In 2015, the Medicare Access and CHIP Reauthorization Act (MACRA) was passed eliminating Medicare Supplements that
cover the cost of the Medicare Part B deductible - and this includes Plan C, Plan F, and high-deductible Plan F (some of the most popular Medicare Supplements).
What is a Medicare Supplement or Medigap plan?
A Medicare Supplement policy (or Medigap plan) works together with
your original Medicare coverage, filling the “gaps” (deductibles,
coinsurance, co-payments, and out-of-pocket costs)
in your Medicare Part A (in-patient or hospital insurance) and Medicare
Part B (out-patient or physician insurance) coverage. Medicare
Supplements are offered by private insurance company (such as United
HealthCare) and provide additional coverage to your original
Medicare Part A and Part B coverage.
Is the Part B deductible a significant cost?
The annual Medicare Part B deductible is not a large amount of money for many people, but the Part B deductible can change (increase) year-to-year. For example, the 2020 Part B deductible is $198
, an increase of $13 from the annual deductible 2019 Part B deductible of $185
So why exclude coverage of the Part B deductible from Medicare Supplements?
Industry expert John Gorman
noted that: "MACRA found Medicare
beneficiaries with first-dollar coverage were among the highest utilizers of
health services anywhere. Most of MACRA, a rare exercise in healthcare
bipartisanship, was about Medicare physician payment, but one tiny section
banned the sale of Medigap plans that cover the Part B deductible, with a
goal of giving seniors more 'skin in the game.'"
As background, . . .
In past years, Medigap Plan F was one of the most popular Medicare Supplements with a high monthly premium, but coverage of all
Medicare deductibles, cost-sharing (co-pays and co-insurance), and
out-of-pocket costs. Plan C usually has a slightly lower monthly premium as compared to Plan F, but does not cover excess Part B charges that can be added by some
physicians - some people chose a Medicare Supplement Plan C to save on monthly premiums. And finally, the high-deductible Medigap Plan F has a very low monthly premium and an
annual deductible that must be met before the Medigap plan pays
The result of MACRA . . .
Starting January 1st, 2020, Medicare Supplement providers will no longer offer Medigap Plan C, Plan F, and High-Deductible
Plan F to people newly eligible for Medicare
Can a person who already has one of these Medicare Supplements keep their plan?
People who are already enrolled in a Plan C, Plan F, or
high-deductible Plan F before 2020 can keep their existing polices - although current Medigap members might expect that their monthly premiums
will increase over time as the plan's "risk pool" shifts due to the loss of
new, healthier plan members who usually keep monthly premiums
What alternative Medigap plans are available beyond 2020?
Experts in the industry expect that many people entering the Medigap market after 2020 will simply choose alternative Medigap plans that do not cover the Medicare Part B deductible - and have a lower premium than these soon-to-be discontinued plans. Often the lower monthly premiums of the alternative Medigap plans offset the cost of the Medicare Part B deductible. For example, people who would have chosen a Medigap Plan F may choose the Plan G (with slightly
lower premium - but providing no coverage of the Part B deductible).
People already enrolled in a Medigap Plan F, and who find their premiums increasing, may also wish to move to a Plan G offered by their same Medicare Supplement carrier since there
should be no medical underwriting as Plan G offers less coverage (the
Part B deductible) than Plan F.
John Gorman (in the article cited above), also predicts that many Medicare beneficiaries may move to Medicare Advantage PPOs
as an alternative to a Medicare Supplement.
Medicare Supplements vs. Medicare Advantage plans
As a reminder: a Medicare Supplement is not the same as
a Medicare Advantage plan.
work together with your original Medicare coverage, filling the “gaps” (deductibles and co-payments) in your Medicare Part A (in-patient or hospital insurance) and Medicare Part B (out-patient or physician insurance) coverage. In short, Medicare Supplements provide coverage in addition to your original Medicare Part A and Part B coverage. Modern Medigap plans do not provide drug coverage and you will need to purchase a stand-alone Medicare Part D prescription drug plan (PDP
) for your prescription needs (or have some other form of drug coverage - like VA drug coverage). Medigap plans are regulated by the state, and for the most part, Medigap plan coverage is standardized across the country (with a few state exceptions, such as Massachusetts, Minnesota, and Wisconsin).
Medicare Advantage plans
act as administers of your original Medicare Part A and Part B coverage. Medicare Advantage plans must offer coverage at least as good as your original Medicare and often add additional benefits like (limited) vision, dental, hearing and/or wellness programs (such as Silver Sneakers) - some plans may also add transportation services and nutrition assistance. Medicare Advantage plan may include drug coverage (and are called MAPDs
) - or the Medicare Advantage plan may come without drug coverage (MAs). Medicare Advantage plans may also be designed for people with specific economic or physical needs and are called Special Needs Plans (SNPs
To read more about how a Medigap policy compares to a Medicare Advantage plan, please see our Frequently Asked Questions: https://Q1FAQ.com/397.html
Finding a Medicare Supplement . . .
If you are searching for a Medigap plan in your area please call or visit a local insurance agent - telephone the company offering or sponsoring the Medigap plan (such as United HealthCare or AARP) - or call a Medicare representative at 1-800-633-4227 (1-800-Medicare) or visit (https://www.medicare.gov/find-a-plan/questions/medigap-home.aspx) - or visit your local SHIP office and speak with a SHIP volunteer.
And the official word from the Centers for Medicare and Medicaid Services (CMS) . . .
"Starting January 1, 2020, Medigap plans sold to people new to Medicare won’t be allowed to cover the Part B deductible. Because of this, Plans C and F will no longer be available to people who are new to Medicare on or after January 1, 2020.
–If you already have either of these two plans (or the high deductible version of Plan F) or are covered by one of these plans prior to January 1, 2020, you will be able to keep your plan. If you were eligible for Medicare before January 1, 2020 but not yet enrolled, you may be able to buy one of these plans.
–People new to Medicare are those who turn 65 on or after January 1, 2020, and those who first become eligible for Medicare benefits due to age, disability or ESRD on or after January 1, 2020."
(from the CMS document "2019 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare")
As reference to MACRA . . .
Here is the actual language from the Medicare Access and CHIP Reauthorization Act of 2015 (04/16/2015 Public Law No: 114-10):
Subtitle A--Medicare Beneficiary Reforms
Sec. 401. Limitation on certain medigap policies for newly eligible Medicare beneficiaries.
Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is amended by adding at the end the following new subsection:
"(z) Limitation on Certain Medigap Policies for Newly Eligible Medicare Beneficiaries.--
"(1) In general.-- Notwithstanding any other provision of this
section, on or after January 1, 2020, a medicare supplemental policy that provides coverage of the part B deductible
including any such policy (or rider to such a policy) issued under a
waiver granted under subsection (p)(6), may not be sold or issued to a newly eligible
"(2) Newly eligible
medicare beneficiary defined.--
In this subsection, the term `newly eligible Medicare beneficiary' means an individual who is neither of the following
"(A) An individual who has attained age 65 before
January 1, 2020.
"(B) An individual who was entitled to benefits under part A pursuant to section 226(b) or 226A, or
deemed to be eligible for benefits under section 226(a), before
January 1, 2020.
‘‘(3) TREATMENT OF WAIVERED STATES.—In the case of a State described
in subsection (p)(6), nothing in this section shall be construed as
preventing the State from modifying its alternative simplification
program under such subsection so as to eliminate the coverage of the
part B deductible [$185 in 2019, up from the - compare to the 2015 Medicare Part B deductible of $147]
for any medical supplemental policy sold or issued under such program to
a newly eligible Medicare beneficiary on or after January 1, 2020.
‘‘(4) TREATMENT OF REFERENCES TO CERTAIN POLICIES.—
In the case of a newly eligible Medicare beneficiary, except as the
Secretary may otherwise provide, any reference in this section to a
medicare supplemental policy which has a benefit package classified as
‘C’ or ‘F’ shall be deemed, as of January 1, 2020, to be a reference to a
medicare supplemental policy which has a benefit package classified as
‘D’ or ‘G’, respectively.
‘‘(5) ENFORCEMENT.—The penalties described in clause (ii) of
subsection (d)(3)(A) shall apply with respect to a violation of
paragraph (1) in the same manner as it applies to a violation of clause
(i) of such subsection.’’.
** And a Special Thanks to Robert L. for his well-timed correction
Additional sources include: