Chicago Tribune Gail MarksJarvis column

Sept. 08--A plan to shut the doors on the most popular insurance policies used by retirees on Medicare will soon present difficult decisions for people choosing Medigap supplement insurance.

In 2020, people who are on Medicare and don't already have what's known as Plan F or Plan C Medigap insurance won't be able to buy it because the federal government will close those plans to new participants. That means that when people go onto Medicare at 65, or if they switch Medicare-related insurance during the next couple of years, they are going to have to be diligent about scrutinizing insurance possibilities before some of those doors start to close.

Choosing Medigap insurance policies to cover the doctor and hospital costs Medicare doesn't pay has never been easy given numerous choices with names that simply use letters from the alphabet. But during the next couple of years, the decisions could be even more difficult.

In the past, people have tended to veer toward Plan F Medigap insurance when they wanted all retirement medical costs covered. Plan F is the most popular of the many Medigap insurance plans because it is the most comprehensive. It doesn't cover dental, vision, or medicine, but if retirees pay their monthly premiums they shouldn't have to pay anything else for doctors, tests or hospitals. Even medical care overseas is partially covered.

In other words, at a time in life when medical issues can pop up suddenly and cost a fortune, Plan F is predictable. Plan C is popular for the same reason, although it isn't as comprehensive as Plan F. Plan C doesn't pick up the "excess fees" doctors charge over Medicare limits. To compare plans see www.tinyurl.com/d4t7xlj.

"My mother has Plan F, and you wouldn't be able to pry it out of her dead hands," said Bryan Padget, an outreach coordinator for the U.S. Department of Aging Senior Health Insurance Program, which helps people choose Medicare-related coverage. "People love not having to worry about paying anything but premiums."

According to research by the Kaiser Family Foundation, about 53 percent of people who buy Medigap supplements choose Plan F or Plan C.

Yet, the popularity of Plans F and C made them unpopular with federal lawmakers and brought about the change that will happen in 2020. In 2015, Congress decided to shut the doors on Plan F and C in 2020 to reduce government spending on Medicare. Although Medigap plans are purchased from private insurance companies, people use them along with Medicare provided by the government. Critics argue that Plan F makes it too easy for people to go to the doctor without thinking twice about the cost.

So after 2020, all Medigap plans accepting new retirees will make seniors pay the extra medical cost of the deductible on Medicare. The Congressional Budget Office estimated the extra cost of paying a deductible would reduce federal spending on Medicare by about $400 million between 2020 and 2025.

With the 2020 change coming, insurance experts say it's crucial for people to act deliberately now so they don't end up locked out of a plan they'd want, or get stuck in a plan they don't want.

To appreciate the concern, it's important to understand how the plans work.

A key is how insurance companies treat pre-existing conditions. If you start Medicare at age 65 you will be accepted into the Medigap insurance plan you want regardless of whether you have good or poor health. But if you don't initially choose Plan F, and you want to switch to Plan F or another plan down the road, the insurance company will check your health. On that basis, you could be turned away from the insurance you want or face a hefty premium based on your health condition.

With the doors closing on Plan F, now is the time to get in if you want the certainty of the most comprehensive plan and are either turning 65 or are older, healthy and already enrolled in Medicare. Anyone who is already in Plan F on Jan. 1, 2020, will be allowed to stay with it for the rest of their lives.

Yet realize that if you are in Plan F after 2020, you could face an unpleasant surprise. Many insurance agents think Plan F premiums could rise after 2020 because the plan won't be taking in any more young, healthy people. As those in Plan F grow older and sicker, the insurance companies may go to government regulators and request the right to raise rates.

With that possibility in mind, some insurance experts and financial planners are telling clients who are turning 65 to go with another alternative, Plan G. It's as comprehensive as Plan F, but requires people to pay the annual deductible for Medicare. This year that's $183.

Kenneth Clark, a consulting actuary and principal of Milliman, said because Plan G is likely to become the new comprehensive plan that will take in a broad group of participants after 2020, it could have a lot of people with poor health and need to raise premiums.

In a recent paper, he told health insurance companies to start figuring out their risks and the premiums they will need to charge after the 2020 changes.

The uncertainty of future costs puts people in a bind as they try to figure out now which Medigap plan might be best for them throughout retirement.

Padget said on emotional grounds alone a person may want to commit to Plan F now "because you won't get a chance again later."

And Maura Carley, president of Healthcare Navigation, which provides health insurance consulting, said given the possibility that changing health could keep a person from moving from one health insurance plan to another, the best approach for Medigap is to "look at supplements as forever choices." She likes both Plan F and Plan G.

Before committing to a plan, she added, ask the insurance company if their policy is "portable." That means if you buy it in one state now, and find yourself moving to another state later, you won't lose the insurance because you can't buy it in your new residence.

"People say they are never going to move, but things change," she said. "You may have to move by the kids."

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