Medicare Supplement Changes In 2020
As part of the Medicare Access and CHIP Reauthorization Act of 2016, supplemental plans that cover the Part B deductible will no longer be for sale in 2020. This legislation means that Plan F, Plan C and High Deductible Plan F will no longer be fore offered to those who are new to Medicare in 2020.
If you have purchased one of these three plans before 2020, you can keep your coverage. You’ll also be able to shop for a new Plan F, C or HD Plan F. These changes only affect those who are new to Medicare in 2020 or after. It does not change anything for those who were already eligible.
Your existing Plan F, C and HD F policies will no be cancelled by your insurance company. You can keep them for as long as you wish.
Is Medicare Plan F Leaving The Market Permanently?
Yes and no. It will only be available to those who were Medicare eligible before January 1, 2020. This applies to those who were on Medicare due to age, retirement and/or disability. If your Medicare Part B begins after 2020, you will have to choose another policy like Plan G or Plan N.
This is not the first time Medicare had discontinued supplemental plans. In 2010, Plans H, I and J were taken off the market for everyone. Of the three, Plan J was most popular because, like Plan F, it was most comprehensive. Those who owned it could keep it, but no other plans were available for purchase under any circumstances.
In our experience, reducing availability of any supplement can have adverse consequences for current owners. With no new members coming in, there are fewer younger and healthy people to offset claims from the group. This usually drives rates up more quickly.
Consequently, those who are in good health may enroll in less expensive coverage due to above-average rate increases. This can leave a remaining pool of unhealthy members who may have more trouble qualifying for a new policy due to health issues. Those left behind may experience higher rate increases than those who are in a policy that is still available for sale and accepting new members.
Should I Consider Medicare Plan G or Plan N?
When Medicare officials modernized supplemental plans in 2010, a very strong argument for Plan G could be made over Plans F and C. Plan G covers everything these plans do except for the small Part B deductible ($185 in 2019).
When you compare costs, the lower premiums with Plan G almost always make up for the Part B deductible – and then some. In other words, why pay an extra $25 a month for Plan F to cover a $185 one-time yearly deductible. It doesn’t make good financial sense.
And Plan G and Plan N are not Guaranteed Issue policies. The only time you can purchase Plan G without the need for medical underwriting is when you’re within 6 months of your Part B effective date. There are a lot of other circumstances where you can purchase Plan F well after your Part B effective date and not be turned down.
This simply means Plan F has to accept many members who might be in poor health. This difference translates to higher rate increase with Plan F when compared to Plan G. As an agent, I see rate increases cross my desk often. It’s not unusual to see insurance companies raise their Plan F rates by a couple of percentage points more than their Plan G and N rates. Again, this makes Plan G more attractive for the long haul due to smaller premium increases.
It’s worth noting that Plans D and G will replace Plans F and C as Guaranteed Issue policies in 2020. Like Plan F before them, these two coverages will now have to accept members in certains situations when they did not before. All of these changes now make Plan N look like the best policy in for lower rate increases over the long run.
What Should I Do About My Medigap Plan Now?
If Plan F follows the trend of Plan J upon phaseout, there will be some policyholders who experience unpleasant, above-average rate increases. The questions is: How far ahead should we start to plan? There’s no time like the present to discuss your options. If you’re in good health, it may be wise to explore changes now.
Certainly Plans D, G, and N are good choices. Their out-of-pocket exposure is low and their premiums are affordable. If you are in good health and able to switch coverage before 2020, it might be a good idea to consider a new policy that will remain on the market for everyone.
And there will also be the addition of High Deductible Plan G to replace High Deductible Plan F. Both of these policies will offer low premiums (under $50 a month in most states), but High Deductible G will cost less and most likely have lower premiums increases year over year.
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There’s a lot to think about when purchasing a supplement for the long run. We help take the mystery out of Medicare insurance shopping for our clients.
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Category: Medicare Supplements
Last updated on July 8th, 2019