By Jagger Esch
January 2020 will bring many changes in Medicare that impact current and future Medicare beneficiaries. Top of the list is the retirement of First-Dollar Coverage plans and introduction of a new high deductible plan.
The plan that began as merely a rumor, High Deductible Plan G is now a guarantee. This plan replaces the current High Deductible Plan F. Although, the Supplement High Deductible Plan G (HDG) doesn’t have a debuting purchase date on the Medicare market just yet, we anticipate a date soon.
Upcoming changes to first-dollar coverage plans and a new high deductible plan
One of the biggest shifts starting in the new year is with the first-dollar coverage plans. These policies will no longer be available to any enrollees eligible for Medicare coverage after January 1, 2020.
While Medicare is getting rid of these plans to newly eligible enrollees after the new year, current members may keep their plans. First-dollar plans are supplement insurance plans that leave the beneficiary with a zero out-of-pocket expense. Future beneficiaries can expect the most change as they lose eligibility for Plans C and F. However, they’ll be eligible for other options starting in 2020.
First-dollar coverage plans
The three supplement plans Medicare considers first-dollar are plans C, F and High Deductible Plan F. Due to the Medicare Access and CHIP Reauthorization Act in 2015 (MACRA), any Medigap policy that pays for the Part B deductible will no longer be available to any beneficiary.
Certain members of Congress think beneficiaries abuse their healthcare services because they don’t have a financial responsibility to pay for them. With zero out-of-pocket costs, seeing the doctor for any reason has become more convenient and less costly.
To curb this behavior, Congress wants to make all beneficiaries meet a Part B deductible amount. By doing so, they hope to prevent some of the “overuse” of healthcare services. Translation: policies will require all members to first meet the Part B deductible before any coverage begins. Some may argue that this deductible may keep many individuals from getting the healthcare they may need. Many beneficiaries are on a fixed income, and this new policy may be out of their budget. The problem with this is as we all know—avoiding the doctor for a small problem can result in more serious health conditions down the road.
Impact on beneficiaries
Individuals that aren’t Medicare “eligible” until after 2020 are those who turn 65 after January 1, 2020. Anyone turning 65 before 2020 may continue to enroll in the first-dollar coverage plans even if they retire after the new year. This also includes enrolling in any new policies.
Unless beneficiaries who turned 65 prior to 2020 are looking to compare coverage, benefits or rates, there’s no need to worry about these upcoming changes. Members currently holding a first-dollar coverage policy will be grandfathered into their plans. This means they can keep their plans without needing to make any changes. However, it’s likely there will be a rate increase for coverage.
Three ‘waiver” states see big impact
In 1990, Massachusetts, Minnesota and Wisconsin received waivers that kept them from mandating the standardized Medigap plans. The waivers were given because they were the only states that already had their own plans in place prior to the 1990 policy.
Now, for the first time in decades, these three waiver states must comply with the changes happening in 2020. This includes eliminating any plans that offer coverage for Medicare’s Part B deductible. Although these states continue to have their own supplemental policies regarding supplement coverage, the 2020 MACRA changes will impact them, but not significantly.
The big change will be like the rest of the country: Newly eligible Medicare enrollees can not join any retiring first-dollar plans. Additionally, plans must require all beneficiaries, new and current, to pay a Part B deductible before receiving coverage.
Look for the annual announcement every September-October from the Centers of Medicaid and Medicare Services (CMS) when the new deductible amount for Part B will be given for the following year. Beneficiaries can use this information to prepare for the next year and budget accordingly.
Alternatives to first-dollar coverage plans
Individuals who become Medicare-eligible AFTER 2020 will still have alternatives to first-dollar policies that may keep costs low. Remember, the difference in these plans and first-dollar plans is the Part B deductible. As of 2019, that deductible is $185 annually.
One alternative to Plan C is Plan N—known as a cost-sharing plan. Plan N is a good option for individuals wanting to save on any premium costs. However, beneficiaries do incur a co-pay of up to $20 for doctor visits and up to $50 for emergency room visits, and may have excess charges applied. Note that some states don’t allow excess charges and even when they do, not all healthcare providers charge them.
Beneficiaries who like what current Plan F offers should seek Plan G. These two options are almost identical. The only difference is the deductible requirement for Plan G. As the most comprehensive supplement policy, Plan G covers almost all medical and hospital costs (including excess charges). Plan G is already becoming popular among beneficiaries, due to the great coverage and lower premium cost than retiring Plan F. Plan G is a great choice for people who want the most coverage possible. After meeting the Part B deductible, beneficiaries shouldn’t have any further costs for Medicare-covered healthcare services.
Medigap Plan F High Deductible isn’t technically a first-dollar policy. However, it’s up for retirement in 2020 since it falls under Plan F. Not to worry—Medicare is introducing a High Deductible Plan G to take its place.
Medicare Supplement High Deductible Plan G
No more rumors or uncertainty. Medicare is introducing the High Deductible Plan G (HDG) in the new year! And it will be available to both current and new beneficiaries. The HDG plan and the High Deductible Plan F (HDF) will likely have the same deductible cost. The big difference between the two will be that the HDG plan requires beneficiaries to meet the Part B deductible before coverage begins.
As of today in 2019, the HDF policy has a deductible amount of $2,300, while the Part B deductible is an annual $185. In 2020, the HDG won’t offer coverage for the Part B deductible. It’s likely this cost will apply to the total plan deductible. There’s not much of a difference. The benefit summary for the HDG policy isn’t yet available, but we expect beneficiaries will have to meet the deductible requirements before coverage begins.
Medicare supplement high deductible Plan G enrollment
The best policy for a person depends on many factors. For example, location, eligibility and a person’s health conditions will weigh greatly on which plan offers the best coverage.
Many seniors favor the standard Plan G choice. Although, for some, the lower premium costs of the upcoming high deductible policy may be a better option. As enrollment for the new plan isn’t available to enrollees yet, we expect a date the closer it gets to 2020.
It is important beneficiaries postpone cancelling any coverage until new policies are in place. Otherwise, a lapse in benefits or denial of coverage is possible. Remember to discuss any changes with a licensed, professional Medicare agent before making any decisions.
For those new to Medicare or getting close, looking at different pricing and coverage options is a great way to be proactive. And, of course, remind clients to look at different carriers before choosing coverage. Working with you ensures beneficiaries make the best decision for their healthcare needs.
Jagger Esch is the president & CEO of Elite Insurance Partners.