Upcoming Changes for Medicare Supplement Insurance Plans

A Medicare supplement insurance plan, also known as a Medigap or Med Supp plan, is purchased in combination with original Medicare to help pay out-of-pocket costs not covered by original Medicare. As of Dec. 31, 2018, nearly 13.6 million people were covered by Med Supp plans, representing nearly a 4% increase from the previous year. Among the different types of supplemental insurance plans, each named with a letter, Plan F is by far the most popular. More than half of Med Supp plan members purchase Plan F.1

However, this dominance is likely to change next year. In 2015, as part of the Medicare Access and CHIP Reauthorization Act, Congress established a provision to stop offering Plan C and Plan F to newly eligible Medicare beneficiaries starting in 2020. Plans C and F offer a benefit that pays for the Part B deductible ($185 in 2019). Eliminating this benefit among original Medicare beneficiaries will help curb government spending for the program.2

Note that any eligible beneficiary who turns age 65 before Jan. 1, 2020 will still be able to enroll in Plan C or F after that date, but the plans will no longer be offered to people who turn age 65 in 2020 or beyond.3

There are currently 10 different supplemental insurance plans available, ranging from A to N. Each type of plan offers the exact same benefits — some may offer basic benefits (e.g., Plan A) while others are more comprehensive (e.g., Plan F). However, be aware that not every state permits all plans and that the cost of each plan will vary by issuers within each state. In fact, Massachusetts, Minnesota and Wisconsin each have customized the requirements for their own Medigap plans, but within each of those states, all individual plan benefits are standardized. This means the only variance is the cost and the issuer.4

Because the popular Plan F will no longer be offered to new Medicare beneficiaries, many anticipate that Plan G will become the plan of choice because it offers all the same benefits except coverage for the Part B deductible.5

As of this writing, Plan G premiums are considerably less than Plan F premiums (the national average in 2018 was $155.70 per month compared to $185.96 for Plan F). If premiums remain that low, the total annual savings on premiums for Plan G ($363 a year) would more than cover the $185 needed to pay for the Part B deductible.6

There’s another potential change on the horizon for Medigap plans. The House Ways and Means Committee has recently initiated an interest in offering long-term care benefits through Medicare supplemental insurance plans. The committee is seeking recommendations for daily and lifetime caps as well as waiting periods to help keep the plans affordable.7

These changes follow on the heels of recent alterations to Medicare Advantage (MA) plans. Until a recent rule change that went into effect this year, Medicare did not offer any long-term care benefits beyond coverage for 100 days at a nursing home following a hospital stay. However, MA plans now have the option to offer benefits that cover home aide assistance when prescribed by a licensed healthcare provider. Be aware that this new rule does not apply to original Medicare; only MA plans.8

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