A Big Change to a Popular Medicare Option Might Increase Your Costs

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Two popular Medicare supplemental insurance plans will be closed to new enrollees after next year.

This change can affect the options and potentially the costs of any senior who has Original Medicare, or intends to enroll in or switch to it.

What is Medicare supplement insurance?

A “Medicare supplement insurance,” or “Medigap,” policy supplements your Medicare health insurance. It covers some of the costs that your Medicare policy does not cover.

Private insurance companies sell Medigap policies. They are not available to all Medicare enrollees, however. Only seniors who have or are switching to Original Medicare can buy a Medigap plan.

As we detail in “7 Things You Need to Know About Medicare,” there are two main types of Medicare policies: Original Medicare and Medicare Advantage.

So, seniors who have or are switching to Medicare Advantage cannot buy a Medigap plan and thus are not affected by changes to Medigap plans.

What exactly is changing with Medigap plans?

As we explain in “The ABCs of Selecting a Medicare Supplement Plan,” there are currently 10 Medigap plans, each labeled with letters from “A” to “N.”

The official Medicare website, Medicare.gov, offers a chart that explains what benefits are included with each plan.

Medigap Plan C and Plan F will no longer be available to new Medicare enrollees after next year, however. Kiplinger reports that this change stems from a 2015 federal law that prohibits the sale of Medigap plans that cover what’s known as the Medicare Part B deductible to new Medicare enrollees starting in 2020.

As you can see from the Medicare.gov chart, Medigap Plan C and Plan F are the only two Medigap plans that cover the Part B deductible. That means that in the future, new enrollees will not be able to enroll in any plans that cover the Part B deductible.

According to a 2015 analysis by the nonprofit Kaiser Family Foundation, Medigap Plan C and Plan F are the two most popular Medigap plans, with 53 percent of Medigap enrollees having one of those two plans.

Seniors who already have Medigap Plan C or Plan F will be able to stick with the policy, but Kiplinger advises that they watch out for future premium hikes. The risk pool for these plans will age faster once the plans stop accepting new enrollees.

What it means for you

This change is perhaps most important for new Medicare enrollees because the Medigap plan you choose upon first enrolling in Medicare is a key decision.

Medicare.gov notes that standardized Medigap policies are guaranteed to be renewable even if you have health problems. So, as long as you continue paying the premium, the insurer cannot cancel your Medigap policy.

This makes it risky to switch Medigap policies, which is why it’s so important to choose the right Medigap policy upon first enrolling in Medicare.

Kiplinger explains:

“Medigap insurers in most states can reject you for coverage or charge more because of preexisting conditions if more than six months have passed after you signed up for [Medicare] Part B (although some states may pass special consumer protections for people who currently have Plan F).”

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