The Medicare Access and CHIP Reauthorization Act (MACRA) has brought significant changes to the Medicare landscape since its implementation. Understanding how MACRA affects Medigap plans is crucial for current and future Medicare beneficiaries, as these changes directly impact coverage options and financial responsibilities.
MACRA's influence on Medigap plans represents one of the most substantial shifts in Medicare supplemental insurance in decades. For millions of Americans approaching Medicare eligibility or currently enrolled, these changes affect which plans are available, what benefits they can access, and how much they'll pay for healthcare coverage.
What is MACRA and Its Connection to Medigap Plans
The Medicare Access and CHIP Reauthorization Act, signed into law in 2015, was primarily designed to reform how Medicare pays healthcare providers. However, MACRA also included provisions that fundamentally altered the Medigap insurance landscape for future Medicare beneficiaries.
MACRA specifically targeted Medigap plans that cover the Medicare Part B deductible, reasoning that when beneficiaries don't pay this deductible directly, they may be less conscious of healthcare costs. This "first-dollar coverage" was deemed to potentially encourage overutilization of medical services.
The legislation created a clear dividing line: those who became eligible for Medicare before January 1, 2020, can purchase any available Medigap plan, while those becoming eligible after this date face restrictions on certain popular plan options.
Major Changes to Medigap Plan Availability After 2020
The most significant impact of MACRA on Medigap plans involves the discontinuation of Plans C and F for new Medicare beneficiaries. These plans, historically among the most popular Medigap options, provided comprehensive coverage including the Medicare Part B deductible.
For individuals who became Medicare-eligible on or after January 1, 2020, these plans are no longer available for purchase. This restriction affects millions of Americans who must now choose from alternative Medigap options that don't provide first-dollar coverage for Part B services.
The high-deductible versions of Plans F and G remain available, but these require beneficiaries to meet a substantial annual deductible before coverage begins. This represents a significant shift in how supplemental Medicare coverage operates for new enrollees.
Impact on Medicare Part B Premiums and Deductibles
MACRA's influence extends beyond Medigap plan availability to affect Medicare Part B costs directly. The legislation aimed to make beneficiaries more cost-conscious by ensuring they experience some out-of-pocket expenses before insurance coverage kicks in.
Under MACRA provisions, Medicare Part B deductibles continue to increase annually, and new Medicare beneficiaries must pay this deductible out-of-pocket since they cannot purchase Medigap plans that cover it. This change is designed to encourage more thoughtful healthcare utilization.
The legislation also includes provisions for income-based adjustments to Medicare premiums, meaning higher-income beneficiaries may pay substantially more for their Medicare coverage. These adjustments affect both Part B and Part D premiums, creating a more progressive payment structure.
Grandfathering Rights for Current Beneficiaries
One crucial aspect of how MACRA affects Medigap plans involves protections for existing beneficiaries. Those who were eligible for Medicare before January 1, 2020, retain the right to purchase Plans C and F, and current enrollees can keep their existing coverage.
This grandfathering provision means that beneficiaries who already have Plan C or Plan F coverage can maintain these plans indefinitely, even if they change insurance companies. They also retain the right to purchase these plans if they weren't previously enrolled but were eligible before the cutoff date.
However, as fewer people become eligible for these plans over time, the risk pools may become smaller and potentially more expensive, as healthier individuals age out and are replaced by a smaller group of new enrollees.
Effects on Medicare Advantage Plans
While MACRA's primary focus regarding supplemental coverage centered on Medigap plans, the legislation also influences Medicare Advantage plans indirectly. The emphasis on cost-sharing and beneficiary responsibility aligns with Medicare Advantage plan structures that typically include deductibles and copayments.
Medicare Advantage plans may become more attractive to new Medicare beneficiaries who can no longer access comprehensive first-dollar Medigap coverage. These plans often provide additional benefits like prescription drug coverage, dental, and vision services that traditional Medicare with Medigap doesn't include.
The long-term impact may see more beneficiaries choosing Medicare Advantage over traditional Medicare with Medigap supplements, particularly as Plan C and F become less available and the remaining Medigap options require more out-of-pocket spending.
Alternative Options for New Medicare Beneficiaries
With Plan C and Plan F no longer available, new Medicare beneficiaries must explore alternative Medigap options. Plan G has emerged as the most popular choice, offering comprehensive coverage similar to Plan F but requiring beneficiaries to pay the Part B deductible.
Plan N represents another viable option, providing substantial coverage while requiring modest copayments for certain services. This plan offers a balance between comprehensive coverage and cost-consciousness that aligns with MACRA's objectives.
High-deductible Plan G provides an option for those wanting comprehensive coverage at a lower premium, though beneficiaries must meet the annual deductible before coverage begins. This option particularly appeals to healthier individuals who want protection against catastrophic medical expenses.
Frequently Asked Questions
How does MACRA change the availability of Medigap plans for people newly eligible for Medicare after 2020?
MACRA prohibits the sale of Medigap Plans C and F to individuals who become eligible for Medicare on or after January 1, 2020. These new beneficiaries must choose from other available Medigap plans that don't provide first-dollar coverage for the Medicare Part B deductible. This change affects millions of Americans who can no longer access the comprehensive coverage these popular plans previously offered.
Which Medigap plans are no longer available for purchase due to MACRA, and who does this affect?
Plans C and F are no longer available for purchase by anyone who becomes eligible for Medicare after January 1, 2020. This restriction affects all new Medicare beneficiaries, including those turning 65, people with qualifying disabilities under 65, and those with end-stage renal disease. However, individuals who were eligible before this date can still purchase these plans, and current enrollees can maintain their coverage.
How do MACRA rules impact Medicare Part B premiums and deductibles for beneficiaries?
MACRA ensures that all new Medicare beneficiaries must pay the Part B deductible out-of-pocket, as they cannot purchase Medigap plans that cover this cost. The legislation also includes provisions for income-based premium adjustments, meaning higher-earning beneficiaries pay more for Medicare coverage. These changes are designed to make beneficiaries more conscious of healthcare costs and encourage appropriate utilization of medical services.
Can current Medicare beneficiaries keep their Plan C or Plan F Medigap coverage if they were eligible before 2020?
Yes, beneficiaries who were eligible for Medicare before January 1, 2020, can maintain their existing Plan C or Plan F coverage indefinitely. They also retain the right to purchase these plans if they weren't previously enrolled but met the eligibility requirements before the cutoff date. This grandfathering provision protects existing beneficiaries from losing access to comprehensive first-dollar coverage.
What influence does MACRA have on Medicare Advantage plans and their future costs or structures?
While MACRA doesn't directly change Medicare Advantage plans, it may make them more attractive to new beneficiaries who can no longer access comprehensive Medigap coverage. Medicare Advantage plans' existing structure of deductibles and cost-sharing aligns with MACRA's philosophy of beneficiary cost responsibility. This could lead to increased enrollment in Medicare Advantage plans as an alternative to traditional Medicare with more limited Medigap options.
