Recently, there has been a resurgence of interest in Medigap Plan F, a Medicare supplement insurance plan that was once considered the Cadillac of Medigap plans. Plan F covers all nine benefits, including the Part A hospital deductible, the skilled nursing facility copayment, and the 20% coinsurance for outpatient services. However, changes brought about by the Medicare Access and CHIP Reauthorization Act of 2015 have made Plan F less popular as insurers can no longer sell this plan to newly eligible Medicare beneficiaries as of January 1, 2020. Only 1% of seniors purchasing a Medigap plan in 2023 chose Plan F, compared to 50% for Plan G, which covers every benefit that Plan F offers except for the Part B deductible.
One important reason why Plan F may not be the best option for seniors born before 1955 is that they would end up paying more than the plan is worth. This is because the only difference between Plan F and Plan G is the Part B deductible, which beneficiaries have to meet before the plan starts paying for outpatient services. Despite this deductible being only $240 this year, the annual premium for Plan F is significantly higher than that for Plan G. This means consumers would be paying $360-$740 extra for a $240 benefit, which is neither cost-effective nor wise. Additionally, no young beneficiaries can enroll in Plan F, which means that the risk pool for this plan is aging and shrinking, potentially leading to higher premiums in the future.
While seniors like Dennis can still purchase Plan F if they choose, it may not be the best option for two very important reasons. Firstly, it will likely cost more than it is worth due to the difference in premiums between Plan F and Plan G. Additionally, the aging and shrinking risk pool for Plan F means that premiums for this plan may increase in the future. Dennis’ insurance agent should have discussed these factors with him and helped him make a decision that was both cost-effective and sustainable for his future healthcare needs. In most cases, Plan G might be a much better choice for seniors in the long run.
In conclusion, while Plan F was once considered the Cadillac of Medigap plans due to its comprehensive coverage, changes brought about by the Medicare Access and CHIP Reauthorization Act of 2015 have made it a less popular option compared to Plan G. Seniors born before 1955 may still be eligible to purchase Plan F, but it may not be the best choice due to higher premiums and the lack of young beneficiaries enrolling in this plan. It is important for seniors to carefully consider their options and consult with their insurance agent to ensure that they are selecting a Medigap plan that meets their healthcare needs while also being cost-effective and sustainable in the long term.
