Medigap Plan F is currently the most common and comprehensive Medigap plan. It is designed to fill in all the gaps in “original” Medicare coverage (Part A – hospital and Part B – doctor/outpatient). If you have Plan F, the plan should pay the deductibles and co-pays/coinsurance for all Medicare-approved charges, leaving you with no out-of-pocket costs.
The advantage of Medigap Plan F, as compared to the other standardized Medigap plans, is the predictability in costs to you. For someone on a fixed income, this level of coverage can be appealing, since you know what your premium is and have no surprising or unknown out-of-pocket costs regardless of your use of medical care.
The most important thing to know about Medigap plans, on the whole, is that the plans are Federally-standardized. What this means is that a Plan F with one company is the exact same as a Plan F with a different company. Likewise, the plans work the same way (regardless of which company it is from), in that the claims are paid automatically through the Medicare “crossover” system and plans can be used at any doctor/hospital that accepts Medicare nationwide. When comparing Medigap plans, including Plan F, the most important factors to consider are the price and company reputation.
What Does Medigap Plan F Cover?
So, what exactly is covered under Medigap Plan F? As mentioned above, Plan F is the most comprehensive Medigap plan. With Plan F, you would not have out-of-pocket costs for anything that is Medicare-covered. Medicare pays its portion, and then Plan F picks up the rest. Here is a list of the benefits that are included as a part of all Plan F’s:
- Medicare Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used)
- Medicare Part B coinsurance or copayment
- Blood (first 3 pints)
- Part A hospice care coinsurance or copayment
- Skilled nursing facility care coinsurance
- Part A deductible
- Part B deductible
- Part B Excess charges
- Foreign travel emergency
These benefits fill in the “gaps” in “original” Medicare (Part A and Part B). Benefits for all plans can be viewed on the Medigap coverage chart.
How Does Medigap Plan F Work?
Medigap Plan F works just like other Medigap plans. First and foremost, Medigap plans can be used anywhere that Medicare is accepted, nationwide. There are no networks on Medigap plans. The plans are NOT PPO or HMO type plans. They “follow” Medicare.
Secondly, Medigap Plan F (and other Medigap plans) pay claims through the Medicare “crossover” system. This is Medicare’s automated system, in which Medicare pays their portion directly to the medical provider and coordinates the payment from the secondary insurance (Medigap plan). There are no claims for the policyholder to file with Medigap plans.
Is Medigap Plan F Ending?
One of the recent developments with Plan F is the pending end of that plan for new beneficiaries. In April 2015, Congress passed the Medicare Access and CHIP Reauthorization Act of 2015. This bill, among other things, set forth an end to “first dollar” coverage, specifically Medigap Plan F and Plan C.
“First dollar” coverage is when a policyholder has a plan that pays everything Medicare doesn’t pay. Although this premise is certainly debatable, Congress pointed to the theory that Medicare beneficiaries “overuse” benefits when they have no “skin in the game”. Regardless of the reasons or the legitimacy of those reasons, this bill was passed and it takes effect in 2020.
So what does this mean for Plan F policyholders? First and foremost, although the bill does not specifically state this, most expect that existing policyholders can keep their existing Plan F policies (“Grandfathered in”). This is what has happened in past instances of plans being terminated (i.e. 2010 plan re-standardization). But the plan would not be available to new policyholders.
This leads to two schools of thought regarding Plan F. The first school of thought is to get Plan F while you can, since the plan will not be available after 1/1/2020. The second, and likely more valid, school of thought is that the looming end to Plan F should caution anyone from choosing that plan. Once the plan is eliminated as an option for new beneficiaries, the population on that plan will becoming increasingly older, which leads to increasing claims ratios and likely more frequent/larger rate increases on those policies. That’s not just a theory but is also based on what has happened in the past when plans were eliminated (i.e. when Plan J was eliminated in 2010).
Is Medigap Plan F the Best Deal?
Medigap Plan F, regardless of the 2020 end of the plan, may not be the best “deal” for your situation anyway. As always, you should investigate the rates for your specific zip code, as rates do vary considerably by geographic area. But, often, other plans will make more sense financially.
For example, the only difference in Medigap Plan G and Plan F is the coverage of the Medicare Part B deductible, which is $166/year (for 2016). In other words, the only out of pocket costs you would have on a Plan G is $166/year. Typically, the premium savings on ‘G’ as compared to ‘F’ is anywhere from $240/year to $500/year. So, it would certainly make financial sense to save $240-500/year in exchange for paying out $166/year.
To get more information about Medigap Plan F or a list of companies and rates for your area, please feel free to contact us or call us at 877.506.3378.