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Medicare Plan G is not going away. There is a lot of confusion surrounding which Medigap plans are going away and which are still available. Rest assured that Plan G isn’t going away. You can keep your plan. If you’re retiring soon, you will be able to sign up for Plan G during your open enrollment period.

What Medical Services Does Plan G Cover?

Plan G covers hospital co-insurance and co-payments for Part B (but not the $198 deductible), the first 3 pints of blood, co-insurance for hospice care and skilled nursing facilities, the Part A deductible, part B excess charges, and limited foreign travel coverage. Dental coverage is not included.

Medigap Plan G: A Small Deductible = Big Savings

Medigap Plan B has a $198 deductible for outpatient services in 2020. After you meet the deductible, Plan G covers the full hospital deductible as well as Part A and B co-pays and co-insurance, including the co-insurance on medications administered by your healthcare provider. It does not cover the co-pay for prescriptions from mail order suppliers or pharmacies.

If you enjoy foreign travel, you’ll be glad to know that Plan G covers expenses incurred in other countries up to the plan limits. Remember to investigate travel insurance before you travel.

What Medicare Plans are Going Away in 2020? 

None of the Medicare supplemental insurance plans are going away entirely in 2020. Seniors who were already eligible for Medicare before 2020 won’t see any changes in the plans they are eligible to purchase. There are changes for new enrollees who won’t be eligible for Plan C or F. 

Massachusetts, Minnesota and Wisconsin have their own rules for Medicare supplements that differ from federal requirements.

What Changes are Being Made to Medicare Supplemental Insurance Coverage?

Medigap plans that cover the first dollar of outpatient deductible are being phased out for new Medicare beneficiaries. Individuals who were already eligible for Medicare before 2020 will continue being able to purchase Medicare supplemental insurance coverage that pays the full deductible for outpatient services (Part B).

This includes individuals who signed up for Part A but not Part B because they were still working and had coverage through their employer. Those who turn age 65 in 2020 or later, will have fewer coverage options.

2020 serves as a dividing line that separates Medicare beneficiaries who are eligible to purchase Plan F and those who are not eligible.

For many couples, this will mean one half of the couple can purchase coverage that will pay the Plan B deductible and the other half of the couple won’t be able to buy the same coverage. 

This is likely to add further confusion to the process of choosing a supplement for many seniors.

Will Medicare Plan F Soon End?

Medicare Plan F may or may not be ending soon for you. If you became Medicare-eligible before the year 2020, you remain eligible for Medicare Plan F. For individuals who do not become Medicare eligible until 2020 or later, Medicare Plan F is not an option.

How Will That Change Retirees’ Costs?

Medicare Plan F covers the deductible for Part B. New Medicare beneficiaries will not be able to buy a supplement that pays the deductible for Part B, so they’ll need to pay the deductible out of pocket. This may not affect their costs as the premium difference may offset the cost of the deductible. It is not unusual for insurance carriers to charge more than the $198 increased benefit provided in higher premiums for Plan F.

Is There Another Medicare Supplement Plan Comparable to Plan F?

Medicare Plan G is almost identical to Medicare Plan F. There are two differences:

  • Plan G does not cover the deductible for Part B.
  • Medicare beneficiaries who were not eligible for coverage prior to 2020 are not able to buy Plan F.

Why is Eligibility for Plan F Going Away?

The premise that these changes are based upon is that Medigap plans that cover the full deductible encourage patients to make unnecessary visits to healthcare providers, thus increasing costs. This theory is being tested with the recent changes for new Medicare beneficiaries. In an article published in the North American Actuarial Journal (1), researchers commented that:

“With the traditional fee-for-service Original Medicare model, providers are paid for the quantity or volume of care. Some believe this leads to delivery of unnecessary services and drives up health care costs.”

Whether the eligibility changes for Plan F and C deliver the expected reduction in use is a social experiment because no one knows the answer. As a Medicare beneficiary, the best you can do is choose the Medicare supplement that best suits your specific needs.

Medicare Plan F wasn’t phased out for beneficiaries who became eligible for Medicare before 2020, so they can choose between Plan F and Plan G.
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Going without a supplement can be financially devastating.

Is high deductible Plan F going away in 2020?

The high deductible Plan F is not going away in 2020. Like the regular Plan F, the high deductible version will have restricted eligibility after January 1, 2020. New Medicare beneficiaries can buy a high deductible version of Plan G (HDG) instead of HDF. Since the plan won’t cover the deductible for Part B, the Part B deductible will apply to the high deductible.

As of January 1, 2020, the deductible for the high deductible plans G, F, and J is $2,340. The deductible will change annually based on the consumer price index.

I’m Currently on Plan F: Should I Change to Another Plan?

If you like Plan F, stay on your plan. In the past, when a Medicare plan was eliminated, individuals who stayed on the plan often experienced large rate increases. This is not expected to happen with the elimination of Plan F because Medicare beneficiaries who were eligible for coverage before 2020 are still able to enroll in the plan. This is expected to prevent unusually high premium increases. One state, Idaho, has legislation that prevents high premium increases on Plan F.

Is Medicare Plan G better than Plan F?

If the premium for Plan F is less than $198 more than the premium for Plan G, Plan F is a better deal as long as the medications listed on the formulary for both plans are the same or, at a minimum, include the medications you take.

Since the difference in coverage equates to covering the $198 deductible for outpatient services, if you pay more than $198 more for Plan F than the cost of Plan G, you’re not getting the best deal.

Medicare insurance coverage can be confusing, but it pays to spend time understanding coverage offered by the various Medigap plans and their premiums. Recently, 55% of seniors purchased Plan F despite many of them charging more than $198 more than the premium for Plan G.

If the premium for Medicare Plan F is more than $16.5 per month more than the premium for Plan G, you should choose Plan G.

Should I switch from Plan F to Plan G?

The coverage difference between Plans F and G is the $198 deductible that must be paid with Plan G and not Plan F. Other than this difference, if the formularies for both plans cover the same drugs, the coverage is identical.

That means the maximum benefit from having Plan F over Plan G should be $198. Yet, in some cases, insurers charge hundreds of dollars more for Plan F.

Before deciding if switching from Plan F to Plan G is right for you, look at the premiums charged for each plan.

Why is Medicare Coverage Confusing?

The Centers for Medicare and Medicaid Services (CMS) regulate healthcare in the USA. In a speech at the Commonwealth Club of California, CMS Administrator Seema Verma (2) who oversees a trillion dollar budget, spoke about the heavy compliance cost of regulating healthcare:

“Medicare has significant problems and it starts with the over 11,000 pages of regulations we produce each year.  While many of them have come with the best of intentions, the cumulative effect has hurt, not helped our healthcare system.  The government cannot spur innovation if it is dictating the process and driving up through burdensome regulations. A perfect example of this is that hospitals spend $39 billion a year for regulatory compliance.”

The regulatory burden increases the cost, complexity, and patient confusion related to healthcare.

How much does Medigap Plan G cost?

It pays to be an educated consumer when you choose your Medigap plan and insurance company. We looked at the cost of Plan G and F for a 65-year-old non-smoking male in North Carolina. The range of premiums was considerable, varying from a low of $103.97 a month to $231.26 a month, equating to an annual difference of $1,527.48 for the same coverage.

We chose three well known insurance companies and compared their rates for Plan G and F.

CompanyMedigap Plan G (2020Medigap Plan F (2020)Difference in annual premiu
Aetna Health$1,335$1,589$254
Aetna Life$1,810$1,989$179
Humana$2,201$2,206$5

How much does Medigap Plan F Cost?

The monthly premiums for Plan F had an even wider range for the same 65-year-old man, varying from $129.28 a month to $296.35, equating to an annual difference of $2,005.02 from the lowest priced plan to the highest for the same coverage in North Carolina. Rates in each state will vary.

Medicare Plan G reviews

You can read a full review of Medicare Plan G in this article. It’s the second most-popular Medigap plan selected by healthcare consumers.

Medicare Supplement Insurance: A Quick Summary

If you’ve been wondering if Medicare Supplement Plan G is going away, or about Plan F, we hope this article has clarified matters.

For Medicare beneficiaries who were eligible for benefits prior to 2020, nothing has changed. For newly eligible beneficiaries, Medigap policies that provide first dollar coverage are not available.

More information about Medicare Supplements and plans offered by Mutual of Omaha are available from the experts at Medicare Nationwide.

References:
  1. North American Actuarial Journal
    https://www.tandfonline.com/doi/full/10.1080/10920277.2019.1678044
  2. Speech: Medicare Remarks by CMS Administrator Seema Verma at the Commonwealth Club of California, Jul 25, 2018
    https://www.cms.gov/es/node/57746
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