How MACRA Will Change Medicare

Thanks to the Medicare Access and Chip Reauthorization Act (MACRA) of 2015 changes are coming. The changes affect people eligible for Medicare after January 1, 2020; but they also include a new high deductible plan available to anyone with Medicare.

Medicare Supplement plans are insurance policies that cover all or part of the difference between Medicare and health care costs.

For example, Medicare pays only 80% of medical expenses; but, a Medigap plan may pay the other 20 percent. Now, there are ten Medicare Supplement plans in most states, labeled Plan A through Plan N.

First Dollar Coverage Plans Being Phased Out

Two of the current Medigap plans, Plan F and Plan C, provide "first dollar coverage." First Dollar coverage plans have virtually no out of pocket costs. The plans pay the 20 percent of medical expenses not paid by Part B, the deductibles for Parts A and B, and various other benefits.

In passing MACRA, Congress eliminates these first-dollar plans because some legislators believe there is over-use in the healthcare industry. Starting January 1, 2020, people newly eligible for Medicare can only enroll in projects that require them to pay the Part B deductible.

The Part B deductible was $185 in 2019, and the amount for 2020 is $197.

Eligibility for Plans F and C

Plans F, C, and High Deductible Plan F (HDF) are available to anyone eligible before 2020. If you have one of these plans, you can keep the same coverage.

Also, if you have a different Medicare Supplement plan, you can switch to F or C, if you meet medical qualifications. If you became eligible for Medicare before 2020 but didn't sign up, you can still buy a first-dollar coverage plan.

However, if you become eligible for Medicare on or after January 1, 2020, you can't enroll in a first dollar Medicare Supplement plan. You'll need to choose another option.

So, if you're born before 1955, you can apply for first-dollar coverage. If you were born in 1955 or later, you can't.

High Deductible Plan F offers all the same benefits as regular Plan F, but you must pay a deductible of $2,300 before the supplemental coverage kicks in. The high deductible plan has proved the right choice for people who want lower premiums and are willing to pay more of their costs out of pocket.

Although HDF is not technically a first-dollar coverage plan, it's going away along with regular Plan F. High Deductible Plan G (HDF) is coming January 1, 2020.

These are the only high deductible Medicare Supplement plans available.

The benefits of HDG are identical to those of HDF, except G doesn't cover the Part B deductible.

If you want a high deductible plan and were eligible for before 2020, you can choose HDF. If you become eligible on January 1, 2020, or later, you can only select HDG.

Other Medicare Supplement Options

Plans F and C aren't options for those new to Medicare; however, several other plans are top choices for supplemental Medicare coverage.

Plans G and D are the most like the first dollar plans.

Plan G is identical to Plan F. Plan D Is like Plan C. Although, with Plans G and D, you must pay the Part B deductible.

With Plan G, the only out of pocket cost for Medicare-covered services is the Medicare Part B deductible. Plan G also covers Medicare excess charges.

Excess charges can be a surcharge of up to 15 percent that healthcare providers can add to their bills in some states.

Plan N is another popular choice that requires more cost-sharing but may have lower premiums. The Plan N copay is up to $20 at the doctor's office and up to $50 in the emergency room.

With the changes imposed by MACRA, your Medicare Supplement options depend on when you first became eligible for Medicare. Keeping up with changes and shopping around for plans can help you get the best coverage for your needs.