CMS recently passed the Medicare Access and CHIP Reauthorization Act or MACRA which will have an impact on the Medicare Supplement industry in the year 2020. While MACRA is two years away, insurance carriers, insurance brokers, and the press have wasted little time in creating lots of confusion surrounding the legislation. A quick history lesson shows that most Americans enrolled in a Medicare Supplement have Plan F, which is has been, and is currently the Guaranteed Issue plan for folks who turn 65. These folks are called Newly Eligible Medicare Beneficiaries. Plan F is considered the Cadillac of health insurance supplements with no out of pocket expenses incurred by the member.
With MACRA, Plan F will no longer be available on a Guaranteed Issue basis on or after January 1, 2020. Medicare beneficiaries who want Plan F must be in reasonably good health and pass underwriting. Plan G will then be the Guaranteed Issue plan. The difference between Plan F and Plan G is simply the Medicare Part B deductible which is $183.00 for 2018. We don’t expect a dramatically different Part B deductible in 2020, but moving forward one could certainly surmise that the Medicare Part B deductible will increase over the next ten years.
For Medicare Beneficiaries who have Plan F – you will not lose your coverage. Your Plan F will continue uninterrupted, but begs the question: What happens to my Plan F premium if it is not a guaranteed product after 2020? Only the healthiest of folks will buy Plan F which will help the overall pool, but the more important underwriting question is how many folks will jump ship and move to Plan G coverage for a lower price?
Currently, the premium savings to move to Plan G is significant as insurance carriers have wasted little time creating an attractive price point for Plan G in hopes of capitalizing on a robust market. Baby boomers are akin to a Hallmark card, “it’s the gift that keeps on giving’ as 15,000 Baby Boomers turn 65 every day until 2030. The jury is still out on whether MACRA will have a more favorable impact on claims experience initially, what the retention rates for Plan F will be , and how competitive Plan G premiums may be after 2020.
What we do know is that lots of insurance carriers have created a compelling story in buying Plan G. As insurance brokers representing thousands of Medicare beneficiaries, we make recommendations on what we see in the market. Certainly MACRA is the biggest change to affect Medicare in more than 20 years. We still find Plan F premiums to be very competitive given the Cadillac benefits. We also recognize that our due diligence as your insurance broker is to provide the best “bang for your buck”, and given the competitive markets for Plan G, we are not waiting to recommend this approach.