We're 4 years post-MACRA, and we thought it was time for a Plan F check-in.
Here's a look at what's happening with Plan F, along with some agent strategies, perspective from Med Supp carriers, and a glimpse into what's coming for Medicare Supplements in the near future.
Plan F Post-MACRA
As a quick refresher for anyone who needs it: you can no longer sell Plan F to anyone eligible for Medicare after January 1, 2020.
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) had many provisions, such as removing Social Security Numbers (SSNs) from all Medicare cards by April 2019.
But perhaps the most notable provision, at least for independent agents, was the phase-out of Plan F.
MACRA specifically prevents individuals new to Medicare after January 1, 2020, from purchasing Med Supps that pay for the Part B deductible. That includes Plan C and Plan F.
For states without Plans C and F, including Massachusetts, Minnesota, and Wisconsin, the same concept applies.
That said, for anyone eligible for Medicare before January 1, 2020, Plans C and F are still fair game.
Whether they're a good buy or not is a different story.
Plan F Statistics In 2024
We examined Plan F sales for Integrity Medicare Supplement carriers, and in 2023, 16.3% of Medicare Supplement sales were Plan F.
In 2022, Plan F sales accounted for 18% of sales, indicating a steady downward trend as Plan F continues to phase out.
Plan F is an Aging Population
The pool of potential Plan F buyers in 2024 is limited to those around age 69 and up. This aging population continues to utilize their insurance more and more.
It's easy to see why insurance carriers aren't too fond of Plan F at this point, due to its utilization patterns and Guaranteed Issue (GI) situations.
This creates a predicament for carriers, as they must issue Plan F without the ability to underwrite.
Plan F Rate Increases
The pool of people who can buy Plan F is getting smaller, and obviously, people are passing away.
There's no new, healthier business coming into that block, so it's like a ticking time bomb for people who are on it.
When you decrease the pool size and it's an aging population, it's going to lead to higher rate increases. And many are starting to see that now – and it's just going to get worse.
Plan F vs. Medicare Advantage
Many agents meet with older clients who are stuck in a Plan F with skyrocketing premiums. The rate increases are only going to get worse, and if the client can't pass underwriting, they're essentially stuck.
The only real option at this point is to take a look at Medicare Advantage plans. If you go to an MA plan, you give up the protection and security a supplement offers.
But simple math says it probably makes the most sense in the majority of situations.
If a client is paying $500 per month on their Plan F premium, that's $6,000 per year – around the Max Out of Pocket (MOOP) for some MA plans.
But again, it just depends on what MA plans are available and what the client's maximum exposure would be if they have a really bad health year.
Plan F vs G vs N in 2024
As we all could've easily guessed, Plan F is dwindling in appeal due to the decreasing pool sizes, aging population, and more expensive claims.
Plan G has always been next in line, but its getting more expensive due to open enrollment business post-2020.
Plan N is really the plan of 2024 and beyond, according to several industry experts I consulted for this article.
Plan N – the New Med Supp of Choice?
Carriers prefer Plan N for its balanced utilization and copay features reminiscent of Medicare Advantage plans.
That $20 copay for doctor visits isn't a big deal, but it's enough for people to think twice about scheduling an appointment they don't need.
Because of those copays, the plan isn't over-utilized, and carriers are having much a better claims experience. It certainly helps that they don't have to offer it GI like they do Plan F or Plan G (depending on the client's age).
Plan N isn't just better for the carriers – clients also enjoy it as a budget option thanks to its lower premiums.
Many people worry about excess charges, but the reality is almost all doctors accept Medicare assignment. The percentage of doctors who accept Medicare fluctuates between 89-95%, depending on which source you look at. So, it's not really an issue.
While Plan G is still the main plan agents sell, carriers are working hard to get more agents to embrace Plan N. We're seeing higher commissions and even bonus programs offering cash incentives for Plan N sales only.
The industry experts I spoke to say this trend is expected to continue, and we should be seeing even more incentives to write Plan N than ever before.
Conclusion
The Medicare Supplement landscape is definitely shifting as Plan F continues to phase out, Plan G gets more expensive, and Plan N rises up as a potential new plan of choice.
The experts I spoke to warned that we're about to enter a rate increase environment, especially thanks to the "COVID Catch-Up." But that's an article for another day (wink, wink!).
Please remember we are here to help you. If you have any questions or need clarifications on anything, don't hesitate to comment.
Good selling!
