This guest blog post was written by Jagger Esch, President & CEO of Elite Insurance Partners and MedicareFAQ, a senior healthcare learning resource center. As a young entrepreneur and seasoned insurance expert, he has a passion for helping people. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate them on all their Medicare options. Jagger lives in the Florida sunshine state and loves boating with his family on the weekends.
First-Dollar Cover Plan Changes for Medicare
Explaining first-dollar coverage changes to clients can be challenging when most Medicare terms are already confusing. However, you’ll notice most of the changes are straightforward. For example, you may have noticed Special Enrollment Period (SEP) changes for people with lower income and Medicaid.
When looking at these changes, it can be hard to identify what will affect your clients and what won't.
If you're client isn’t on Medicaid or receiving a low-income subsidy, then the change to the SEP won’t apply to them. However, your clients could be impacted by the changes in which prescriptions are covered. Double checking Part D plans annually should be a priority for you.
The change that could affect many new clients is the removal of first-dollar plans from the Medicare markets.
Explaining First Dollar Plans to Clients
First-dollar plans are defined as: an insurance policy feature that provides full coverage for the entire value of a loss without a deductible.
Basically, your client pays the premium and doesn’t need to worry about much else.
The Medicare Supplements that are considered first-dollar plans are Medigap Plan F & C. The Medicare Plan F has a High Deductible option, but since the Plan F is being retired, the High Deductible F will also be eliminated.
The Impact of Medicare Changes on New Beneficiaries
When the first-dollar coverage plans retire, beneficiaries should expect to see larger than usual premium increases. Medicare Beneficiaries new to Medicare will be affected by what plans are available for enrollment.
If a Medicare Beneficiary is currently on a first-dollar plan, they can stay on that plan. However, the beneficiary can still shop other companies that offer the first-dollar plans in their area.
Beneficiaries that aren’t eligible for Medicare before January 1st of 2020 won’t be grandfathered into eligibility for Plan F, C, or High Deductible F.
The plan that has the highest level of coverage for beneficiaries will be the Medicare Plan G. Medicare Plan G is almost identical to the F except that the cost is typically much lower.
Beneficiaries eligible for Medicare enrollment prior to January 1st of 2020 can still enroll in a first-dollar coverage plan after the new year. This also applies to beneficiaries that have Part A of Medicare that delayed their part B.
In most cases, beneficiaries that have Special Election Periods must choose from the following letter plans:
- Plan A
- Plan B
- Plan C
- Plan F
- Plan K
- Plan L
With the removal of plan F & C, future beneficiaries that qualify for the SEP may possibly have access to Plans G and D. Medicare will give us that information at a later date.
It’s expected that rate increases will happen more aggressively for beneficiaries currently on the plans F or C. This is because no new, younger beneficiaries will be allowed to join those plans. The cost of claims will increase and companies will have to increase rates to keep up with the claims.
The best way to explain this to your clients is to use plan J as an example and explain the importance of changing plans during the SEP.
If you don’t know what happened after Plan J was eliminated from the list of plan options, here’s a quick recap:
- Beneficiaries that stayed on the plan suffered higher rate increases
- They waited so long to change plans, they couldn’t qualify for other coverage
Unfortunately, many Medicare Beneficiaries choose not to act quickly when these changes were made. Then, many were medically disqualified as they developed a condition that wouldn’t allow them to qualify for a plan change.
Bring on the Changes
Most of the Medicare changes are coming in slowly, but there are many of them. As a licensed insurance agent, you know that MANY things in this industry change constantly.
Staying up to date on continuing education is important. The more you know as an agent, the better you can help your clients.
Some additional changes happening include:
- 2019 Medicare Advantage Plan Open Enrollment Period (OEP) (This enrollment period gives beneficiaries on Medicare Advantage Plans another opportunity to change coverage)
- Coverage gap closing
- Changes in Part D plans (What you can take and which plans are available)
Most beneficiaries will not feel the impact of the changes occurring in 2020 for a few years—the exception being those aging in that cannot get the first dollar plans.
Due to its small deductible, Plan G has been the top choice for new beneficiaries as the Medigap choice for most people aging into Medicare. In most cases, it is more cost effective to pay the deductible than paying the additional money in premium for the Medigap Plan F.
To help with these changes, it is highly recommended that you seek out a licensed professional that can help guide you and answer your questions accurately.
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