The Retirement of Medigap Plan F
This is about healthcare, but hear us out.
We know the topic seems to blanket headlines and conversations with an air of perpetuity. Believe us, you’re not alone in your sentiments. However, we won’t be speculating on the impact of Obamacare reform on premiums or coverage; not that these details are immaterial to your well-being. Instead, we’re going to talk about the retirement of Medigap Plan F in 2020.
The departure of Plan F is like an all-you-can-eat buffet, stocked with your favorite dishes, made with the most prized ingredients, going away forever. For years, each visit to the buffet felt too good to be true. With its unmatched selection and reasonable price, the whole experience nearly defied logic. In hindsight, you realize you were probably right and now, the restaurant owner feels the same way. In this case, that buffet is Medigap Plan F and the restaurant is the US Government.
Forbes Magazine columnist Danielle Kunkle describes Medigap Plan F as, “the Cadillac of all supplement plans. It essentially gives the policyholder 100% coverage. Medicare covers 80% of your outpatient benefits and Plan F covers both your Part A and B deductibles as well as the other 20%. People with Plan F have no copays for Medicare-covered services whatsoever — not even a copay at the doctor. (Plan C is similar but doesn’t cover Medicare excess charges, so it is less popular).”
In most cases until recently, we recommended Plan F from AARP, because it eliminated the need to ever worry about deductibles, thus providing the greatest degree of certainty. In retirement, the last thing we want you to experience are surprises and when health care costs are often the greatest threat to a financially-successful retirement, Plan F was the natural choice. Unfortunately though, if you turn 65 on or after January 1st, 2020, Plan F is off the table. The government’s justification? Too many trips to the buffet. (doctor)
Under Plan F, participants have the freedom to visit their doctors whenever they want, without any additional expense. Naturally, the government felt this program may be unsustainable in coming years, because someone must satisfy that bill. Therefore, on New Year’s Day, 2020, only those currently enrolled in Plan F at the stroke of midnight will be able to enjoy the benefits of deductible-free healthcare.
If you won’t meet the cutoff date, your glass is anything but half-empty. The US government, known for its impressive variety of offerings, has more than one “buffet” in its restaurant portfolio. Including Plan F, there are 8 Medigap plans available to eligible individuals, which afford you a wide swath of premium and coverage choices. Most similar to Plan F, in both premium and coverage, is Plan G. We feel the concessions on coverage, relative to premium savings, are reasonable compromises for most individuals.
One final note: regardless of the Medigap plan you choose, you must all elect a Medicare Part D plan, which will help to cover the cost of your prescription drugs. While this is a topic for another newsletter, use your existing prescriptions to help sort through the available Part D options.