Choosing Medicare coverage is bewildering enough. Now, a law change that takes effect next year appears to be complicating matters for some enrollees.
The issue: Americans who become eligible for Medicare on or after Jan. 1, 2020, can no longer buy a Medicare supplement plan that covers their Part B deductible. Those so-called Medigap plans included two types of plans — Type C and Type F, the most popular of the 10 types of Medigap plans.
Congress hoped the change would require seniors to have more skin in the game, prompting them to think twice before seeking unnecessary medical care.
But the change doesn’t apply to everyone. Those who turn 65 before Jan. 1, are already enrolled in a Medigap plan or who are already enrolled in Medicare can still switch to or purchase a Type F or C plan, with some limitations.
“Plan F is not ending,” said Casey Schwarz, senior counsel for education and federal policy at Medicare Rights Center, a Washington, D.C.-based consumer advocacy group. “Anyone who had Medicare prior to that date can enroll and may keep that plan.”
“There’s a lot of confusion,” said Lisa Lettenmaier, a health insurance broker in Tigard. “People are making an assumption they’re going to get kicked off. I’ve had to do a lot of clarifying.”
Here’s what you need to know:
What is Medigap?
It’s an additional insurance policy, also known as Medicare supplemental insurance, that fills in some or all coverage “gaps” left by traditional Medicare.
What gaps are those?
Traditional Medicare (Plans A and B) covers hospitalizations (Part A) and doctor’s visits (Part B), mostly for seniors age 65 and over. But it requires recipients to cover about 20% of their costs. There’s also an annual deductible for hospitalizations (not yet set for 2020, but $1,364 in 2019) and for Part B ($185 in 2019). Long stays in a hospital or nursing home can lead to additional and substantial out-of-pocket costs.
How does Medigap work?
There are 10 types of plans, ranging from letters A through N, that offer different levels of coverage. Most Medigap enrollees have chosen Type F, which covers all out-of-pocket costs. That means their only medical cost, aside from prescription drugs, is their monthly premium, which can be quite high.
Congress now has effectively barred Medigap plans from covering Medicare’s Plan B deductible, which was $185 in 2019. Only Medigap Type C and F plans covered the Part B deductible.
Congress hoped the change might save the system money. Experts counter it could cause seniors to forgo needed care, leading to medical complications and higher expenses later.
The change applies only to those who become Medicare eligible after Jan. 1, 2020. That includes those who turn 65 or become disabled in 2020 or later.
What if I’m already in a Type F plan?
Nothing changes. You can keep your plan or even switch to another. Seniors already 65 also can enroll in a Type C or F plan if they’ve not already done so, if they want to switch Medigap plans or if their Medicare Advantage plan ends.
What if I haven’t enrolled in Medicare because I haven’t retired and am insured through work?
As long as you turned 65 before Jan. 1, you’ll still be able to enroll in a Type F plan when you do retire.
What if my Medicare Advantage plan ends after 2020? Can I still get a Type F?
Yes. If you lose your plan through no fault of your own or move out of its service area, you have 63 days to enroll in another Medicare Advantage or Medigap plan, without having to undergo screening for pre-existing medical conditions.
For instance, in Oregon, Moda Health Plan is officially terminating its PPORx plan in some counties for 2020 and replacing it with a new plan. Those affected could choose to enroll in a Medigap plan or any other Medicare Advantage plan without undergoing medical underwriting.
What’s the next best plan if there’s no F?
Type G is now the most generous. It covers everything Type F covered except for Medicare’s Plan B deductible.
“G is the new F,” said Lisa Emerson, program director for Oregon’s Senior Health Insurance Benefits Assistance program, or SHIBA.
Will Type G cost me more?
It’s more expensive than other types, but not necessarily Type F plans. In recent years, Type F plan premiums have increased more dramatically, insurance brokers say. Even with the Plan B deductible factored in, many Type G plans cost less than Type Fs, and insurance brokers have already nudged clients from F to G. “Especially our older clients, we’ve moved them to a Plan G and saved them $70 to $80 a month,” Lettenmaier said.
Is Medigap right for me?
Seniors who travel a lot or who maintain homes in different states often opt for Medigap plans because it doesn’t limit them to a specific doctor or hospital network. Those with high ongoing medical costs also find Medigap plans can protect them from large out-of-pocket expenses. But some providers won’t accept seniors without Medicare Advantage plans. So it really depends. Talk to an insurance broker or volunteer SHIBA representative about what’s right for your situation.
Brent Hunsberger is an investment adviser representative in Portland. For important disclosures and information about Brent, visit bit.ly/2dwmN7w. Reach him at email@example.com or leave a message at 503-683-3098.