New changes are coming to Medicare, which will affect people who turn 65 after January 1, 2020, or who enroll in Medicare Parts A and B after that date. If you’ve already started drawing on Medicare and are enrolled in these programs, these changes will not affect you.
However, if you’re not 65 yet or haven’t started drawing on Medicare by the start of 2020, you will be impacted by these changes. We’ll talk about the exact changes you can expect later, but first, let’s talk about what Medigap insurance is and why it matters.
MEDIGAP INSURANCE, SUMMARIZED
Medigap insurance plans, which are provided by private insurance companies, usually help cover copays and coinsurance related to Parts A and B of Medicare. For new enrollees in 2020, however, Plans C and F will not be available. As a result, Parts A and B — which cover things like doctor’s visits, medical equipment, and so on — will have an out-of-pocket deductible starting in 2020… unless you enroll in a different plan.
But these new plans won’t offer the same coverage as C and F.
MEDIGAP PLAN CHANGES IN 2020
If you are not enrolled in Medicare in 2019, Medigap insurance plans will look different for you in 2020. The two Medigap plans that pay the annual Parts A and B deductible — C and F — will no longer be accessible to those who turn 65 in 2020. Plan F is a highly favored program among current enrollees, as it is usually only $20-$30 per month more in premiums and regularly saves people almost $300 per year before any major medical issues.
However, since these plans are being removed as an offer to new Medicare recipients in 2020, we need to talk about other options.
THE MEDICARE ADVANTAGE PROGRAM
The Medicare Advantage Program, often referred to as Part C, provides all of your Part A and Part B benefits, and in some cases may also help with Part D (prescription drug coverage). It’s especially appealing because it may offer a bit more coverage for people with a pre-existing condition. They also have a yearly limit on your out-of-pocket costs for medical services, which makes them quite appealing for Medicare enrollees. With Part C, you do not need Medigap insurance, but there may be out-of-pocket expenses and coverage gaps. It’s important to note that Part C is a private insurance plan, which means you’ll need to shop around for the right fit. If that seems like it’s not ideal for you, you may want to consider traditional Medicare with new Medigap insurance plans that will be available in 2020.
ALTERNATIVE MEDIGAP INSURANCE PLANS
Instead of enrolling in Plan C or F like current enrollees, retirees and people drawing on Medicare starting in 2020 (who decide to skip Medicare Advantage plans) will need to use a replacement plan, such as Plan G or N. With Plan G, you will pay your own Part B deductible, which can range depending on state and your age. Depending on your state, it could save you $200-$300 in premiums and offset some of the deductible, if not all of it.
Plan N, on the other hand, covers Parts A and B, except for copays for doctors visits and hospital stays. Both programs operate similarly to C and F, with slightly different coverage and a somewhat more complex application process if you are switching from other plans. For new Medicare recipients, the application process is similar to currently popular Medigap plans.
WHAT TO DO ABOUT THE CHANGES TO MEDIGAP INSURANCE
If you are eligible for Medicare now but have not enrolled, it’s important that you do so. This way, you can benefit from Plans C and F (as they exist now) to help cover your deductibles. If you are not 65 before January 1, 2020, you should speak to your financial planner and a Medicare expert to discuss changes to your retirement and healthcare expenses, and which plans you should consider once you’re enrolled.