October 21, 2019 BARRON’S 17
With the popular Medigap Plan F being phased out at year’s end, seniors
should learn the alternatives—and their costs. ByGailMarksJarvis
MedicareNewcomers,
ForgettheCadillacPlan
THE SO-CALLED CADILLAC OF MEDICARE-RELATED
insuranceisbeingphasedoutatyear’send,shut-
ting Medicare newcomers out of the plan that
many retirees buy for peace of mind, and poten-
tiallyboostingcostsforthosewhoremainorturn
to another popular option.
Peoplewhoturn65after2019won’tbeallowed
topickMedigapsupplementPlanF,themostpop-
ular supplemental plan that helps retirees cover
medicalcoststhatMedicaredoesn’tpay.Retirees
alreadyinPlanFbyyear’sendwillbeallowedto
stay.Almost60%ofthe14millionpeoplewhohave
MedicaresupplementinsuranceareinPlanF,ac-
cording to CSG Actuarial research.
Knownas“first-dollarcoverage”becausepeo-
ple don’t have to worry about costs the moment
they walk into a doctor’s office, lab, or hospital,
PlanFisthemostexpensiveoftheMedicaresup-
plementalplans.Nearlyeverythingexceptvision,
dental,drugs,andequipmentsuchashearingaids
is covered. There are no deductibles, no co-pays,
andnobillsafterapersonhasleftadoctororhos-
pital, and no approvals are necessary to go to a
specialist. Even overseas care can be covered.
The no-fuss nature of Plan F prompted the
2020change.Supplementsaresoldbyprivatein-
surance companies, but the federal government
setstherulesbecausetheinsurancekicksinwhere
Medicareleavesoff.“Thegovernmentistryingto
prevent overutilization,” says Adam Wasmund,
chiefdevelopmentofficerofJackSchroeder&As-
sociates, which advises health insurance brokers.
Tryingtoanticipatethefutureisworthwhilenow
because of the rules around selecting supplemental
insurance.WhenyouarenewtoMedicare,youcan
getintoanysupplementalplanregardlessofhealth.
Afterthat,however,ifyougrowdissatisfiedandwant
moreextensivecoverage,alowercost,oradifferent
insurancecompany,youmaynotbeabletoswitchif
your medical conditions have changed. Insurance
companiesaskaboutyourhealthandcanrejectyou.
ThatiswhyMauraCarley,presidentofHealth-
careNavigation,tellsanyonewhochoosesaMedi-
care supplement or Medicare Advantage Plan to
think about their pick from the start. Consider it
a“foreverchoice,”shesaid,becausepeoplecanget
sickastheyageandthatkeepsthemfromswitch-
ing. Also, she suggests making sure that any
choice is portable to another state in case you
move. Find free help through your state’s State
Health Insurance Assistance Program, or SHIP.
Choosingplansisn’tsimplebecausethereare
differentstandardMedicaresupplementchoiceswith
namesofthealphabetfromPlanAtoPlanN—each
withitsownmixtureofdeductibles,co-payments,and
extracosts.Thetaskiscomplicatedbystateregula-
tions.Notallstatesallowthefullarrayofplans,each
statesetsitsownprices,andgovernmentsitesthat
helpconsumersarebumpeddowninGooglesearch
resultsbyinsurancecompaniesvyingforcustomers.
Some insurance experts are warning people
who are already in Plan F and its closest cousin,
Plan G, to brace themselves for price increases.
After the change, Plan G will survive as the
most comprehensive plan for newcomers. It is
identicaltoPlanFwithoneexception:Peoplemust
payMedicare’sdeductiblebeforeinsurancecover-
agekicksineachyear.Thisyear,thedeductibleis
$185.About27%ofpeopleinsupplementsarenow
in Plan G, according to CSG Actuarial.
Prices aren’t expected to soar immediately. In
fact,someinsurershavebeencuttingpremiumsre-
centlyinbothPlanFandPlanGtolurecustomers
inadvanceofchanges.Butexpertswarnretirees
thatasinsurancecompaniesadapttogovernment-
imposedchangesafter2020,peopleinbothPlanF
andPlanGcouldbeshakenbyrateincreases.
Sopeoplechoosingsupplementsnowarebeing
advised to pick deliberately so a price shock
doesn’t upset their budgets later. Paying the de-
ductible now seems fairly painless, and financial
plannersalreadyhavebeenurgingclientstoselect
Plan G as a bargain compared with Plan F. But
there is a question about whether Plan G will re-
main a bargain as the 2020 changes play out.
Nationally,monthlypremiumsforPlanGaver-
age about $150 compared with Plan F’s $186, ac-
cording to Aon. The monthly savings in Plan G
more than cover the annual $185 deductible that
peopleusuallyfinishpayingoutofpocketafterthe
first or second visit to a doctor each year. But
when Plan G becomes the only comprehensive
choice for newcomers, insurance experts aren’t
surethesavingswillpersist.Deductiblestypically
increase annually, and some insurance brokers
think the government may try to tame Medicare
spending at some point in the future with much
larger deductibles.
Medigap Benefit A B C D F G K L M N
Part A hospice
care coinsurance
or copayment
Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes
Skilled nursing
facility care
coinsurance
No No Yes Yes Yes Yes 50% 75% Yes Yes
Part A deductible No Yes Yes Yes Yes Yes 50% 75% 50% Yes
Part B deductible No No Yes No Yes No No No No No
Part B excess
charge
No No No No Yes Yes No No No No
MedigapPlans No new entrants after 12/31/
ComparisonShopping
Medigap supplemental plans pick up where Medicare leaves off, but
there are many differences and exclusions among the plans.
Yes = the plan covers 100% of this benefit; No = the policy doesn’t cover
that benefit; % of the benefit covered Source: Medicare.govIllustration by Rose Wong
EXPERT’S TIP:
Consider your
selection of
a Medicare
supplement
or Medicare
Advantage Plan
a “forever
choice,”
because people
can get sick as
they age and
that keeps them
from switching.
Maura Carley
President of
Healthcare Navigation