Coming Changes to Medigap Policies
The Chicago Tribune ran a story on changes to Medigap policies, Why Seniors Should Choose Wisely When Selecting Medigap Supplement Insurance. The article explains that
In 2020, people who are on Medicare and don’t already have what’s known as Plan F or Plan C Medigap insurance won’t be able to buy it because the federal government will close those plans to new participants. That means that when people go onto Medicare at 65, or if they switch Medicare-related insurance during the next couple of years, they are going to have to be diligent about scrutinizing insurance possibilities before some of those doors start to close.
If you are wondering why this is newsworthy, given that there are a number of other Medigap plans available, the story explains the popularity of Plan F.
In the past, people have tended to veer toward Plan F Medigap insurance when they wanted all retirement medical costs covered. Plan F is the most popular of the many Medigap insurance plans because it is the most comprehensive. It doesn’t cover dental, vision, or medicine, but if retirees pay their monthly premiums they shouldn’t have to pay anything else for doctors, tests or hospitals. Even medical care overseas is partially covered.
The article notes that over half of beneficiaries purchase Plans C or F. Then why would Congress do away with these popular plans? Well, according to the article, “the popularity of Plans F and C made them unpopular with federal lawmakers and brought about the change that will happen in 2020. In 2015, Congress decided to shut the doors on Plan F and C in 2020 to reduce government spending on Medicare. Although Medigap plans are purchased from private insurance companies, people use them along with Medicare provided by the government. Critics argue that Plan F makes it too easy for people to go to the doctor without thinking twice about the cost.”
Even if a beneficiary has Plan F, after 2020, the beneficiary may see a rise in premiums “because the plan won’t be taking in any more young, healthy people. As those in Plan F grow older and sicker, the insurance companies may go to government regulators and request the right to raise rates.” The article notes that some advisers are suggesting beneficiaries take a hard look at Plan G. Of course, if Plan G becomes the new Plan F in terms of popularity, then it’s likely that Plan G premiums will increase. One expert quoted in the article suggests that a Medigap policy be viewed as a lifetime choice and the beneficiaries need to be sure that the policy purchased is portable.