Leave My Medicare Supplement Alone!

You may have been caught up in the recent political circus on TV and missed the political power play behind the scenes.  Congress voted to eliminate a Medicare supplement that provides first dollar coverage.  (First dollar coverage means you pay no co-pays, deductibles, or co-insurance.  Medicare and the Medicare supplement pay everything.)  This will change everything about how you approach your Medicare, and it is a cause for re-evaluation of your Medicare Supplement plan.

Congress’s change potentially creates a problem for beneficiaries who have a Plan F supplement.  Or, at least, it is reason for re-evaluation.  There are other supplement plans, but which one should you choose?

Congress Tinkers with Medicare Supplement

Congress is constantly trying to fund government programs.  The balancing act is to generate sufficient revenue to pay for adequate benefits without over burdening the taxpayer.  Congress discovered that Medicare beneficiaries who do not pay any co-pays, co-insurance, or deductibles unnecessarily over use the medical system and consequently Medicare.  The Medicare Trust Fund is stressed to the breaking point.  Congress found that beneficiaries who pay co-pays, deductibles, and co-insurance do not over use the medical system.  Their solution is to stop first dollar coverage.  That means, supplement plans cannot pay everything.  Beneficiaries must pay some kind of co-pay, deductible, or co-insurance.  There must be some disincentive to over using the system.

Medicare Supplement Plan F Going Away

The Medicare supplement plan that covers all co-pays, deductibles, and co-insurance is Plan F.  You will not be able to purchase a new Plan F after December 2019.  Those who have Plan F will be grandfathered in and may keep the plan.  The consequence of this change is that no new beneficiaries will be joining Plan F.  Insurance is built upon pools of people.  Of the 10,000 people turning 65 each day in the U.S., no one will be purchasing Plan F’s after 2019.  Those who have Plan F will age and die, reducing the number of persons who pay premiums.  If there are fewer people paying in less premium but more and larger medical claims being paid out, the insurance company will be forced to raise rates on the existing members of the plan to keep the plan viable.  While it is hard to know the future, it would be hard to say Plan F’s future will be positive after 2019.

Plan G is the New Plan F

The next plan up is Plan G.  The two differences between Plan F and G are: you pay the Part B deductible, which is currently $166.  It is a one time annual deductible.  After you pay the Part B deductible of $166, there are no more co-pays, deductibles, or co-insurance for the year.  Everything will be covered 100%.  Second, Plan G premium is noticeably less than Plan F’s.  The other point of interest is that Plan G’s have fewer and smaller rate increases than Plan F’s.

Shrinking Pool of Insured

Medicare trustees are trying to slow the drain on the trust fund.  Eliminating first dollar coverage that Plan F’s afford was the solution.  The problem is that no new members will join the pool of insured who have Plan F.  Traditionally, insurance companies raise premium rates when the pools of people who pay premiums becomes smaller.  Plan F members will be forced to look other places for more affordable coverage.  Plan G will likely become the new Plan F.

You may wish to reconsider your supplement plan if it is Plan F.  The ground is shifting.  Visit OmahaInsuranceSolutions.com for the most current education on Medicare.