Medigap Changes: Restrictions on Medigap Plans

The bill finally passed in Congress in 2015 (H.R.2) introduced Medigap changes by putting restrictions on Medigap plans from covering the Part B deductible for new beneficiaries beginning in 2020, and requiring those beneficiaries to pay it directly.

Almost quarter of 12 million Medicare beneficiaries supplement their Original Medicare by enrolling in one of Medicare Supplement Plans. Medicare Supplement Plans (Medigap Plans) are sold by private insurance companies who are licensed in your state. The prime purpose of Medicare Supplement Insurance is to fill the gaps in Part A and Part B of Original Medicare. They provide protection against the future (catastrophic) losses for Original Medicare out-of-pocket expenses such as:

  • Deductibles
  • Copayments/ coinsurances
  • Excess charges

There are 10 Standardized Medicare Supplement Plans, each plan has a designated letter (Plan A, Plan B, etc.). There is a basic Plan A and other more comprehensive plans having basic and extra benefits. Two Medigap plans, Plan C and Plan F, cover the annual Part B deductible.

Medigap Changes: Restrictions on Medigap Plans with Part B deductible

H.R.2 changes this by prohibiting Medigap policies from covering the Part B deductible for new beneficiaries beginning in 2020, and requiring those beneficiaries to pay it directly.

Restrictions on Medigap plans means that effective January 1, 2020, any newly eligible Medicare beneficiary will not be able to buy Medigap plans C or F with Part B deductible coverage. They also won’t be able to purchase plans C or F as part of a guaranteed issue right. Instead, they can choose Medigap Plan D or Medigap Plan G that doesn’t cover the Part B deductible.

In other words:

  • Before January 1, 2020
    • You can buy Medigap plans C and F plus other available plans. This extends to Guaranteed Issue Rights.
  • After January 1, 2020
    • You cannot buy Medigap plans C and F, but only Medigap plans D and G (that do not cover Part B deductible) plus other available plans. This extends to Guaranteed Issue Rights.

People who are enrolled in Medicare before January 1, 2020 will still be able to purchase plans C and F with that first dollar benefit, and will be able to purchase C or F as part of their guaranteed issue right.

Medigap Changes: Rationale

The change is based on the belief that if beneficiaries have to pay upfront and out-of-pocket for the first services they receive in a year, they would be less likely to get medically unnecessary care and thus save Medicare money.

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