By Tucker Thompson, CSA
In 2015 Congress passed the Medicare Access and Chip Reauthorization Act (MACRA). The law does several things. The most notable change was repealing the current growth rate formula for calculating updates to Medicare payment rates to physicians and establishing an alternative set of annual update and the limiting of certain Medicare supplement polices and making adjustments to income related premiums to Medicare Parts B and D. MACRA will also make adjustments to inpatient hospital payment rates.
MACRA will prohibit the sale of Medicare supplement policies Plans C and F that cover the Part B deductible beginning in 2020 to newly eligible Medicare individuals. This will include individuals who become eligible for Medicare coverage due to age (65), disability on or after January 1, 2020.
What does this mean to Medicare supplement Plans C and F today? Nothing. There is also an election this November 2016 that could change how MACRA works by 2020.
The sales of Medicare supplement Plans C and F will continue. Will these plans change in 2020? No. Individuals with these plans do not need to replace their Medicare supplement Plan C or F and may keep it as long as they maintain paying their premiums and remain enrolled in the plan. Plans C and F will only be offered to individuals who are already age 65 or on disability before January 1, 2020.
Company Medicare supplement actuaries have told me that there is not an actuarial reason for Plan F rates to increase more rapidly than say a Plan G, since Plan F will not be a closed block of business. It just can’t be sold to newly eligible Medicare individuals on or after January 1, 2020.
Unlike a Medicare advantage plan (HMO, PPO) or a Prescription Drug Plan, you may change your Medicare supplement plan and company by answering required underwriting questions. Then, if approved, you can change at any time during the year. Major medical plans, affordable health care plans (Obamacare plans) for those under age 65 do not require underwriting questions.
Tucker Thompson, CSA, has worked in the insurance field for over 24 years in Life Insurance, Long-Term Care, Medicare Supplements, Medicare Advantage Plans, and Prescription Drug Plans.
