Medicare Plan F and C Prices To Drastically Increase! How to Avoid Steep Rate Hikes and Find the Right Plan NOW!
Every decade or so, Congress evaluates and makes sweeping changes to some of the laws that govern Medicare. MACRA, or the Medicare Access and CHIP Reauthorization Act of 2015 included some of the most radical changes we’ve seen yet.
(Read more about 2016 MACRA changes to provider reimbursements)
Notable changes affecting two Medicare Supplement plan options — Plan C and Plan F — will cause significant premium price increases as the plans are scheduled to sunset in the year 2020.
(Since more than half of MediGap enrollees are enrolled in a Plan F, as opposed to fewer than 10% on a Plan C, we will focus this information on Plan F. However, the information applies to both types of plans.)
Why Are MediGap Plan F Going Away?
Congress felt that Medicare Supplement plans that offered first-dollar coverage were costing Medicare too much money to the government-run program. Although there are conflicting reports, Congress felt that plans which covered the Medicare Part B deductible upfront, also called first-dollar coverage, were causing strain on the system due to unnecessary services and high-cost acute care.
Forcing beneficiaries to pay their Part B deductible (which varies each year) will make them use their plan more intentionally, Congress felt.
What Changes Did Congress Make to Plan F and C?
The main change in the 2015 MACRA was the elimination of Medicare Supplement plans that offer first-dollar coverage.
First-dollar coverage plans, currently Plans C and F only, cover the beneficiary’s Medicare Part B deductible. In other words, the beneficiary’s coverage begins as soon as their plan becomes effective — they do not have to meet any deductible before their plans “kicks in.”
In barring first-dollar coverage, Congress hopes that there will be less abuse of Medicare.
Plans C and F will be eliminated and no longer available to new enrollees beginning January 1, 2020. People who are enrolled in those plans prior to the year 2020 will be able to remain on the plan if they choose, however, they may experience significant rate increases.
How Do You Know Premiums for Plans F and C Are Increasing?
Because Medicare Plans F and C will no longer be accepting new enrollees beginning in 2020, insurance carriers are slowly hoping to phase out the plans. The best way to phase them out? By making them less attractive by increasing plan prices.
Here at My Medicare Partners, we have access to a cutting edge program which allows us to see historical rate increases, allowing us to predict which carriers and which plans may skyrocket in the future.
Congress also repealed four other Supplement plans in 2010, all of which experienced significant rate jumps before their termination. So based on history and based on what the carriers are anecdotally warning insurance agents of, we fully expect Plan F and Plan C will experience similar trends that don’t favor you, the consumer.
While people who enroll in one of these plans before 2020 will be able to remain on the plan if they choose, many are expected to jump ship as the rates creep up and instead enroll in an alternative Supplement Plan.
Why Are Insurance Carriers Raising Plan Premiums?
There are several factors which cause insurance companies to raise their rates on plans which are being phased out:
- Insurance companies know that after January 1, 2020, they will have no new revenue from these plans.
- Only less healthy people may remain on the plans, therefore increasing costs of running the plans.
Since the first point is self-explanatory, let’s investigate why sicker people would cause a plan’s rate to increase:
When the rates begin to creep up between now and 2020, more and more beneficiaries will decide to seek alternative options. When switching from one MediGap plan to another, these folks will have to go through medical underwriting.
People who are unable to pass medical underwriting due to preexisting conditions and therefore unable to switch plans will be stuck on their Plan F. As more and more healthy people leave the plan, less healthy people will remain on the plan. People who obtain more, and more expensive, health care services will cause the overall costs of running the plan to rise — and insurance companies
will pass these increases onto the consumer.
Furthermore, as more people leave Plan F, costs will rise. The basic principle that allows the concept of insurance to work is called risk pooling: if we all pay a little bit into a pool, and very few of us have large expenses, the risk is distributed among all of us. So your large expense won’t be as large when the risk is spread. Therefore, when fewer people are on a particular MediGap plan, costs to operate the plan and to provide healthcare services increase. And again, insurance companies will pass these increases onto the consumer.
What Plans Are Alternatives to Plan F and Plan C?
Due to the increasing prices, many Plan F and Plan C beneficiaries will switch to other similar Supplement plans, likely a Plan G.
The only difference between a MediGap Plan F and a Plan G is the annual Part B deductible. The Part B deductible for the year 2017 is only $183. Otherwise, the same benefits in a Plan F are offered by a Plan G: comprehensive coverage of doctor visits, hospitalizations, and more.
MediGap Plan G allows you to visit any Medicare doctor or facility in the country at no cost, and even provides some coverage while traveling abroad. Plan G covers the Part A deductible, A and B co-pays, hospice care, excess charges, and more.
Plan G eliminates all of your out of pocket costs (except for the small Part B deductible)!
Surprisingly, Plan F (while they are still available) often cost more than Plan G. For example, a Plan F for Vicky may cost her $133.88 per month (annually $1606.56), while a Plan G from the same insurance company may cost her 98.83 per month (annually $1185.96). Let’s not forget that the Plan G will require her to pay the Part B deductible of $183. Vicky will still save $237.60 by switching from a Plan F to a Plan G!
Switching from one plan to another is simple and takes very little time with the help of a My Medicare Partners Agent. You sit back and relax while we do all the work!
It’s easy to see why Plan G is the preferred alternative to Plan F!
Should I Switch My MediGap Plan?
Most likely, yes!
Each person’s medical needs and budget are different, which is why My Medicare Partners’ Agents take the time to get to you know. We evaluate your individual needs and desires.
If you do have to go through medical underwriting (you are not in a Guaranteed Issue situation such as your Initial Enrollment Period), we also make sure you will pass underwriting before you cancel your currently plan. If you were to cancel your current plan and subsequently be denied new coverage, you could be left stranded with no coverage and astronomical out of pocket costs.
Do go at it alone — let the experts help, free of charge!
Allow My Medicare Partners’ friendly Agents to search for the best plan for you. Premium is not the only thing to consider when enrolling in a plan, and we’ll be sure to evaluate other aspects that contribute to your out of pocket costs, or lack thereof, to make sure you have an affordable plan that will best serve you for life.
There’s no hassle, no obligation, and our Concierge Member Services never cost you a dime. Don’t delay — Plan F prices can creep up at any time!