By Mary Johnson, editor

Are you one of the 62%?  This is a term that I invented for Medicare beneficiaries with a Medigap supplement whose premiums have increased by 62% or more since 2016, like mine.  If that’s you, welcome to the club!

A colleague and I recently discovered that he, his wife, and I are in this dubious category.  Our Anthem Medigap premiums for Plan “F” have increased by over 62% since 2016.  In just five years, Bill’s premiums rose a total of 66% and Jan’s rose 62% over four years.  And my Medigap premiums rose 66% as well, but that increase was over four years instead of five.

To help you determine if you’re one of the 62%, you will need the Medigap premium that you paid 2016 (if you were enrolled then) and subtract that from your Medigap premium for December of 2020.  Then divide the difference by your 2016 premium to get the percentage of increase since 2016.  Even if you have a Medigap plan other than plan “F,” it’s perfectly OK to plug in the numbers for your plan in the right-hand column of the chart to see how you compare.

Are You One of the 62%?

Medigap premiums have been rising at a very fast pace since 2016.  About 29% of Medicare beneficiaries have a Medicare supplement, known as Medigap, to cover Medicare out-of-pocket costs and to protect from catastrophic expenses for Medicare-covered services.  Medigap plans are popular because they provide “first dollar” coverage.  Beneficiaries have no co-pays when they visit the doctor for covered services.  There are 10 standardized plans “A” through “N,” the most comprehensive of which, plans “C” and “F,” were closed to new enrollees effective January 1, 2020.

Plans C and F were closed because in 2015 our elected members of Congress thought them too generous.  Those plans cover the Part B deductible which is $203 in 2021.  Some lawmakers argue that Medicare beneficiaries need to pay something out-of-pocket in order to reduce medically unnecessary visits to the doctor.  Let that sink in.

However, those who have Medigap plans pay premiums that are significantly higher than other forms of supplementary coverage such as Medicare Advantage plans precisely because we want to have this sort of no- surprises and no second-guessing out-of-pocket costs type of coverage.  And concern is growing that by closing plans C and F to younger and more healthy new enrollees, premiums will spike for those of us who keep our plans.

Switching to a different Medigap plan other than “C” or “F” though, generally won’t solve much of the cost problem.  Unlike almost all other health insurance in the U.S., Medigap insurers are not required to cover pre-existing conditions except during an individual’s initial enrollment period when they first turn 65 and enroll in Medicare.  People who want to switch to another Medigap plan, later on, may wind up having to go through underwriting, may face waiting periods and exclusions of six months or more, and may pay premiums that are just as high or can be turned down altogether.  While individuals are free to shop for a Medicare Advantage plan, once they switch, they may not be able to get their former Medigap plan back later if they change their mind.

Scariest of all, Congress soon may once again consider a proposal that would re-design the structure of Medigap.  The idea is to shift even more costs to beneficiaries, with proponents saying “it increases incentives for using medical services prudently.”  (When in reality it “makes services more expensive so policyholders won’t be able to afford care.”)

The proposal would impose a new combined $750 deductible for Part A and Part B services, and Medigap plans would be restricted from covering it, a cost Medigap supplements don’t have now.  Currently, Medigap plans pick up almost all out-of-pocket costs.  But under this proposal, enrollees’ out-of-pocket costs are capped, including payments made on their behalf, at $7,500 before catastrophic coverage.

For spending that occurs after the deductible is met, but before the out-of-pocket cap, beneficiaries would be responsible for 20% of the cost of all services.  Medigap policies would cover just half of that amount, meaning beneficiaries would be expected to pay an effective coinsurance rate of 10% (up to $750), a new expense that most purchasers of Medigap supplements don’t have now.

The Congressional Budget Office recently estimated that re-designing Medigap in this manner would save the federal government $116 billion in spending on Medicare through 2028.  This is a proposal that was universally loathed the last time TSCL surveyed retirees about it.  But for those of you who are just learning about it, please share your comments with us.  Let us know — are you one of the 62%?

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