Get real answers about Medicare Plans C and F after January 1, 2020 

Medicare Supplement Plans C and F

It’s a hot topic for Medicare plan C and F policyholders and new buyers alike.  Sales of Medicare Supplement plans C and F have been discontinued for new buyers unless you were eligible for Medicare prior to January 1, 2020.  If you have one of these plans, your plan won’t be canceled or forced to change plans.  You can keep the plan for as long as you want. But is that really a good decision?

Should you jump ship or hold on to the plan you have?

If you’re new to Medicare, should you take one of these plans or avoid them?  We’ll go into reasoning behind the confusion and what you should do.

As of January 1, 2020, Medicare Supplement Insurance Plans C, F and High Deductible F will no longer be sold to new Medicare eligibles. Plans C and F are sometimes referred to “First Dollar” coverage or the “Cadillac” plans.  If you don’t have it before 2020 you will have to settle for more economical, less luxurious Camry version.

Plans C and F really should be viewed as luxury plans anyway. If you do have to pay the annual deductible out of your pocket, you’ll save more than that on your total premiums over the year with the next best plan.  The plan just below an F is plan G. Medicare Supplement Plan G offers everything that F does except the annual expense of the Medicare Part B Deductible.  If you are crunching numbers on the better value, it’s almost always G.

Plan F is really attractive on paper because it is the the highest level of coverage offered and you don’t have pay any additional out of pocket expenses for Medicare covered services.  You don’t need to send checks to doctors and hospitals and the quarterly Explanation of Benefits you get from Medicare should always show that you owe $0.00.  It’s a great plan for people who can’t handle keeping track of what portion they owe the provider, but you’ll over pay in your premiums.

The harsh reality is that Medicare Supplement companies need to stay in business, and if you don’t want your premiums to increase to an amount that isn’t affordable, people have to stop over utilizing unnecessary services.  That’s the goal.  Enrolling in a Medicare Part B and a Supplement is usually a huge benefit to most consumers, and paying an additional few hundred dollars for the year is not going to be life changing. The fact is that most people get an annual rate increase on their F plan that will far exceed the Medicare Part B Deductible.

Previously Discontinued Medicare Supplements

This isn’t the first time this has happened.  There have been other plans in the past that became a “Liquidated Block of Business” and some plans have undergone revisions.  You may have noticed that within the standardized Medicare plans there are some letters missing from the chart.  That’s because Medigap plans E, H, I and J have all been eliminated for new Medicare eligibles.

Most of these plans were eliminated due to duplicate coverage that became part of  what Medicare already covered. Plans D,G, I and J all had coverage for At Home Recovery, and whoever bought the policy prior to 2010 could keep it, but it was not available for new buyers.  Plan J was an even bigger deal because it offered prescription coverage, but now we have the Medicare Part D drug coverage available as a separate benefit.

It makes sense that if there are no younger, healthier people purchasing the policies, then the group of people just gets sicker and older.  Because there aren’t any new premiums being generated that go into the block of business, logically the rates for existing policy owners will go up.  This theory leads us to think the rates will explode.   But think about the other side of the coin…those same people will begin to die and the rates may remain stable due to natural attrition.

When a group of insureds is experiencing higher than expected medical claims, it has to make up the loss in one way or the other.   The insurance companies aren’t in the business of losing money and they have to retain a certain amount of money to pay future claims.  They cover the shortage by passing along rate increases to make up the deficiency in collected premiums.

Err on the Side of Caution…

We suggest you err on side of caution before you take a plan C or F anymore.  We have been recommending a G plan over the C or F plan for years and still do, except under the following circumstances:

• Take the C or F plan if you cannot stay on top of what part of the Medicare Part B deductible you still owe. This can be particularly helpful for anyone who has a problem handling their bills for whatever the reason.
• You have the money and just don’t want the hassle of dealing with the bills. Sometimes it’s just not worth it.

Insurance companies use actuaries to predict the claims that the Medicare plans will incur.  There is little surprise when it comes to predicting how much a group of people will use in medical costs for a specific plan, like the F plan, in a certain geographic area.  Similar methods help determine the cost of life insurance.  Life and health insurance actuaries use mortality and morbidity tables to help predict the likelihood of illness, disease and death.

Morbidity refers to poor health due or how likely a person is to any cause and the existence of disease. Mortality is about the certainty of death.  Actuaries use these tables to help determine insurance rates. They have a good idea of how long we’ll live based on our health, family history, geographic location, occupation and lot’s more. It’s not an exact science, it’s still a prediction. There have been instances in the past that the rates did not skyrocket, but there is no way to be certain of what will happen.

If you would want personalized advice specific to your situation, simply fill out the Customized Quote form or call 614-402-5160 and we’ll be happy to assist you.