Frequently referred to as the “Cadillac” of Medigap plans, Medicare supplement Plan F is the most common and comprehensive plan out of the 10 Federally-standardized Medicare supplements. According to recent studies, about 40% of all policy holders in the Medigap market have this particular plan.
Medigap Plan F is designed to pay everything Medicare Parts A and B do not cover so that the policyholder has no additional out-of-pocket co-pays or deductibles. Although it is the most common, it is not always the best “deal” and does not have the best long-term outlook. If you would like us to compare Medicare supplemental plans such as Plan N, we are happy to help. Also, if you already have a plan in place such as Plan J and have questions about your coverage, we can provide you with the answers you are looking for.
WHAT DOES MEDICARE SUPPLEMENT PLAN F COVER
Medicare supplement Plan F pays everything that Medicare Parts A and B do not cover at the doctor and hospital so that you don’t have any out-of-pocket co-pays or deductibles. Without a doubt, it is the easiest plan to explain or understand, since you pay a monthly premium and then have “full” coverage with the Medigap plan picking up after Medicare pays its portion.
If you are looking at the standardized Medigap coverage chart, you will see that, for Plan F, all the boxes are checked. But what does that mean exactly?
Below is a list of the different benefits that are provided by Medigap plans overall. All of these are benefits are included in Plan F coverage:
- Medicare Part A coinsurance and hospital costs including up to 365 additional days after Medicare benefits
- Medicare Part B coinsurance or copayment
- Blood (up to 3 pints)
- Part A hospice care coinsurance or copayment
- Skilled nursing facility care coinsurance
- Medicare Part A deductible
- Medicare Part B deductible
- Medicare Part B Excess charges
- Foreign travel emergency (up to plan limits)
One important note about Medigap Plan F is that there is also a “high-deductible” version of this plan. This plan, often referred to as HDF for high-deductible F, is a much less common and less comprehensive plan. HDF has a $2180 (in 2015) deductible that must be met before any plan benefits begin. When you are comparing Plan F rates, you should make sure you are getting quotes on the “regular” Plan F instead of HDF if that is the plan you are wanting to compare.
Additionally, it should be understood that all Plan F’s provide the same standardized benefits, as detailed above. No companies can add or take away from the Federally-standardized benefits that are mandated to be offered on Plan F. So, it is a simple matter of comparing rates if you want this plan, since coverage will be exactly the same no matter which Medicare supplement insurance company you decide to use.
HOW DOES MEDIGAP PLAN F WORK
In addition to the coverage being Federally-standardized, the way the plans work is also standardized across companies.
If you have a Medigap Plan F, Medicare is still your primary coverage. Medicare pays its portion, and the Plan F picks up where Medicare drops off, paying the remainder of the charges so that you have no co-pays, deductibles, or coinsurance to pay.
On Plan F, just like with any of the Medigap plans, you can go to any doctor/hospital nationwide that takes Medicare. There are no networks that you must use and no provider directories to check. If your doctor takes Medicare, he/she are required to take the standardized Medigap plans.
When you go to the doctor, you will present your red, white and blue Medicare card, in addition to the card provided to you by your Medigap Company. The provider would bill Medicare, which would pay its portion and initiate the Medicare “crossover” (all done electronically) to the secondary insurance (Medigap) company. The claims are all handled electronically and automatically without involvement on the part of the policyholder or a need for a policyholder to manually file claims except in rare instances.
MEDICARE SUPPLEMENT PLAN F VS PLAN G
One of the common questions regarding Medigap plans is “What is the difference between Plan G and F”, and which is the better option. The answer to this question is more straightforward than you may think.
First of all, there is only one benefit difference between the two plans – that is the coverage of the Medicare Part B deductible (currently set at $147/year for 2015). There are no other differences – that is it!
So, it is a simple mathematical calculation to determine whether ‘F’ or ‘G’ makes the most sense for you. You can simply check the premium difference between the two plans and see how that compares to the current Part B deductible. If the premium savings on ‘G’ is greater than the deductible amount, then Plan G makes more sense. If it is NOT greater than the deductible amount, then you should stick with Plan F.
Just like when comparing any type of insurance, you must weigh the costs vs. the benefits received. In some areas of the country, the premium difference between ‘F’ and lower level plans is minimal. In that case, Plan F may make the most sense. However, in the majority of situations, the difference in ‘F’ and ‘G’ premiums is greater than the Part B deductible amount, making ‘G’ the more prudent choice.
There is one other important factor in deciding between these two Medigap Plans. That factor is the rate stability over time. In some cases, Plan F can be less rate-stable than some of the other plans that are not offered in “guaranteed issue” situations. Because Plan F is available to applicants on a “guaranteed issue” basis when they lose employer or Medicare Advantage coverage (and some other situations), the population on this plan is, on average, less healthy than the population on some other plans. This should also be taken into consideration when deciding between Plan G and F.
WHO SHOULD SIGN UP
Medigap Plan F is definitely a viable option for some people or in some situations. The biggest advantages of Medigap plans are their flexibility and comprehensive coverage. This holds true about all Medigap plans.
Plan F can be used at any doctor or hospital nationwide that accepts Medicare. There are no networks that restrict where you can use the plan. So, this plan is a great option for someone who travels or has homes in two locations. Also, it is ideal for someone who doesn’t like the managed care-style of healthcare, where you must see your primary doctor and get a referral to see a specialist. Be cautious if considering Medicare Advantage plans, as many of these plans do work on a managed care type model, as well as being network-based plans.
The primary variable that sets Plan F apart from other supplement options is that it is the most comprehensive plan. Because it pays everything Medicare A & B don’t cover, it can work great for someone on a fixed income who wants completely predictable, fixed medical expenses.
In addition, Plan F is a wise choice for someone who has some health problems or pre-existing conditions but finds themselves in a “guaranteed issue” situation. Some “guaranteed issue” situations include losing group/employer coverage, losing Medicare Advantage coverage, or moving out of a Medicare Advantage plan’s service area. In a “guaranteed issue” situation, the insurance company cannot make you answer health questions or deny you coverage. Plan F is one of the plans that is offered in such situations.
Who should sign up for Plan F is also dependent on where you live. Rates for Medigap plans vary by zip code, and in some places, premiums are only slightly higher than the premium for other lower-tier coverage plans. In those cases, it may make sense to go the Medigap Plan F route.
THE FUTURE OF MEDIGAP
Medigap Plan F has been at the forefront of supplement sales since the plans were standardized. It’s current 40+% market share bears that out. That said, the future of Medigap Plan F may be in jeopardy.
Recent trends are moving away from that plan, as people look at other, less expensive options such as Plan G and Plan N. Also, and maybe even more importantly, recent legislation threatens the existence of the “first-dollar” coverage plans (i.e. Plan C and F). This legislation, which is scheduled to take effect in 2020, eliminates Plan F for new Medicare beneficiaries.
In the past, when changes like this have occurred, current policyholders have been “grandfathered” in and allowed to keep their plans. Although this has not been determined or announced, most presume this will be the case for this change as well.
Regardless, even if you do have the option of keeping your current plan, it is likely not a wise idea to do so. When a “block” of business is “closed” to new applicants like this, it leads to rate instability, as no newer/younger people are going on the plan.
So, Plan F is certainly a currently viable option. It provides the best, most comprehensive coverage your money can buy. However, with the 2020 changes in mind, it will be even more important to take a hard look at other plan options that may offer a lower premium and be more stable into the future.