The National Association of Insurance Commissioners (NAIC) has released their proposed breakdown of Medicare Supplement plans to take effect in 2020, to comply with new regulations on first dollar coverage passed by congress last year. H.R. 2 eliminates first dollar coverage (discussed further below) as part of Medicare Supplement plans beginning in 2020, along with changing the reimbursement rates for Medicare providers.
What is first dollar coverage?
Simply put, first dollar coverage is coverage without any deductibles or coinsurance. The coverage is considered “first dollar” because from the first dollar spent, the coverage pays its share. Medicare Supplement Plan F is an example of first dollar coverage, because the plan pays the Part A and Part B deductibles.
How does this change Medicare Supplement plans?
Starting in 2020, plans C and F will only be available to existing Medicare beneficiaries. New Medicare beneficiaries will have their choice of the remaining plans, with Plan G offering the richest benefits. NAIC has also proposed the introduction of a high deductible Plan G to take the place of high deductible Plan F.
Why are they making this change?
Many believe that first dollar coverage encourages overuse of services, because beneficiaries have no financial incentive to limit their care to only what’s truly necessary. By passing along a share of cost even to those people who have Medicare Supplement plans, the hope is to lessen the strain on the Medicare program.
While the new plans won’t take effect for several years, this is sure to significantly change the Medicare Supplement landscape for agents and beneficiaries alike.