A Medicare Supplement Insurance Plan, or Medigap, is private health insurance that Medicare beneficiaries purchase to help them pay for additional expenses not covered by Original Medicare. Currently, there are ten available plans, with benefits ranging from foreign travel emergency care to hospice care. However, starting in January 2020, this will be reduced to eight plans. Your choices are going to change, but one thing will not: the importance of choosing the plan that is most appropriate for your financial and health situation. Although you can decide to switch plans after you first enroll, companies can refuse to issue a policy based on health concerns, or simply hike your rates. So, choose wisely and consult the expertise of an insurance agent or broker.
How to choose the right Medicare supplemental plan
How are you going to select the best plan to supplement Medicare? You can start by asking yourself several important questions:
1. How much can I afford to pay?
2. Which plan is going to work best for me?
3. Which insurance company do I choose?
The first question that crosses your mind is probably the same question most people who are looking to purchase insurance ask themselves. How much insurance can I afford to purchase? To answer this question, you need to look at your monthly budget and examine your health-related expenses. How and when are you spending that money? Do the math to see how your medical expenses would change with a Medigap plan. Based on your financial and health situation, you can then decide on the most appropriate Medigap plan.
Since the plans all have similar benefits and are standardized by law, you should consider using a comparison tool or chart like this one from Medicare.gov. This type of table can help you compare plans side-by-side. Carefully review all plans, look at the deductibles, copayments, and coinsurance amounts. Once you make the comparison and know what you need, go back to your budget and factor that in. After deciding which plan is going to work best for you, it’s time to choose a carrier.
There are three pricing methods that companies use to set their premiums: attained-age (rates do not increase as you age), issue-age (rates increase as you get older), and the community-rated method (rates that are the same for all members of a community). Check which type of pricing the companies you are looking at provide. Of course, as with other insurance products, rate increases due to inflation are unavoidable. So, you might want to go with the one that offers you the best rate at the time of enrollment.
When looking for a Medicare Supplement Insurance Plan, keep in mind that companies cannot deny you acceptance due to a pre-existing condition when you enroll in a Medigap plan during Medicare open-enrollment at age 65. And while it is true that you can change Medigap plans whenever you want or enroll outside of the open-enrollment period, insurers can then look at your pre-existing conditions and choose not to insure you.
What is changing in 2020?
Congress voted to eliminate the supplement plans that cover the deductible for Medicare Part B, in order to reduce federal spending. The Act also provides a more efficient way for doctors to receive compensation for providing services to Medicare patients. The new law comes into effect on January 1, 2020. After this date, new beneficiaries will no longer be able to enroll in the only two policies that cover the deductibles for Medicare Part B, which are Plans C and F.
The two plans being eliminated through the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Plans C and F, are the most popular and comprehensive Medigap plans. However, beneficiaries who are currently enrolled can continue to renew their policies because, in general, all Medigap plans are guaranteed renewable as long as enrollees continue to pay their premiums on time. Regardless, these beneficiaries can switch plans.
The fact that policyholders do not have to pay out-of-pocket expenses with Plans C and F is another reason for their prevalence. The plans cover all the gaps in Medicare, including all deductibles, the first three pints of blood used, the copayment for Part B, the deductible for Parts A and B, and the hospice care copay required in Part A. The only difference is that Plan C does not cover the excess charges in Part B, the 15% charged by doctors for services offered.
Why should Plan C and Plan F policyholders consider changing to another plan when both policies are guaranteed renewable?
Some experts are pointing to a possible rate increase, since there will be no new members joining the plan, and the claims of existing members will very likely increase as they age. If the trend remains consistent, the scenario will be similar to what happened when Plans H, I, and J were discontinued in 2010. With no new, healthier members, the offset of claims didn’t occur, and rates increased.
We should note that the increase was not seen in every state, and some carriers did not raise their rates either way. Nonetheless, enrollees of Plan C and F could be paying more in years to come. Then again, this is certainly true about every plan, whether due to the member’s age, inflation, or internal company reasons. Before making a decision, talk to your insurance carrier and discuss your options.
Remember that every individual’s case is different and what might be right for one member is not necessarily the best option for another one. If you are considering changing your Medigap insurance, it is important to do your research and compare policies. Your decision should be based on your individual needs and financial situation. It is always advisable to talk to an agent to get all your facts straight.