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Medigap Plan Sales May Show Change in Buyer Tastes: AAMSI Data

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What You Need to Know

  • The popularity of Plan N policies, which expose insureds to higher doctor bills, may have tripled.
  • The apparent popularity of Plan N policies could have something to do with AAMSI's survey sample.
  • Hard Medigap enrollment figures for 2020 will come out in a few months.

Americans now aging into Medicare eligibility may be more open to accepting what amounts to a two-tier doctor fee system to hold down Medicare supplement (Medigap) insurance premiums.

The American Association for Medicare Supplement Insurance (AAMSI) has published data raising that possibility in a summary of results from a new consumer survey.

All of the survey participants became eligible for Medicare in 2020 by turning 65, and all combined Medigap policies with traditional Medicare coverage.

About 33% of the new Medigap enrollees who participated in its survey said they had signed up for Medigap Plan N policies, according to survey data gathered by MedicareFAQ.com for AAMSI.

America’s Health Insurance Plans reported in 2020, based on data health insurers put in their annual financial statements for 2018, that Medigap Plan N policies accounted for only about 10% of overall Medigap enrollment in 2018.

About 59% of the AAMSI survey participants said they signed up for Medigap Part G coverage in 2020.

In 2018, the richest available policies, Plan F and Plan G, accounted for 60% of total Medigap enrollment, according to AHIP.

AAMSI did not give any details about the MedicareFAQ.com survey sample. It’s possible that the apparent popularity of Part N policies is due to the nature of the sample. But, if Plan N policies are getting to be more popular, that could be a sign that people turning 65 now are more willing to accept access to fewer doctors, or pay more to see higher-cost doctors, to hold down monthly premiums.

Like other Medigap sold to consumers who are “aging into” Medicare eligibility, Medigap Plan N cannot cover the Medicare physician and outpatient services deductible.

Medigap Plan N policies cover almost everything else a Medigap is allowed to cover, with the exception of doctors’ “excess charges” and $20 co-payments for most physician office visits.

Medicare Part B Excess Charges

Some doctors “accept Medicare assignment.” Those doctors count the Medicare Part B program’s reimbursement rates as payment in full. Other doctors will treat Medicare patients but want to charge more. Those doctors’ excess charges can be up to 15% more than the standard Medicare rate.

Traditional Medicare program managers do not have “provider network contracts” with the doctors and do not use the term “network.”

But, from the perspective of a patient used to provider networks, the doctors who take Medicare assignment may, in effect, look as if they are in the low-cost Medicare provider tier. The doctors who treat Medicare patients but bill for excess charges may look as if they are in the equivalent of a second, higher-cost tier.

Plan F and Plan G policies cover the excess charges. Plan N policies do not pay doctors’ excess charges.

Typical premiums for Plan G coverage start at about $90 per month. Typical premiums for Plan N policies are about $20 to $25 lower than the monthly premiums for the comparable Plan G policies, according to 65Medicare.org.

A Medigap Primer

About 14 million people with traditional Medicare coverage use Medigap policies to fill the many holes in Medicare Part A hospitalization coverage and Medicare Part B outpatient and physician services coverage.

Federal law requires insurers to base each Medigap policy on a standardized “letter plan” template, but the Medigap market operates under the jurisdiction of state insurance regulators, with little direct federal agency involvement.

The Centers for Medicare and Medicaid Services publishes detailed Medicare Advantage plan enrollment data every month; Medigap market watchers have to wait until the spring after a year is over to get definitive Medigap sales data for the previous year. AHIP and Mark Farrah Associates get the definitive enrollment data by sifting through the insurers’ annual financial statements.

Congress complicated Medigap enrollment analyses by requiring all Medigap users who age into Medicare eligibility in 2020 or later to pay the Medicare Part B deductible. The 2021 Medicare Part B deductible is $203.

Consumers who were already eligible for Medicare before 2020 can continue to own and buy Medicare Plan F coverage.

To try to minimize confusion, regulators created Plan G policies — policies that are just like Plan F policies, except that the Plan G policies refrain from paying the Medicare Part B deductible.

 

(Photo: Adobe Stock)