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Important Changes to Medigap Coverage

Feb 10, 2018

If you will turn 65 soon and be applying for Medicare, you should carefully consider whether you also want to enroll in a Medigap policy. Beginning in 2020, Medicare beneficiaries will no longer be able to enroll in two of the most popular plans, F and C.

Between copayments, deductibles, and coverage exclusions, Medicare does not cover all medical expenses. Medigap (or “supplemental”) plans offered by private insurers are designed to supplement and fill in the “gaps” in Medicare coverage. There are 10 Medigap plans currently being sold, which are identified by letters A through G and K through N. Each plan package offers a different combination of benefits, allowing Medicare beneficiaries to choose the combination that is right for them.

Plans F and C are popular Medigap plans because they both cover the Medicare Part B deductible. Plan F, the most comprehensive Medigap plan currently available, also pays for all doctor, test, and hospital fees. Plan C is similar, but it does not cover the excess fees that doctors charge over Medicare’s limits. According to the Kaiser Family Foundation, 53 percent of Medigap enrollees have either plan F or plan C.

As a result of legislation passed by Congress in 2015starting in 2020 Medigap insurers will no longer be allowed to offer plans that cover the Medicare Part B deductible – in other words, Plans F and C. According to the Chicago Tribune, critics argue “that Plan F makes it too easy for people to go to the doctor without thinking twice about the cost.” However, people currently enrolled in Plans F and C, as well as those who buy policies before 2020, may keep their F and C coverage for the rest of their lives.

Although there appears to be an incentive to “lock in” these two comprehensive plans while you still can, new Medicare beneficiaries should consider the risks before enrolling in Plans F or C . While the plans are comprehensive, experts warn that premiums may go up without new enrollees after 2020. As the enrollees in Plans F and C age and their heath declines, the companies offering Plans F and C may experience more costs that won’t be offset by new younger, healthier enrollees. An alternative is Plan G, another comprehensive plan that does not cover the Part B deductible. But some experts believe that premiums will rise for this plan, too, as more beneficiaries in poor health enroll in it.

The choice of Medigap plan is important because once you choose one, it is difficult to switch. Medigap plans cannot consider pre-existing conditions when you enroll during the open enrollment period, which is a six-month period that begins on the first day of the month in which you are 65 or older and enrolled in Medicare Part B. But if you don’t enroll during the open enrollment period, there is no guarantee that the insurance company won’t charge you more for a pre-existing condition.

Before choosing a Medigap plan, you should weigh your need for comprehensive coverage with the risk of higher premiums. With the imminent phase-out of Plans F and C, it’s a tough choice and there are no easy answers. For more information from the Chicago Tribune about what the elimination of plans F and C means for consumers, click here.

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