Medicare beneficiaries who have elected to receive their healthcare coverage under Original Medicare will typically want to purchase a Medigap plan.  Also known as Medicare Supplement insurance, these plans cover many of the out-of-pocket expenses not paid for by Medicare.  Covered expenses often include deductibles, copay/coinsurance, Part B excess charges, extra days in the hospital and foreign travel emergency care.

So, why wouldn't you want to purchase the 'F' plan?  Despite its generous coverage, there are several reasons you should avoid 'F' and consider other plan options.

1. The 'F' plan is going away!
In April of last year, the Senate approved a bill commonly referred to as "doc fix" legislation.  In short, this bill was passed to amend how doctors are paid under the Medicare system and comes at an estimated cost of $200 billion over the next ten years.  Under the bill, beginning in 2020, Medigap plans may no longer cover the Part B deductible.  This means 'F' and the less popular 'C' plans cannot be sold to new beneficiaries.

2. 'F' Premiums likely to rise significantly.
Individuals who have purchased the 'F' plan prior to 2020 will be "grandfathered" and able to keep the plan.  However, the premiums will likely rise dramatically.  If an insurance company cannot sell the plan to new policy holders, the risk profile of the currently covered beneficiaries goes up.  They are getting older and generally less healthy, which increases the cost of coverage for the insurance provider.  Normal premium increases and related "cost of care" increases are likely to shoot up. 

A good comparative example is the elimination of the 'J' plan in 2010.  At the time, that was the most comprehensive plan available.  Those that retained the plan after June of that year have subsequently experienced significant increases in premium as the pool of policy holders have aged and become less healthy.

3. You might be stuck with 'F'.
Many people do not realize that their health can play a big part in accessing Medigap plans.  During your initial enrollment period (IEP), you have guaranteed issue rights.  This means you can purchase any plan available in your area without being subject to medical underwriting.  Once outside your IEP, very few plan alternatives have guaranteed issue.  If your health declines or you have significant pre-existing conditions, changing to a new Medigap plan may be difficult.  Insurance companies can deny coverage, charge more, or exclude coverage for the pre-existing condition.

4. Save some green with 'G'!
A fantastic alternative to 'F' is the 'G' plan.  Even if the 'F' plan were not being discontinued, we recommend Medicare beneficiaries strongly consider 'G'.  This plan offers the same coverage as 'F' except for the Part B deductible, which is $166 in 2016. These plans tend to have smaller premium increases and are very competitively priced.  In fact, it is not uncommon for the 'G' plan to be priced at a level that still offers savings after the Part B deductible has been paid.  The following example is representative of a recent real client case.

Case Background:  65 year old female residing in Illinois, purchasing a plan during her IEP.  She expects to have at least 4 visits to the doctor this year.

Medigap Plan Quotes:
(Note:  Boomer Benefit Planning does not sell insurance plans and has no affiliation with Mutual of Omaha.  This quote is provided as an example and is not an endorsement or solicitation for a specific product.)

• Mutual of Omaha 'F' Plan: $138.55/month
• Mutual of Omaha 'G' Plan: $108.40/month

'F' versus 'G' Annual Cost:

• 'F' Plan: $1,662.60 (Premium Only)
  
• 'G' Plan: $1,466.80 (Premium + $166 Part B deductible)

'G' saves her $195.80 despite having to pay the deductible that 'F' covers!

Planning for healthcare in retirement is no easy task.  Medicare is confusing and complex with its myriad of choices and plan structures.  Despite what we often see in the marketplace, there is no "one size fits all" solution to Medicare coverage.  Proper planning can save you from incurring thousands of dollars in unnecessary healthcare expense.

Coverage for medications within the Medicare system can, not surprisingly, be a confusing and complex topic.  Many people believe that all drugs are covered under their Part D prescription drug plan. However, Medicare is comprised of four "Parts" and medications may be covered under each depending on the situation.

PART A - Inpatient / Hospital Coverage
While Part A covers you when admitted to the hospital or a skilled nursing facility (SNF), you may also have covered drugs during your stay.  Generally, any payments made to the hospital or SNF will include coverage for all medications administered during your period of inpatient care.

PART B - Outpatient / Medical Coverage
​Typically, coverage for medications under Part B are limited to those that are not self-administered. These would be medications that are delivered via injection or infusion within a hospital outpatient setting or other medical facility.  Note that injections usually administered by the patient do not fall in this category and would generally fall under your Part D coverage.  Medications covered under
Part B will be subject to the annual deductible, which is $166 in 2016. Those expenses do not apply toward the Part D deductible or "Donut Hole" limits.

Medication coverage under Part B may include:

• Vaccinations for flu, pneumococcal, and hepatitis B
• Medications delivered via durable medical equipment, such as an infuser
• Injectable drugs given by a licensed medical provider deemed reasonable and necessary
• Oral anti-nausea medication associated with chemotherapy
• Certain nutritional supplements delivered via feeding tube

Part C - Medicare Advantage
Medicare Advantage (MA) is a private insurance alternative to Original Medicare. These plans must offer the same medication coverage as Parts A & B.  Additionally, most people participating in MA also receive Part D prescription drug benefits.  It is important to note that an individual may not be enrolled in Medicare Advantage and purchase a separate Part D plan.

Part D - Prescription Drug Plan
These plans are the traditional option selected by participants in Original Medicare, which means they are purchasing individual components for Medicare benefits.  That vast majority of prescription drugs will be covered under this plan if not applied to Part A or B as outlined above. Most Americans will have several plans available and they are not all the same.  It is very important to regularly review your drug coverage plan, particularly during open enrollment each year.  (October 15-December 7)  

Insurance companies will change their formularies (i.e. how they cover a medication), pharmacy networks and supplemental benefits annually.  Ignoring these changes or those related to your healthcare needs will frequently result in unnecessary out of pocket expense increases.