What Is First Dollar Coverage for Medicare?

Medicare includes lots of jargon, which leaves many of us scratching our heads. What, exactly, do some of these terms mean? Here’s an example: first dollar coverage. 

Let’s try to explain it in plain English.

What Is First Dollar Coverage?

First Dollar Coverage refers to an insurance policy where the insured is not obligated to pay copays or any initial out-of-pocket expenses before their coverage kicks in.

Some Medicare Supplement plans (also called Medigap) include first dollar coverage with no Medicare deductibles. Those plans are no longer available for most new beneficiaries, though several Medigap plans still offer first dollar coverage for Medicare Part A.

Because there is no deductible, however, the insurer will typically pay less overall than on a plan that has a deductible, or the first dollar plan will require a higher monthly premium, in order to offset its costs. 

First dollar coverage can apply to any type of insurance – home, auto, business and health care. 

Can I Get Medicare First Dollar Coverage?

There are a few types of Medicare Supplement plans that offer first dollar coverage, which means that they cover the Medicare Part A and Part B deductibles.

Medicare Supplement Plan F, Plan C and Plan J offer first dollar Medicare coverage for the Medicare Part A and Part B deductibles. However, Plan J was discontinued in 2010, and Plan F and Plan C were discontinued for new Medicare beneficiaries in 2020.

This means that if you first became eligible for Medicare after 2010, you aren’t eligible to apply for Plan J. And if you became eligible for Medicare after January 1, 2020, you won’t be able to apply for Medicare Supplement Plan F or Plan C. If you had Plan J, Plan F or Plan C before those dates, you can keep your plan if you wish. If you were first eligible for Medicare before 2020, you may be able to apply for Plan F or Plan C if they’re available where you live.

Why Was First Dollar Coverage Discontinued?

Medicare changed its first dollar policies as a way to control costs. First dollar coverage is often linked with an overuse of healthcare services.

Without any personal financial responsibility, a first dollar coverage policyholder has no incentive to be more careful about their health care costs. She might, for example, go to an emergency room for a non-emergency health problem – say, a sprained ankle – which could be treated better and more economically in an urgent care clinic or a physician’s office.

If a beneficiary is required to pay a deductible for their care, they are more likely to only seek care when they truly need it.

Can I Keep or Still Get First Dollar Coverage?

Although Medigap Plan F and Plan C are no longer available to new Medicare beneficiaries, other Medigap plans do offer first dollar coverage for your Medicare Part A costs. 

Medigap plans that offer full Part A deductible coverage are:

• Plan B
• Plan D
• Plan G
• Plan N

Plans that offer partial coverage of the Part A deductible are:

• Plan L: 75% of deductible is covered
• Plan M: 50% of deductible is covered

All these plans also cover some or all of other out-of-pocket Medicare costs, including coinsurance, copayments and other charges.

You can use the chart below to compare the costs that are covered by each type of Medigap plan.

As mentioned above, Medicare allows policyholders who had a first dollar plan before those plans were discontinued to keep their plan.

Where Can I Get Medigap Coverage?

According to Medicare, every Medigap policy is required to follow federal and state laws and offer standardized benefits designated by the plan’s letter. (Medigap policies are standardized in different ways in Massachusetts, Minnesota and Wisconsin than in the other states.)

Some Medigap plans may offer additional benefits, so you can choose the plan that best meets your needs.

Medigap policies are sold by private insurers, and each insurance company decides which Medigap policies it wants to sell; they don't have to offer every Medigap plan, though they must offer Medigap Plan A if they offer any Medigap policy.

A licensed insurance agent can help you compare the Medicare Supplement plans that are available where you live, including the costs they cover and whether they offer any first-dollar Medicare coverage.