How does MACRA impact writing Medicare Supplements in Minnesota?

Now that the dust has settled from AEP and is beginning to clear, it is time to focus on ROY (Rest of Year). During the flurry you might have missed the details about MACRA.

What is MACRA?

MACRA stands for the Medicare Access and CHIP Reauthorization Act, legislation signed into law in 2015. MACRA states that anyone who is “newly eligible” for Medicare as of January 1, 2020, may not enroll in a Medigap Plan that covers the Part B deductible. However, please note that if someone turned 65 prior to January 1, 2020, they are still eligible to enroll into any pre-MACRA plan.

MACRA has introduced a small amount of cost-sharing by removing the ability to cover the Part B deductible ($197 for 2020), which in turn is leading to lower premiums in these plans.

So how does MACRA impact Minnesota plans? In Minnesota we have unique Medigap / Supplement plans: Extended Basic, Basic with Optional Riders, High Deductible and Co-pay Plans. Since MACRA does not allow the Part B deductible to be covered, each plan must remove this coverage.

On the Basic plan, only 3 riders can be selected for those clients who turned 65 on or after January 1, 2020: Part A Deductible, Excess Charges, and Preventative Care.

On the Extended Basic plan, those who enroll that turned 65 prior to January 1, 2020 will have the Part B deductible covered, otherwise this will no longer be covered.

While the High Deductible does not reimburse the Part B deductible, it does count towards the Plans deductible. If in the unlikely circumstance that the Plan’s deductible is met with only Part A expenses, then the member would be responsible for the Part B deductible above and beyond the Plans deductible.

The other plans are not impacted as the Part B deductible was already a responsibility of the member.

What should agents consider?

As time passes, the Minnesota Co-pay Plan (Plan N) may become a more stable plan with lower premiums. These premiums combined with consideration of the co-pays may bring cost savings to most members. Currently a Co-pay Plan member could save up to $400 a year with a post MACRA 2020 plan with riders. The member would need to visit the emergency room 8 times or their doctor 16 times in a year to match the cost of the Basic plan.

While many people who choose a Medicare Supplement might prefer a comprehensive Basic Plan, agents should be sure clients understand the opportunity for significant savings with a Co-pay Plan.

What do agents need to remember?

When meeting with your clients, check their date of birth to see if they are eligible for a Pre-MACRA plan. If so, understand the client’s options. They are NOT required to sign up for a Pre-MACRA plan but can if they choose. Also remember that you cannot sign up a client for a Pre-MACRA plan if they are not eligible. Using the carrier online enrollment system will ensure you avoid mistakes. This type of enrollment mistake can be a compliance breach possibly resulting in a fine, licensing issue or even imprisonment (which is unlikely but a provision within the new regulation).

Understand the pros and cons of enrolling into the different plans, as no particular plan is right for everyone. Premiums can increase and we believe that cost sharing plans will show lower increases over time.

Remember that the key to Medicare is suitability.