By now, most Medicare beneficiaries know that
Medigap Plan F is still with us but no longer an option for new beneficiaries.
The Medicare Access and CHIP Reauthorization
Act of 2015 mandated that, as of January 1, 2020, insurers can no longer sell
to newly eligible Medicare beneficiaries Medigap policies (Medicare supplement
insurance) that cover the Part B deductible. That’s specifically Plan F and
Plan C. Those who have one of these plans are essentially grandfathered in and
will be able to keep it. They will continue to have coverage for the Part B
deductible, which is $198 in 2020.
Plan F has been called the “Cadillac of
Medigap plans,” providing first-dollar coverage.
The plan pays the first dollar of the first medical bill and the beneficiary
never writes a check when using healthcare providers who will see Medicare
patients.
This sounds great but there still can be
reason for trepidation. Those who have this coverage wonder what will happen to
the monthly premiums once new beneficiaries, mostly younger and healthier, are
no longer able to enroll in the plan. The Plan F population will continue to
age and, with that, can come increased utilization of healthcare services and
higher costs.
Let’s answer some of the questions those who
have Plan F may be asking.
Will I be able to change my policy to Plan G
or some other lettered plan?
This question may be cause for concern because
pre-existing medical conditions can have an impact on the application.
·
There are four states
that allow beneficiaries to switch to a different Medigap plan. The insurer
cannot deny an application because of pre-existing medical conditions.
·
A few states offer an
opportunity once a year. For example, California has a birthday rule that
allows an individual to change to a plan with the same or lesser benefits, at
the time of their birthday.
·
There are some
insurance companies that will allow a policy holder to switch to a different
policy the company offers, without medical underwriting.
·
In states without
these opportunities, the guaranteed issue right can
get in the way. The insurer may impose medical underwriting and pre-existing
conditions can lead to a higher premium or denial of the application.
When can I apply for a
different Medigap policy?
Some may worry that they missed their chance
to make a change during the Fall Open Enrollment Period, which ended December
7. However, there’s no need to worry about that. There is no specific open
enrollment period for Medigap policies. A beneficiary can apply for one at any
time.
Will making a change be worth it?
This depends on a couple of things.
·
Pre-existing medical
conditions: As mentioned above, these can lead to a higher premium.
·
The insurance company:
Here’s a real-life example.
Bill contacted his insurance company to find
out about switching from Plan F to Plan G. Yes, he could at any time without
medical underwriting. However, then he learned the monthly premium would be
only $2.76 less. In other words, he would save $33.12 a year in premiums
but would have to pay $144.60 for the Part B deductible. Bill now
knows his insurer will allow him to change whenever, so he decided to bide his
time and see what happens with the premiums over time.
What about Wisconsin, Minnesota, and
Massachusetts?
These states have their own standardization
models, so there is no Plan F. However, this change applies: there will be no
coverage for the Part B deductible in policies sold to newly eligible
beneficiaries in 2020. And, the same application issues – timing and
pre-existing conditions – come into play.
Before trading in your “Cadillac,” take time
to investigate your options. Don’t drive off until you’re certain of your
choice.
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