Difficult Choice on Medigap

A plan to shut the doors on the most popular insurance policies used by retirees on Medicare will soon present difficult decisions for people choosing Medigap supplement insurance.

In 2020, people who are on Medicare and don’t already have what’s known as Plan F or Plan C Medigap insurance won’t be able to buy it because the federal government will close those plans to new participants. That means that when people go onto Medicare at 65, or if they switch Medicare-related insurance during the next couple of years, they are going to have to be diligent about scrutinizing insurance possibilities before some of those doors start to close. But during the next couple of years, the decisions could be even more difficult.

In the past, people have tended to veer toward Plan F Medigap insurance when they wanted all retirement medical costs covered. Plan F is the most popular of the many Medigap insurance plans because it is the most comprehensive.

It doesn’t cover dental, vision, or medicine, but if retirees pay their monthly premiums they shouldn’t have to pay anything else for doctors, tests or hospitals. Even medical care overseas is partially covered. In other words, at a time in life when medical issues can pop up suddenly and cost a fortune, Plan F is predictable.

Plan C is popular for the same reason, although it isn’t as comprehensive as Plan F. According to research by the Kaiser Family Foundation, about 53 percent of people who buy Medigap supplements choose Plan F or Plan C. But in 2020, all Medigap plans accepting new retirees will make seniors pay the extra medical cost of the deductible on Medicare.

The Congressional Budget Office estimated the extra cost of paying a deductible would reduce federal spending on Medicare by about $400 million between 2020 and 2025.