The adoption of Medicare in 1954 guaranteed a minimum level of health care coverage to all seniors regardless of their ability to pay. Since that time, changes to the original plan have made it possible for seniors to enjoy the benefits of original Medicare or Medicare supplement policies, also known as Medigap policies.
However, changes are coming to the program in 2020 may affect your coverage — especially if you are newly eligible for Medicare.
Medicare Plan C and Plan F Are Being Discontinued
Private insurance companies issue Medigap policies that are designed to supplement original Medicare. In the past, there were 10 such plans. Each one designated by a letter of the alphabet, such as Plan A or Plan B.
The plans were designed to cover a portion of the charges that would otherwise be paid out of pocket, such as copays, deductibles, and health care related to travel outside the United States. The plans were standardized, meaning that all plans beginning with the same letter provided the same basic level of service, regardless of who issued the policy.
For seniors who reach the age of 65 after this year has ended, Medicare Plans C and F will no longer be available. This is due to a 2015 change in federal law that prohibits a Medicare supplement insurance policy from paying the annual Part B deductible, which is $185 for 2019. Since Plan C and F both pay the Part B deductible amount, those plans will be off the table in 2020.
To be clear, this change only applies to seniors who will turn 65 after January 1, 2020. Anyone who turns 65 prior to January 1, 2020 will be grandfathered in and can still apply for either of those plans even after that date. Also, seniors who presently have one of those plans will be able to keep their plan with no changes.
The modifications that were made to the Medicare laws in 2015 came about as the result of a belief that seniors were being over-zealous in seeking health care services because the absence of a deductible resulted in free services. The prevailing theory was that seniors would be more selective in seeking health care if they had to pay an out-of-pocket deductible. Additionally, it was believed that paying such a deductible would lower the overall cost of the Medicare program, which would save money for taxpayers.
Introduction of Medicare Plan D and Plan G
One alternative to Medicare Plan C is Plan D, which offers the same basic protection but does not cover the Part B deductible. Plan D is a good option for seniors who do not want their copays covered in the same manner as they are covered in Plan N. However, Plan D does not cover certain excess charges associated with a visit to the doctor’s office, such as the difference between the Medicare reimbursement amount and the amount that the doctor actually bills you. Seniors who want coverage for excess charges might want to consider Plan G.
In the past, Plan F has been the most popular Medicare supplement plan because of its generous coverage. It is often referred to as the Cadillac of all plans. However, because Plans F and C will no longer be available to seniors who turn 65 after January 1, 2020, newly eligible seniors may want to take a look at Plan G, which provides the same basic coverage less the Part B deductible.
Although Plan G does not pay the Part B deductible, it does pay coinsurance, deductibles, and copays for Medicare Part A. Part G also pays 80 percent of any emergency medical costs that a patient incurs overseas. Other changes for 2020 will include a Plan G with a high deductible amount.
The Cost of Prescription Drugs is Dropping
Regardless of which Medicare Supplement Plan you choose, the good news is that, for the first time in almost 50 years, the cost of prescription drugs is dropping. According to the Consumer Price Index for Prescription Drugs, drug prices have fallen approximately 1.2 percent over the past year, which is the largest decline experienced since 1972.
Look for Important Differences During Open Enrollment
If you are a senior who is presently on Medicare or soon will be, these changes may affect you. As such, you should take the time to learn as much about the upcoming changes as you can.
If you need to make a change in your original Medicare coverage or your Part D prescription drug plan, you must do so between October 15, 2019 and December 7, 2019. This is known as the “open enrollment” period for original Medicare.
However, if you want to buy Medigap supplement insurance with federal protections known as “guaranteed issue,” you must do so within six months of your Medicare Part B coverage going into effect. This is known as the “open enrollment” period for Medigap policies. During that time, insurance companies cannot deny coverage to you regardless of any pre-existing conditions. You can still buy a Medigap insurance policy outside of the open enrollment period. However, you may be subject to a health screening.
The third type of Medicare coverage is a Medicare Advantage Plan, also known as Medicare Part C. These plans are issued by private insurance companies and replace original Medicare. They are not the same as a Medicare Supplement policy or a Medigap policy. If you take out a Medicare Advantage Plan, you will use your plan for all your medical needs, including both hospital and medical insurance. The open enrollment period for Medicare Advantage plans is January 1, 2020, through March 31, 2020.
In conclusion, the open enrollment dates stated above are extremely important. If you fail to change your coverage during those times, you may have to wait another year or undergo a health screening.