No More First-Dollar Coverage Plans

If you become Medicare eligible after 2020, you won't be able to enroll in any first-dollar coverage plans.

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First dollar coverage plans are health insurance plans that start paying benefits without the insured person having to pay any upfront costs. In other words, no deductible or copayments must be paid first. The coverage begins with the first dollar charged for health care or hospitalization.

First Dollar Coverage Plans

There are several benefits to having a first dollar coverage plan. The insurance plan you’ve purchased does not have a deductible, so benefits are paid with the first claim filed. It’s comprehensive coverage and therefore limits the risk assumed by the Medicare Beneficiary.

Disadvantages of Having First Dollar Coverage

The biggest disadvantage to having first dollar coverage is the cost. To give an example, the money you save in premium going from a Plan F (no deductible) to a Plan G (you pay the Part B deductible) is usually over $300.

That means most people are spending an extra $300 in premiums. It can quickly become apparent, we need licensed insurance agents to help us navigate the murky waters of insurance premiums and benefits.

Medicare Supplement Plans C & F

The words Medigap and Supplement both refer to the Medicare plans you can purchase that pay after Medicare pays as primary. Two words with the same meaning, they supplement or fill the gap in coverage Medicare leaves behind.

Medicare Plan F pays everything left over by Medicare. It is first dollar coverage that pays your Part A deductible your Part B deductible. In addition, it covers the 20% coinsurance not paid by your Medicare plan and any excess charges you may incur.

The Medigap Plan F is truly the fullest coverage you can buy and is the best example of first dollar coverage. You pay the premium; your insurance company pays the claims.

Medicare Plan C is the exact same coverage as Plan F with only one exception. Plan C does not cover excess charges. Plan C pays your Part A deductible & your Part B deductible. In addition, it covers the 20% coinsurance not paid by your Medicare plan.

Excess Charges

If you purchase a plan that does not coverage excess charges, you need to educate yourself so there are no surprises. Medicare has assigned a dollar amount that can be charged for every service or procedure.

Providers can charge up to an additional 15% over and above what Medicare has approved. Some states do not allow excess charges. If you are traveling, it may be beneficial to know the rule in the states you plan to visit.

Say Goodbye to First Dollar Coverage

For decades, we’ve loved our first dollar coverage plans. Most Medicare Beneficiaries are on a Plan F right now. We’re emotionally attached the protection we feel from having the fullest coverage available.

The rules are changing in 2020. Congress has decided that Medigap Plans will no longer cover the Part B deductible, for new enrollees. If you are already on a Medigap Plan C or F, then you are considered “grandfathered in.” Meaning you can keep your coverage, but the plan is no longer accepting new enrollees.

Over time, the rates on these first dollar coverage plans will continue to increase. Eventually, the premium will drive Medicare Beneficiaries to seek out other Medicare Supplement Plan options.

Why are We Losing Our First Dollar Coverage?

Congress decided to repeal the first dollar coverage options in an attempt to help stabilize the amount of money that Medicare pays to doctors. It’s part of the MACRA 2015 bill that was passed in 2015.

The idea is this change will help contain some of the expenses paid out in claims and over the long run, minimize insurance rate increases. Congress wants everyone to be responsible for their healthcare coverage and the costs. In other words, we need to seek treatment at the appropriate medical facility for the ailment in question.

For example, go to the doctor for a cold and the emergency room in the event you fear loss of life, limb or bodily function.

What Options Will be Available in 2020?

If you’re already enrolled you’ll be grandfathered in. You can even purchase your Plan F or Plan C from other carriers after 2020.

Plans D, G and N will all continue to be available in their current format. No changes are expected as these plans do not offer first dollar coverage. Plan G offers great savings as it covers everything except the Part B deductible. Making this change now would make the 2020 changes inconsequential to you.

At one time, first dollar coverage plans were the best option. They provided all the coverage you could need. In today’s world, first dollar coverage plans cost more than the protection they offer.

If you haven’t done so recently, or if you have questions regarding your coverage options, contact a licensed insurance agent. You are not in this alone and a trusted agent can provide you with the knowledge and confidence needed to make the right choice for you and your family.