MACRA and the Medigap Letter Plans

As previously reported, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) takes effect on Jan. 1, 2020.

MACRA prohibits issuers from selling Medicare supplement insurance plans, or Medigap plans, that pay the Medicare Part B deductible to people who become newly eligible for Medicare on or after Jan. 1, 2020.

The National Association of Insurance Commissioners (NAIC) incorporated the federal MACRA changes into the NAIC Medicare Supplement Insurance Model Regulation. Most states have added those changes to their own laws and regulations, to avoid losing their authority to regulate Medicare insurance plans (Medigaps).

Confusion about the details continues.

Most of the confusion is about who is a "newly eligible" beneficiary and who is not, and the effect of MACRA on existing Medigap plans.

'Newly Eligible' Beneficiaries

Newly Eligible: This is someone whose 65th birthday occurs on or after Jan. 1, 2020, or someone who becomes newly eligible for Medicare due to disability or disease on or after that date.

The simple test for being "newly eligible" is the date of an individual's 65th birthday, or for someone younger, the date of their eligibility for Medicare due to disability or disease.

The date of enrollment for benefits does not matter for the purposes of MACRA. If a person's birthday anniversary was on Jan. 1, 2020, for instance, that person would be a newly eligible person, and the rule applies. It doesn't matter that their Medicare entitlement would have begun in the previous month; it's their 65th birthday that determines their MACRA status.

Not Newly Eligible: Anyone who was eligible for Medicare prior to Jan. 1, 2020, because they were 65 or older, or who was otherwise eligible for Medicare before that date, is not newly eligible, regardless of whether they ever enrolled for benefits. For instance:

Someone whose 65th birthday was prior to Jan. 1, 2020, but delayed enrollment in Medicare is not newly eligible.
Someone who was awarded Social Security Disability Insurance retroactively, with their eligibility for Medicare occurring prior to Jan. 1, 2020, is not newly eligible.
Someone who is eligible for Medigap guaranteed issue under federal or state law and was age 65 or eligible for Medicare due to disease or disability prior to Jan. 1, 2020, is not newly eligible.

MACRA Effect on Medigaps

A newly eligible individual can't buy Medigap plans C, F, or high-deductible (HD) F because these plans include a benefit for the Medicare Part B deductible. Instead, anyone newly eligible for Medicare can buy Medigap plans D, G, and high-deductible (HD) G.

These Medigap plans do not contain the prohibited benefit for the Medicare Part B deductible.

This does not mean that Medigap plans C, F, and high-deductible F will become unavailable, nor does it mean that premiums will immediately skyrocket. Federal law requires companies selling Medigap in a state to make Medigap plans C or F available, and that requirement was not changed by MACRA.

Some people will still be able to buy Medigap plans C, F, or HD F under certain conditions, under the laws of their state, if they were eligible for Medicare prior to Jan. 1, 2020.

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Bonnie Burns is a training and policy specialist consultant at California Health Advocates.