The single biggest inaccuracy I hear agents telling Medicare beneficiaries is, “You need to go with the Plan G Medicare Supplement, because it’s by far the best supplement.”
This is poor advice that could financially scar seniors for years to come due to the MACRA legislation enacted Jan. 1, 2020. How so, you ask? With the new MACRA Rule, Medigap Plan C and F are the guaranteed issue plan for those who were Medicare eligible before that date – Jan. 1, 2020.
Medigap Plan D and G, on the other hand, will be the guaranteed issue plan for those who were Medicare eligible AFTER Jan. 1, 2020.
So, what does “guaranteed issue,” or “GI,” mean? GI rights (also called Medigap Protections) are offered to folks in certain situations. Regardless of how sick these folks are, insurers must offer certain Medicare supplement plans without the ability to screen for high-cost chronic conditions (no medical underwriting needed).
The most common GI right is for someone on a Medicare advantage plan who moves to a new state or area where that advantage plan is not offered the GI right to get a Plan G supplement (not a Plan N) even if they are terminally ill.
Folks who enroll in an advantage plan when they turn 65 also have a GI right for 12 months, so if they get diagnosed with cancer the 12th month of being on an advantage plan, they can change to a Medicare supplement plan G with no health questions asked.
If you lose group or union Medicare coverage, you can also enroll in a Plan G, but not a Plan N if you were under age 65 as of Jan. 1, 2020.
There are seven guaranteed issue rights, but the portion of customers granted these rights is relatively small, yet the effect on the Plan G is huge. The impact in Plan G medical claims is a problem because insurers need to cover the additional expense by increasing premiums.
We’ve only had two and a half years of newly eligible customers with federal GI rights, but the pressure will increase each year as more people age into Medicare. This means Plan G premiums will increase faster those of Plan N.
The Plan N has similar coverage to the Plan G, the only difference being the Plan N clients have a doctor co-pay of zero dollars, up to but never more than $20, and a $50 ER co-pay, plus Part B excess charges (15% more than Medicare covers).
But here’s the catch: more than 96% of U.S. doctors participate with Medicare and agree to charge only the amount Medicare approved for services.
The biggest danger in choosing a Medigap plan is future rate stability. Remember that 80% of all healthcare expenditures come from 20% of customers.
Plan G is the best plan for agents, but not so much for their clients going forward.
Chris Dewey is the founder of May River Medicare Insurance in Bluffton.
