The effects of Medicare supplement changes for 2020.

The most recent change brought about in the Medicare world is the elimination of Medicare supplement plans F and C. This means that these policies will not be available to people becoming eligible for Medigap from 1st January 2020. This means that from 1st January 2020, the sale of policies covering Part B deductibles will be prohibited. The companies who try to sell these policies after the mentioned period will be subject to fines, imprisonment or civil penalties no more than $25,000.

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The effect of this depends on the eligibility date, resident state, health status, and current Medigap provider. Provided below are the effects:

  • State of residence:

A lot of people might drop Plan F and try to purchase Plan G because of agents who might convince them that it is a better idea but it could be just for business. If the state of residence allows an open enrollment on birthdays than keeping Plan F makes more sense. The rule allows people to switch from one Plan F to another Plan F during the open enrollment without any underwriting questions. This also helps people to stay away from any possible rate increases by carriers.

  • Health status:

Everyone has some health issues in his or her lifetime. But if currently, a person does not have any health issue than it will be easier to purchase any Medigap policy as long as they pass the underwriting questions and review.

  • Eligibility date:

If anyone becomes eligible before January 1st, 2020 then they can buy Plan F or C. So these plans do not become closed risk pools and new beneficiaries are allowed to join. So everyone who is eligible for Medigap policies can purchase Plan F or C but will be closed after 2020 as it won’t be a purchase option anymore. This is also easy to understand. The people who become eligible for Medigap policies will have to find an insurance agency and also pick up the plan that suits the needs best. Guaranteed issue rights will be applicable to plans G and Plan D. Plan G has become fairly popular as the plan was not open to Guaranteed issue rights which made the rate increases or decrease more stable.

  • Current insurer:

Insurance companies rate Medigap plans using the below mentioned three ways:

  • Community rating: this means that everyone has the same premium for a particular policy taken through the same insurer. This is for the people with the same zip code and regardless of age.
  • Issue-age rating: This means that the premium will be based on the age at which the plan was purchased. In short, if a person wants to change policy at the age of 75 than the rating will be according to the current age.
  • Attained-age rating: This means that the rate is based on current age.