We’ve had dozens of calls already this year from beneficiaries asking whether their Medicare Cost Plans are going away. The answer is: maybe, depending upon where you live.
What Are Medicare Cost Plans?
Private insurance companies offer Medicare Cost Plans in the same way that Medicare Advantage plans are offered. Cost Plans have been available since the 1970’s and are often thought of as a cross between a Medigap and Medicare Advantage plan.
Medicare Cost plans are like Medicare Advantage plans in a few ways. They both have:
- A predetermined network of providers
- An out-of-pocket maximum
- Additional benefits that Original Medicare does not
In contrast, they are similar to Medigap plans in the way they work with Original Medicare. For instance, when you seek medical help outside of your network, a Cost Plan works like a Medigap plan in the way that Original Medicare will be in charge of your coverage.
Why and How Are Medicare Cost Plans Being Eliminated?
For many years, the government has been trying to withdraw Medicare Cost Plans as an option for Medicare beneficiaries. The Government Accountability Office (GAO) has conducted audits to ensure the best decision is being made for beneficiaries.
Medicare Cost Plans were started to help beneficiaries in rural areas that didn’t have competing Medicare Advantage plan options. Now, with the growth of Medicare Advantage plans continuing to skyrocket, there isn’t really a need for Cost Plans anymore.
In fact, in 2012, 99% of Medicare Cost Plan enrollees had at least one Medicare Advantage plan available to them.
Without further delay, the changes to Medicare Cost Plans will finally go into effect as of January 2019. Currently, 15 U.S. states have counties that offer Medicare Cost Plans. The states are:
- North Dakota
- New York
- South Dakota
- Washington DC
As of January 1, 2019, Medicare Cost Plans will be eliminated by the federal government from counties where two or more Medicare Advantage plans are competing. This is known as the two-plan test. If you live in a county that has less than two competing Medicare Advantage plans, you might be able to keep your Cost Plan. You will be notified in the mail, if you haven’t already, whether you are losing your Cost Plan or not.
The state that will make the most adjustments is Minnesota. As of 2017, Minnesota had 380,195 Cost Plan enrollees. Minnesota has 62% of the country’s total Cost Plan enrollees and 42% of the total Medicare beneficiaries in Minnesota.
According to the Data Decisions Group, “In Minnesota, approximately 6,400 Cost Plan seniors per day will elect a new plan during the Annual Election Period (AEP).” This estimate adds up to 350,000 plan changes.
The estimated 30,000 enrollees who won’t elect a new plan during AEP will most likely let their insurance carrier automatically deem them over to a Medicare Advantage plan.
Options for Cost Plan Enrollees
Option 1: Medicare Advantage Plan
If you want to switch plans prior to losing your Cost Plan (to ensure you have no lapse in coverage) you will want to change plans during the Annual Election Period (AEP). Normally, the AEP begins October 15th and ends December 7th, but because of the special circumstances this year, this window of time will be extended until February 28th, 2019 for people who are losing their Cost Plan.
As Cost Plans are ending, many insurance carriers will be adding more Medicare Advantage plan options. This will give Cost Plan enrollees more choices when changing plans. However, Medicare Advantage plans are not the only option when switching from a Medicare Cost Plan.
Option 2: Medigap Plan
One of the other options you have is switching back to Original Medicare and applying for a Medigap plan. Normally when applying for a Medigap plan outside of your Open Enrollment Period, you would have to answer health questions. In this case, however, because of Cost Plan enrollees being forced to switch plans, you will have a dedicated period where you will be able to enroll in a Medigap plan without having to answer any health questions. This Period begins November 2nd and ends March 4th of 2019.
Option 3: Original Medicare
Another option is switching back to Original Medicare with no supplemental coverage. To avoid penalties, beneficiaries should enroll in a stand-alone Part D drug plan if going with anything other than a Medicare Advantage plan.
Keep in mind, if you don’t make a transition from your Cost Plan to a different plan, you will be switched automatically to the Medicare Advantage plan that is replacing your particular Medicare Cost Plan.
However, if you do not like that plan, you will have a chance to change your Medicare Advantage plan to a different Advantage plan or return to Original Medicare between January 1st and March 31st of 2019.
Also, if you have had a Medicare Cost Plan with just Medicare Part B in the past, you will now need to enroll in Medicare Part A regardless of the option you choose. You can do this at the Social Security office between January 1st and March 31st during the Medicare General Enrollment Period
If you are unsure which new path to take, think about the things you like most about your Medicare Cost Plan. In the case that you like the flexibility of choosing your own doctors, a Medigap plan may be best. If you had a Cost Plan with an included drug plan and enjoyed the convenience of that, you might want to enroll in a Medicare Advantage plan that has a Part D plan.
Begin Your Research on Cost Plan Alternatives Now
Find all these dates and enrollment periods confusing? You are not alone! However, we can handle that part for you, so you just need to determine which type of new coverage would best suit you and then give our Medicare insurance experts a call.
Study the two main types of plans available to you as soon as possible. If you figure out which route to go before AEP, your application process will be a lot smoother.
Boomer Benefits offers free consultations so that we can help discuss your options.
Often, we hear from beneficiaries who did not use Boomer Benefits, that their doctors aren’t included in their chosen Medicare Advantage plan’s network. We, however, will make sure we find you a plan that includes the majority (if not all) of your doctors.
Because we are a Medicare brokerage, we are able to see price quotes from thirty different insurance carriers. If you choose to go with a Medigap plan, know that each Medigap plan letter has the same coverage regardless of the carrier you get it through. We’ll help you find the one that has the most competitive price in your area.
Contact Boomer Benefits during AEP so you can have a smooth transition.