Two popular Medigap plan options in the United States are ending in the near future.
Medigap Plan F and Plan C are being eliminated because of a new law that no longer allows Medigap policies to newly eligible beneficiaries to cover Medicare Part B deductibles after 2020. Newly eligible Medicare beneficiaries will not be able to purchase these two plans starting in 2020.
This decision could impact millions of Medicare beneficiaries.
Plans F and C are the two most popular Medigap plan options. Two out of 3 Medigap enrollees had either Plan F or Plan C according to 2014 data from America’s Health Insurance Plans.
But there is a way to secure your Plan F or Plan C coverage today.
When Medigap Plan F is ending
Medigap Plan F and Plan C are two of the most comprehensive and most popular Medigap plan options.
Over 6 million people were enrolled in Plan F, and nearly 1.1 million people had Plan C, according to 2014 data from America’s Health Insurance Plans.
But all of that might change soon.
Beginning on January 1, 2020, new Medicare beneficiaries will not be able to enroll in Medigap Plan F or Plan C, according to Congress.gov. This is because of a new bill called the Medicare Access and CHIP Reauthorization Act of 2015.
Plans F and C, which cover the Medicare Part B deductible, are being discontinued in an attempt to reduce total Medicare spending by the Government.
Plan F and Plan C are both referred to as “first-dollar” coverage plans because they cover the annual Medicare Part B deductible. This benefit allows policyholders to get non-emergency medical care without having to pay an annual deductible.
The 2015 Act has created concern among some Medicare beneficiaries, according to Daniel Esposito, a licensed insurance agent for TZ Insurance Solutions.
“People out there that have Plan F are concerned,” he said. “They’re wondering: What’s going to happen with my plan?”
How this impacts you
If you’re a current Medicare beneficiary and want your Medigap plan to pay for the Medicare Part B deductible, you should enroll in Plan F or Plan C before the year 2020.
Unless new plans are added, most new Medicare beneficiaries in 2020 will only have 8 Medigap plan options to choose from: Plans A, B, D, G, K, L, M, and N.
If you’re a new Medicare beneficiary starting in 2020, you will not be able to enroll in Plan F or Plan C and will not have coverage for the Medicare Part B deductible benefit. This means you will have to pay the Medicare Part B deductible out of pocket. If you use Medicare Part B services, you must pay the annual deductible, which is $166 as of 2016.
The Part B deductible increased about 13% from 2015 to 2016 and may increase even more in future years.
Esposito thinks that there is a high probability the Part B deductible will increase at a higher rate than we are used to seeing especially due to the recent increase.
Current Medigap policyholders
If you are currently enrolled in a Medigap policy, you can still take action today.
Esposito said that if you are currently enrolled in Plan F or Plan C and want to switch carriers before 2020, you should switch as soon as possible to lock in the current rates. He believes that insurance carriers may increase premiums in the future.
“Plan F holders may want to make sure Plan F is the right plan for them and make changes while they are healthy and still able to qualify for a new plan,” he said.
Esposito said one of the best things about Medigap plans is that you can change plans at any time.
“You don’t have to wait for Annual Enrollment,” he said. “If you want to pay less money and you want to get a better deal, you can go get a better deal.”
Choosing the best insurance company
Whether you are switching to a new insurance carrier or enrolling for the first time, it is important to buy a Medigap plan from a stable and trusted insurance company.
Remember — the only differences between one insurance company’s Medigap Plan F and another company’s Plan F are the price and the company itself.
Esposito recommends choosing an insurance company with an A+ rating from rating companies such as A.M. Best Company and the Better Business Bureau.
“A+ rated companies have the ability to not only pay their claims but they have the financial stability to have stable rates,” he said.
Lower rated carriers or new insurance carriers may offer lower premiums at first, but they might increase premiums drastically from year to year, or after the introductory rates are over.
You can get a free quote from A+ rated insurance companies and see how the new law will impact your Medigap coverage by calling a licensed insurance agent today.
Don’t wait to secure your preferred Medigap plan. If you switch to Medigap Plan F or Plan C today, you will have coverage of the Medicare Part B deductible, even if the deductible increases in future years.
“If you are uncertain about plan F or the future of Plan F, give us a call,” Esposito said.