Medicare Cost plans are ending for most people!

July 16, 2018; updated 8/28/2018     About this blog:  click here

Medicare Cost plans are Ending Dec. 31, for over 2,000 people!

If you currently have a Medicare Cost insurance policy to supplement your Medicare, be worried. Be very worried.  This a special kind of insurance policy.

You may have already received a letter from your insurance company saying that your Medicare Cost plan is ENDING on December 31, 2018, and that It will not be sold anymore, starting in January 2019.

This DOES affect people in the Twin Cities, Minnesota area.

It does NOT affect people in 21 Counties —  the seven counties of Northeast Minnesota:  Aitkin, Carlton, Cook, Lake, Itasca, Koochiching, and St. Louis Counties;  and these other 14 counties:  Goodhue, Kanabec, LaSueur, McLeod, Meeker, Mille Lacs, Pine, Pipestone, Rice, Rock, Sibley, Stevens, Traverse, and Yellow Medicine.

If you are NOT in one of these 21 counties, then the end of Medicare Cost plans for you means two big things:

First, you will have to pick some other kind of insurance to go with your Medicare for 2019.

Second, no matter what you choose, you will likely end up paying a higher premium for the same coverage. Or, if you choose a policy with a premium similar to what you pay now, you will have worse coverage than before.

Who does this affect?

Over 500,000 people in the US have Medicare Cost plans.   Of those, over 400,000 are in Minnesota, where these policies have been very popular for a long time.

The Medicare Cost plans won’t actually disappear everywhere.   As mentioned above, the Cost Plans will continue in 21 Minnesota Counties in 2019.     But, the entire Twin Cities metro area will lose these plans, as well as some other parts of Minnesota, and that affects over 2,000 people.

What are Medicare Cost plans, anyway?

They are a very special animal, sort of a hybrid between the two major types of Medicare insurance,  which are Medicare Supplement policies, and Medicare Advantage policies.  To learn more about these, see our previous posts.

Medicare Cost plans have good freedom of choice as to what doctors and hospitals you see.  But, there is a two-part mechanism as to how the medical providers get paid:

  1. When the insurance company pays medical providers which are in the insurance company’s network, the federal government reimburses the insurance company what it paid those providers, plus some profit for the insurance company.

This is like a “cost-plus contract”:  Reimbursement of actual costs, plus a profit margin.

  1. For medical providers who are not in the insurance company network, they bill Medicare directly for the government’s reimbursements under Medicare Part A and B. The insurance company pays those providers portions of the bills that are not paid for by the government.

This is the standard way that original Medicare — Parts A and B — works.

In Minnesota, Medicare Cost Plans are these three families of policies:  Blue Cross/Blue Shield Minnesota Platinum Blue; HealthPartners Freedom; and Medica Prime Solution.

Why are they being discontinued for many people?

The insurance industry does not like these Cost Plans, for a very specific reason.  As mentioned above, the government decides how much profit the insurance company makes on these policies.

These are the ONLY kind of Medicare policies who have their profit amount regulated by the government.    The insurance companies can make a lot more profit from Medicare Advantage policies, which do not have any limits on profits.

The insurance industry wants to get rid of the Cost Plans, so that they can sell Medicare Advantage policies to people instead, and make a lot more profit off of them.

Insurance companies have lobbied Congress for years to get rid of Cost Plans, and they finally  largely succeeded.  There’s a good chance they will succeed in gettng rid of Cost Plans, for 2020, in the remaining places that still have them for 2019.

What do I need to do?  What choices do I have? 

You will need to pick a different kind of insurance policy during the official Enrollment Period this year, which starts on October 15 and ends on December 7.

To the best of our knowledge right now, you should have two choices.

One of these is to get on a Medicare Supplement insurance policy. Normally, you would have to pass a health screening (except when you first get on Medicare), but for the Cost Plan members, the health screening will apparently be waived.

Medicare Supplement policies are especially useful to snowbirds, since you get good coverage anywhere you go in the US.  You would also need to buy, separately, a Part D drug insurance policy, since these are not included in Medicare Supplement plans.   You can buy it from the same company as your Medicare Supplement, or from a different company.

You also have the choice to buy the other kind of policy, known as a Medicare Advantage plan.  These have drug coverage combined into the same policy.

Medicare Advantage policies might not be such a good choice for snowbirds, or people who spend a good amount of time out of state.  That’s because the Medicare Advantage policies usually have tight networks of providers, and very little coverage when you go out of state.

In either case, you want to comparison shop very carefully, looking at the choices you have for policies you could buy.  Your current insurance company will likely offer a policy to — but it might or not be the best value you could pick!

In general, lower monthly premiums mean higher deductibles and co-pays for you to pay; and higher monthly premiums mean lower deductibles and co-pays.

However, you have to look and calculate closely.  You also need to see if the doctors and hospitals you see are “in-network” or “out-of-network” for each policy.

That can make a HUGE difference in how much you shell out for deductibles and co-pays.

You also need to shop carefully regarding the drug coverage, and see what kind of co-pays you would pay for the drugs you take – or even if they are covered at all!

It’s a big amount of work, but it can make a difference of hundreds of dollars, even thousands, of what you end up paying in total during the course of a year.

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