For Americans 65-and-over, Medigap insurance, sold to consumers by private insurers, has been an efficient and effective health insurance planning tool for millions of Americans. Now, with two plan options on the chopping block and service reductions in another key plan option, Medigap won’t quite look the same by 2020.
In a nutshell, here’s what will change with Medigap next year, according to Medicare — mostly impacting future U.S. adults aged 65-and-over:
- Medigap options Plans C and F won’t be available for those new to Medicare after 2019. If you’re 65-or-older, and already have coverage through Parts C and F, no changes will apply to your coverage.
Medigap Plan F is deemed by health care experts as the most generous of all the11 platform plans - with some calling it the “Cadillac” of Medigap health care plans.
Thanks to a federal law enacted in 2015, federal government coverage for Medicare's Part B deductible, which costs $185 for 2019, isn’t an option in 2020 for new Medicare enrollees.
- Another plan option — Plan G — will continue to be available but it won’t cover the enrollee’s Part B deductible. Plan G is widely viewed as being akin to Plan’s C and F, giving new Medicare enrollees one plan option with common components to the ones being eliminated in 2020.
Medicare Part B covers things like physician appointments, common outpatient therapy visits, and coverage for in-demand medical equipment such as wheelchairs and walkers.
Medigap changes in the works for years
Medicare experts say that the Medigap changes have been brewing since Congress adjusted Medicare coverage in 2015 — it’s just that consumers likely weren’t aware of those changes.
“We’ve been talking about it for years,” says Joanne Giardini-Russell, a Medicare specialist at Boomer Health Group, in Detroit, Michigan. “Those that turn 65 after January 1, 2020, will no longer be able to purchase Plans F or C. — it’s been in the works since 2015.”
The impending phaseout of Plans F and C will have the most significant impact on older consumers — even current ones, Giardini-Russell says.
“Since Plan F is the plan with the most consumers currently enrolled, there will be an impact,” she notes. “We expect that as rates increase for those plans, healthier folks will start poking around for new plans. They’ll apply through the medical underwriting process and be approved.”
That said, getting the plan change timelines right is a big issue if a senior wants to shift Medigap plans.
“With Medigap policies, when a person wants to change carriers due to rate increases or any other particular reason, they will most likely need to undergo that medical underwriting process,” Giardini-Russell says. “There is only one time when a person can skip underwriting – that’s when they are in their own ‘open enrollment’ time period which is their first six months being enrolled into Part B. They can purchase any Medigap contract of their choice with no regards to pre-existing conditions. After that, they’ll be covered.”
Why change Medigap in the first place?
Medicare administrators may have engineered the Medigap changes out of financial necessity, as Medigap consumers were taking too many bites out of the plan coverage apple.
“First-dollar coverage plans will be eliminated come 2020, and this includes Plan C, Plan F, and high-deductible Plan F,” says Lindsay Engle, a marketing specialist for Medicare FAQ in Clearwater, Fla. “Officials felt that since these plans leave you with zero out of pocket costs, beneficiaries were going to the doctors more than necessary.”
“By eliminating the coverage for the Part B deductible, which is $185 in 2019, officials felt that beneficiaries would stop going to the doctors for every minor issue if they had to pay a deductible first.”
Engle reminds Medicare enrollees that as long as you turned 65 before January 1, 2020, you can still enroll into a first-dollar coverage plan after 2020. ”If you’re currently enrolled in a first-dollar coverage plan, there’s nothing you need to do,” she says. “Some agents are using the scare tactic that premiums will increase, but nobody knows that for sure.”
Engle says the best option for those aging into Medicare after 1/1/2020, could be Medigap Plan G or Plan N. “If you’re looking for a high deductible plan, there’s a new High Deductible Plan G being introduced in 2020 to replace High Deductible Plan F.”
“Good riddance” to bad insurance plans?
Others say the time had long since come to put Plan’s C and F out to pasture.
“The so called ‘first dollar’ plans that the government seeks to eliminate, such as Medigap plans C and F are finally on the way out, and good riddance to them,” says Chris Alberta, president and CEO of Principium Tactical Wealth Management, in Brighton, Mi.
Alberta notes that Plan C was the guaranteed issuance option for so many years that the premiums had spun out of control years ago, and that Plan F basically took over that role throughout the last 10 years.
“The fact that both options covered the measly Medicare Part B deductible ($185 annually in 2020) wasn't really much of a benefit to begin with, as both cost far more in premium than the deductible itself,” he says.
Like Engle, Alberta says that Plan G is the way to go for new Medigap consumers who can’t use Plans C and F.
“Plan G is still available and is a mirror image of Plan F, with the exception of the member paying the deductible,” he says. “The price of Plan G is better, along with a quantifiably healthier claims history. It's the option that savvy buyers and agents have preferred for years.”
Plan N is also becoming more popular due to its lower premium as a cost sharing plan, Alberta notes.
“You'd pay up to $20 for Part B services and potentially $50 for an emergency room visit,” he says. “But beware, Plan N does not cover excess charges to Part B and the faction of doctors and hospitals that are choosing to bill more than Medicare approved is growing exponentially. That's a surprise you don’t want.”
Overall, as the Medigap landscape tightens, Medicare Advantage options have largely become far better in recent years, Alberta says.
“For those looking to lower costs and add wellness and preventative benefits, a Medicare Advantage plan may be the way to go.”