Medigap: New Rules for 2020

Enrolling in Medicare and choosing a Medicare Supplement is bewildering enough. Now, a law change that takes effect January 1, 2020 appears to be complicating matters even more.

President Barack Obama signed the Medicare Access and CHIP Re-authorization Act (MACRA) into law on April 16, 2015. The goal of this change was to 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.

If you turn 65 before Jan. 1, are already enrolled in a Medigap plan or you are already enrolled in Medicare then you can still switch to or purchase Plan C or Plan F, with some limitations.

Plan F is not ending. Anyone who had Medicare prior to that date can enroll and may keep that plan. There’s a lot of confusion. People are making an assumption they’re going to get kicked off of these plans and in the last few months I’ve had to do a lot of clarifying.

Here’s what you need to know:

What is Medi-gap?

It’s an additional insurance policy, also known as Medicare supplement insurance, that fills in some or all coverage “gaps” left by Original Medicare.

What gaps are those?

Original Medicare (Part A and Part B) covers hospitalizations (Part A) and doctor’s visits (Part B), mostly for people age 65 and over. But it requires you to pay about 20% of the 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 different plans, ranging from letters A through N (with some letters missing), that offer different levels of coverage. Most Medigap enrollees have chosen Plan F, which covers all out-of-pocket costs, including all deductibles. That means your only medical cost, aside from prescription drugs, is your monthly premium, which can be quite high since the insurance company is picking up 100%.

What’s changing?

Congress now has effectively barred Medigap plans from covering Medicare’s Plan B deductible, which is $185 in 2019. Only Medigap plans C and F covered the Part B deductible.

Who’s affected?

The change applies only to those who become Medicare eligible after Jan. 1, 2020. That includes those who turn 65 or become eligible through disability in 2020 or later.

What if you are already enrolled in Plan F?

Nothing changes for you. You can keep your plan or switch to another plan with lower costs. Anyone already 65 also can enroll in either plan C or F if they’ve not already done so, if they want to switch Medigap plans or if their Medicare Advantage plan ends.

What if you haven’t enrolled in Medicare because you have not retired and are insured through work?

As long as you turned 65 before Jan. 1, you’ll still be able to enroll in Plan F when you retire.

What if you have a Medicare Advantage plan and it suddenly ends after January 2020? Will you be able to choose Plan F in the future?

Good news! The answer is Yes. If you lose your Medicare Advantage (Part C) plan through no fault of your own or move out of the plan’s service area, you have 63 days to enroll in another Medicare Advantage or Medigap plan and you can choose Plan F.

What can you do if Plan F is not an option?

Plan G is now the most generous plan. It covers everything Type F covered except for Medicare’s Plan B deductible.

Will Plan G cost you more?

It’s more expensive than other plans, but not necessarily Type F plans. In recent years, Plan F’s monthly premiums have increased more dramatically.

Even with the Part B deductible factored in, Plan G costs less than Plan F, and many of my clietns have already changed from F to G and are seeing savings of over $200.

Is Medigap right for you?

If you travel a lot or if you maintain homes in different states then you may want to opt for a Medigap plan because it doesn’t limit you to a specific doctor or hospital network like Medicare Advantage plans.

Anyone with expensive ongoing medical costs like oxygen or chemotherapy will also find Medigap plans will protect them from large out-of-pocket expenses.

My advice to everyone is to talk to an expert. Find a local insurance broker who lives and works with clients in your area to discuss the pros and cons between the different plans. An local agent will have other clients enrolled in these plans and can give you valuable feedback on what his/her clients have experienced.

If you call the insurance company directly they will only tell you how perfect their plan is and why you should enroll. An agent’s job is to watch out for your best interests so I tell people the good and the bad so you can decide if the plan is a good fit.

There are a lot of choices which is good for the consumer but the large number of choices can be quickly overwhelming. It’s best to consult a professional who can help you narrow down your choices.

Would you like my help?

If you would like to talk to me or schedule a meeting at your home or a nearby meeting place, you can reach me at 207-370-0143 or use my simple form on the CONTACT page of this site to send an email message.

The best part about working with me is that it will not cost you anything to meet with me to discuss your options or to review the plans that are available.  I am paid by the insurance companies in the form of a commission if you enroll in a plan.

You will not pay any more than anyone else and you are under no obligation whatsoever to enroll in any plans if you meet with me.  My goal is to help you and I have found great joy in being able to offer my services to people who need my help.

If you are turning 65 this year or retiring, you may have questions.

Call me today and I will be happy to explain all your options and help you compare plans so you can choose the coverage you need for a price you can afford.

Schedule a phone call or an in-person meeting.

I can answer all your questions over the phone or we can meet face-to-face and I can help you with everything you need to know. I have all the forms and applications you need and I can also help you complete them.