Medicare Supplement Plans Are Changing: What You Need to Know

CHICAGO—If you are buying a Medicare supplemental policy in the United States, make sure you choose your insurance carefully over the next few months.

At the end of 2019, the doors will close on Plan F, which is considered the Cadillac plan of supplemental insurance policies known as Medigap. Designed for people who do not like healthcare cost surprises, it is the most popular of supplemental plans used to pay for services that Medicare does not cover.

But unless prices increase significantly, the existing Plan G may be a better deal.

The government is cutting off access to Plan F for new Medicare enrollees to control costs. Eight other supplements will remain open.

Insurance experts expect Plan G to become the new draw for people wanting the most coverage without surprises.

Although Plan F is the most expensive option, retirees pay top dollar because they can go to any doctor or hospital that accepts Medicare patients. There is no surprise bill afterward—no deductible, co-payments, or coinsurance.

Participants already in Plan F when the doors close at the end of next year will be able to stick with the plan. But if you turn 65 any time after the beginning of 2020, you will not be able to buy Plan F.

In addition, if you are in Medicare now and buy a Medicare Advantage plan or another Medigap insurance plan, switching after Jan. 1, 2020 could be difficult. Most states allow insurance companies to screen for conditions ranging from diabetes to heart attacks and cancer. On that basis, you could be turned away from Plan F or face high premiums.

Plan G is currently identical to Plan F except for the $183 deductible participants must pay at the beginning of the year.

Rates differ by state and insurance company, but the national average for Plan F premiums is $185.96 a month, compared with $155.70 for Plan G, said Kris Schneider, vice president of consumer and carrier engagement for AON Retiree Health Solutions.

“Buying G is a no -brainer,” said Jeff Goldman, an insurance agent at G.M. Goldman & Associates in Skokie, Illinois. “You save about $350 a year on premiums, so it makes no sense to buy F to cover the $183 deductible.”

Lower costs have been drawing an increasing number of Medigap customers into Plan G in the last three years—about 37 percent of new enrollees versus 53 percent in Plan F, according to CSG Actuarial.

Experts are not sure what will happen to costs once insurance companies see the effects of the 2020 changes. Some expect Plan G rates to jump because under Medicare rules, the plan must accept new enrollees regardless of health conditions.

Others estimate Plan F premiums to soar because new healthy 65-year-olds will no longer come into the plan, resulting in an older, sicker pool of people to cover.

“I see no way around Plan F rates continually increasing, perhaps exponentially after 2026,” said Adam Wasmund, chief marketing officer of Jack Schoeder & Associates, which advises health insurance brokers.

There will be more clarity as state regulators approve rates and insurance companies examine the claims of participants in both Plan F and Plan G. But Wasmund is concerned that the federal government could raise Plan G deductibles in an attempt to curb more Medicare usage in the future.

“Could the deductible be $200, $1,000 or $2,000?” said Wasmund. “Who’s to say what the government will do?”

By Gail MarksJarvis