Medicare Has Made Major Changes in Medigap
Supplemental Insurance Program This Year
The easiest part of Medicare insurance to understand
has just become more complicated: two new plans introduced, four plans
no longer for sale, many changes in others
June
30, 2010 – Since the prescription drug program was added to Medicare,
the program seems to many senior citizens to be in a constant state of
change and increasingly complicated. Now, what has always been the most
stable and least complicated part of Medicare – Medigap insurance – has
undergone major changes. Effective June 1, new standard policies were
introduced (M and N) and several old policies will no longer be sold (E,
H, I, and J) and other policies were changed.
The good news for millions already on these plans,
however, is that they may not have to do anything.
A Medigap (also called “Medicare Supplement
Insurance”) policy is private health insurance that is designed to
supplement Original Medicare. This means it helps pay some of the health
care costs (“gaps”) that Original Medicare doesn’t cover (like
copayments, coinsurance, and deductibles), according to Medicare.
If you are in Original Medicare and you have a
Medigap policy, Medicare will pay its share of the Medicare-approved
amounts for covered health care costs. Then your Medigap policy pays its
share. (Note: Medicare doesn’t pay any of the costs for you to get a
Medigap policy.)
Also, a Medigap policy is different than a Medicare
Advantage Plan (like an HMO or PPO) because those plans are ways to get
Medicare benefits, while a Medigap policy only supplements your Medicare
benefits.
Every Medigap policy must follow Federal and state
laws designed to protect you, and the policy must be clearly identified
as “Medicare Supplement Insurance.” Medigap insurance companies in most
states can only sell you a “standardized” Medigap policy identified by
letters A through N.
Each standardized Medigap policy must offer the
same basic benefits, no matter which insurance company sells it. Cost is
usually the only difference between Medigap policies with the same
letter sold by different insurance companies.
In Massachusetts, Minnesota, and Wisconsin, Medigap
policies are standardized in a different way, according to Medicare.
And, too, in some states, you may be able to buy another type of Medigap
policy called Medicare SELECT.
Medicare says the changes being made in these
supplemental policies has been brought about by new laws that started
with the introduction of Part D, the drug program, and the birth of the
Medicare Advantage plans.
The changes that became effective June 1, 2010
include the following:
• Basic Benefits – Starting with policies
effective on or after June 1, 2010, Hospice Part A coinsurance
(outpatient prescription drug and inpatient respite care coinsurance)
will be covered. Plan K will cover 50% of the costs and Plan L will
cover 75% of these costs.
• Part B Coinsurance – Plans K, L, and N
will require you to pay a portion of Part B coinsurance and copayments,
which may result in lower premiums for these plans. All other Medigap
policies pay them at 100%.
• New Plans Offered – Plans M and N are new
choices. See the chart on page 13 for details.
• Plans D and G – Plans D and G effective on
or after June 1, 2010 have different benefits than D or G Plans bought
before June 1, 2010.
• Plans No Longer for Sale – Plans E, H, I,
and J will no longer be sold after May 31, 2010. But, if you already
have or you buy Plan E, H, I, or J before June 1, 2010, you can keep
that plan. Insurance companies selling Medigap policies are required to
make Plan A available. If they offer any other Medigap plan, they must
also offer either Medigap Plan C or Plan F. Not all types of Medigap
policies may be available in your state.
Changes are different if you live in Massachusetts,
Minnesota, or Wisconsin. If you need more information, call your State
Insurance Department or State Health Insurance Assistance Program.
Medigap Insurance Policy
Changes Effective June 1, 2010
There are two
charts below - the top chart reflects the coverage of Medigap insurance
policies
through May 31, 2010. The bottom chart shows the new array of policies
and coverage. For larger views, click on the charts.
Laws that Required Changes
These changes have been in the development stage
since 2003.
The conference report of the Medicare, Prescription
Drug, Improvement and Modernization Act of 2003 (MMA) included language
encouraging the National Association of Insurance Commissioners (NAIC)
to modernize the Medigap market. This prompted a review of Medigap plans
and benefits, and in 2005 the NAIC formed a Subgroup to develop a
modernization proposal. In March 2007, the NAIC Plenary approved this
modernization proposal, in the form of revisions to the NAIC Medigap
model.
On July 15, 2008, Congress passed the Medicare
Improvements for Patients and Providers Act of 2008 (MIPPA), which also
required additional changes to the Medigap model.
In addition, Congress enacted the Genetic
Information Nondiscrimination Act of 2008 (GINA) on May 21, 2008, which
also called for changes to the NAIC Medigap model.
The final revisions were adopted by the NAIC on
September 24, 2008.
The Centers for Medicare and Medicaid Services
joined with NAIC to issue a detailed guide on the changes in the Medigap
program. It is free and available online in pdf format.
One section of the book is written for people who
already have a Medigap policy, which includes most senior citizens,
excluding those that have shifted to an Advantage Plan in recent years.
This section is printed below with page references found in the book
left in, to be used for future reference.
This official government guide, developed jointly
by the Centers for Medicare & Medicaid Services (CMS) and the National
Association of Insurance Commissioners (NAIC) has detailed information
about the following:
• What a Medigap (Medicare Supplement Insurance) policy is
• What’s new in 2010
• What Medigap policies cover
• Your rights to buy a Medigap policy
• How to buy a Medigap policyThis guide can help if you’re thinking
about buying, or already have, a Medigap policy.
The complete guide - Choosing a Medigap Policy:
A Guide to Health Insurance for People with Medicare (pdf) - can be
downloaded by
clicking here.
For People Who Already Have a Medigap Policy
You should read this section if any of these
situations apply to you:
• You’re thinking about switching to a different
Medigap policy.
• You’re losing your Medigap coverage.
• You have a Medigap policy with Medicare
prescription drug coverage.
Changes to Medicare's supplemental health
insurance plans that went into effect at the beginning of the
month are leaving people confused and worried about
skyrocketing premiums.
Sam Deibler, director of the town's
Commission on Aging, which runs a free health insurance
counseling program with Greenwich-based Family Centers, said
he's already received more than a dozen calls about the changes.
While the changes don't affect people
currently covered by the supplemental plans -- also known as "Medigap"
plans because they fill gaps in Medicare -- they could down the
road, Deibler said.
Four programs -- the E, H, I and J policies
-- were eliminated. Seniors currently covered under those
policies can continue with them, but their premiums are likely
to increase because no new people are signing on, Deibler said.
The J plan, for example, has been very
popular because it provided wide-ranging coverage, and was less
expensive than other plans with less coverage, Deibler said.
"The J plan is one of those that will start
to show increases in premiums down the road," Deibler said. "Our
advice to people is you don't need to change right away, but pay
attention to any increases you have in your premium rates."
Along with the four plans being closed to
new members, two new ones have been added, and people may wonder
if they should switch, Deibler said. There are now 10
supplemental plans, down from 14.
In addition, benefits for home recovery and
preventive care will be eliminated from all plans. Since the
health care reform bill passed by Congress in March makes
preventive care, such as screenings for colon, prostate and
breast cancer, free to Medicare beneficiaries, that change won't
have much of an impact.
However, said Deibler, there is a "de facto
increase in the premiums" because they lost two benefits. The
at-home therapy benefit provided up to $1,600 in coverage.
While the
Medicare
Part D prescription drug program introduced in 2006
have caused a lot of confusion, the supplemental plans have been
relatively stable since congress added them nearly 20 years ago,
according to Deibler.
Consumers shopping for Medicare supplement
insurance, or Medigap coverage, have some new options.
On June 1, insurers started selling two new
lower-cost Medigap policies and stopped offering four others. At
the same time, the federal government, which regulates Medigap
benefits, started requiring plans to cover at least a portion of
hospice costs.
Like most health-insurance plans, Medicare
doesn't pick up the tab for everything. Because patients are
required to pay a portion of some of their bills, about 89% of
the 47 million people with Medicare have some form of
supplemental health insurance, according to the Kaiser Family
Foundation. Many opt for a federally subsidized private Medicare
Advantage plan instead or they receive supplemental coverage
from a former employer. And close to one-fifth purchase a
Medigap policy.
Sold by private insurers, these
plans—labeled A, B, C, D, F, G, K, L, M and N—offer standardized
menus of benefits. (Massachusetts, Minnesota, and Wisconsin have
their own versions.) And, as with most insurance policies, the
more benefits you want, the higher the premium.
You Keep What You Have
Whether the recent changes to these plans
have an impact on you depends, in part, on when you purchased
your Medigap policy. If you enrolled before June 1, you can hold
onto your policy—even if it's no longer being sold—and your
benefits won't change.
Consumers "are not required to purchase a
new plan and they should rest assured that they will not lose
any benefits," says Joe Baker, president of the nonprofit
Medicare Rights Center.
Instead, the changes apply to Medigap plans
sold after June 1. On that date, insurers stopped selling plans
E, H, I and J, in part because those plans offer some benefits
now covered under original Medicare or Part D prescription-drug
plans, says Mr. Baker.
Insurers also now are selling two new
plans, M and N. These new options charge lower premiums than
most other Medigap plans, but consumers must pay a higher share
of the cost for various services. With plan M, for example, an
insured must pay half of the $1,100 deductible for
hospitalizations. Under plan N, an insured owes $20 for each
doctor's visit and $50 for emergency services.
If you’re satisfied with your current Medigap
policy’s cost and coverage and the customer service you get, you don’t
need to do anything. If you’re thinking about switching to a new Medigap
policy, below and pages 35–37 answer some common questions about
switching Medigap policies.
Can I switch to a different Medigap policy?
In most cases, you won’t have a right under Federal
law to switch Medigap policies, unless you are within your 6-month
Medigap open enrollment period or are eligible under a specific
circumstance for guaranteed issue rights. But, if your state has more
generous requirements, or the insurance company is willing to sell you a
Medigap policy, make sure you compare benefits and premiums before
switching.
If you bought your Medigap policy before 1992, it
may offer coverage that isn’t available in a newer Medigap policy.
On the other hand, older Medigap policies might not
be guaranteed renewable and might have bigger premium increases than
newer, standardized Medigap policies currently being sold. If you decide
to switch, don’t cancel your first Medigap policy until you have decided
to keep the second Medigap policy. On the application for the new
Medigap policy, you will have to promise that you will cancel your first
Medigap policy. You have 30 days to decide if you want to keep the new
Medigap policy. This is called your “free look” period. The 30-day free
look period starts when you get your new Medigap policy. You will need
to pay both premiums for one month.
Do I have to switch Medigap policies if I have
an older Medigap policy?
No. If you buy a new Medigap policy, you have to
give up your old policy (except for your 30-day “free look period,” see
page 34). Once you cancel the policy, you can’t get it back, and it can
no longer be sold because it isn’t a standardized policy.
Do I have to wait a certain length of time after
I buy my first Medigap policy before I can switch to a different Medigap
policy?
No. You should be aware that if you’ve had your old
Medigap policy for less than 6 months, the Medigap insurance company may
be able to make you wait up to 6 months for coverage of a pre-existing
condition.
However, if your old Medigap policy had the same
benefits, and you had it for 6 months or more, the new insurance company
can’t exclude your pre-existing condition. If you’ve had your Medigap
policy less than 6 months, the number of months you’ve had your current
Medigap policy must be subtracted from the time you must wait before
your new Medigap policy covers your pre-existing condition.
If the new Medigap policy has a benefit that isn’t
in your current Medigap policy, you may still have to wait up to 6
months before that benefit will be covered, regardless of how long you
have had your current Medigap policy. If you’ve had your current Medigap
policy longer than 6 months and want to replace it with a new one and
the insurance company agrees to issue the new policy, they can’t write
pre-existing conditions, waiting periods, elimination periods, or
probationary periods into the replacement policy. 36
Why would I want to switch to a different
Medigap policy?
Some reasons for switching may include the
following:
• You’re paying for benefits you don’t need.
• You need more benefits than you needed before.
• Your current Medigap policy has the right
benefits, but you want to change your insurance company.
• Your current Medigap policy has the right
benefits, but you want to find a policy that is less expensive. It’s
important to compare the benefits in your current Medigap policy to the
benefits listed on pages 11 and 13. If you live in Massachusetts,
Minnesota, or Wisconsin, see pages 44–46. To help you compare benefits
and decide which Medigap policy you want, follow the “Steps to buying a
Medigap policy” on pages 27–32.
If you decide to change insurance companies, you
can call the new insurance company and arrange to apply for your new
Medigap policy. If your application is accepted, call your current
insurance company, and ask to have your coverage ended. The insurance
company can tell you how to submit a request to end your coverage. As
discussed on page 34, you should have your old Medigap policy coverage
end after you have the new Medigap policy for 30 days. Remember, this is
your 30-day free look period. You will need to pay both premiums for one
month.
Can I keep my current Medigap policy (or
Medicare SELECT policy) or switch to a different Medigap policy if I
move out-of-state?
You can keep your current Medigap policy regardless
of where you live as long as you still have Original Medicare. If you
want to switch to a different Medigap policy, you’ll have to check with
the new insurance company to see if they’ll offer you a different
Medigap policy. You may have to pay more for your new Medigap policy and
answer some medical questions if you’re buying a Medigap policy outside
of your Medigap open enrollment period. See pages 16–18.
If you have a Medicare SELECT policy and you move
out of the policy’s area, you have the following choices:
• Buy a standardized Medigap policy from your
current Medigap policy insurance company that offers the same or fewer
benefits than your current Medicare SELECT policy. If you’ve had your
Medicare SELECT policy for more than 6 months, you won’t have to answer
any medical questions.
• You have a guaranteed issue right to buy Medigap
Plan A, B, C, F, K, or L that is sold in most states by any insurance
company.
What happens to my Medigap policy if I join a
Medicare Advantage Plan?
Medigap policies can’t work with Medicare Advantage
Plans. If you decide to keep your Medigap policy, you’ll have to pay
your Medigap policy premium, but the Medigap policy can’t pay any
deductibles, copayments, coinsurance, or premiums under a Medicare
Advantage Plan.
So, if you want to join a Medicare Advantage Plan,
you may want to drop your Medigap policy. Contact your Medigap Plan
insurance company to find out how to disenroll. However, if you leave
the Medicare Advantage Plan you might not be able to get the same
Medigap policy back, or in some cases, any Medigap policy unless you
have a “trial right” (see guaranteed issue right, Situation #4 and #5 on
page 25).
Your rights to buy a Medigap policy may vary by
state. You always have a legal right to keep the Medigap policy after
you join a Medicare Advantage Plan.
Losing Medigap
coverage
Can my Medigap insurance company drop me?
If you bought your Medigap policy after 1992, in
most cases the Medigap insurance company can’t drop you because the
Medigap policy is guaranteed renewable. This means your insurance
company can’t drop you unless one of the following happens:
• You stop paying your premium.
• You weren’t truthful on the Medigap policy
application.
• The insurance company becomes bankrupt or
insolvent.
However, if you bought your Medigap policy before
1992, it might not be guaranteed renewable. At the time these Medigap
policies were sold, state laws might not have required that these
Medigap policies be guaranteed renewable.
This means the Medigap insurance company can refuse
to renew the Medigap policy, as long as it gets the state’s approval to
cancel your Medigap policy. However, if this does happen, you have the
right to buy another Medigap policy. See the guaranteed issue right,
(Situation #6) on page 25.
Medigap policies
and Medicare prescription drug coverage
If you bought a Medigap policy before January 1,
2006, and it has coverage for prescription drugs, see below and page 39.
Medicare offers prescription drug coverage (Part D) for everyone with
Medicare. If you have a Medigap policy with prescription drug coverage,
that means you chose not to join a Medicare Prescription Drug Plan when
you were first eligible. However, you can still join a Medicare
Prescription Drug Plan.
Your situation may have changed in ways that make a
Medicare Prescription Drug Plan fit your needs better than the
prescription drug coverage in your Medigap policy. It’s a good idea to
review your coverage each fall, because you can join a Medicare
Prescription Drug Plan between November 15—December 31 each year. Your
new coverage will begin on January 1 of the following year.
Why would I change my mind and join a Medicare
Prescription Drug Plan?
In a Medicare Prescription Drug Plan, you may have
to pay a monthly premium, but Medicare pays a large part of the cost.
There’s no maximum yearly amount. However, a Medicare Prescription Drug
Plan might only cover certain prescription drugs (on its “formulary” or
“drug list”).
It’s important that you check whether your current
prescription drugs are on the Medicare Prescription Drug Plan’s list of
covered prescription drugs before you join. If your Medigap premium or
your prescription drug needs were very low when you had your first
chance to join a Medicare Prescription Drug Plan, your Medigap
prescription drug coverage may have met your needs. However, if your
Medigap premium or the amount of prescription drugs you use has
increased recently, a Medicare Prescription Drug Plan might now be a
better choice for you.
Will I have to pay a late enrollment penalty if
I join a Medicare Prescription Drug Plan now?
This will depend on whether your Medigap policy
includes “creditable prescription drug coverage.” This means that the
Medigap policy’s drug coverage pays, on average, at least as much as
Medicare’s standard prescription drug coverage.
If it isn’t creditable coverage, and you join a
Medicare Prescription Drug Plan now, you’ll probably pay a higher
premium (a penalty added to your monthly premium) than if you had joined
when you were first eligible. You should also consider that your
prescription drug needs could increase as you get older. Each month that
you wait to join a Medicare Prescription Drug Plan will make your late
enrollment penalty higher.
Your Medigap carrier must send you a notice every
year telling you if the prescription drug coverage in your Medigap
policy is creditable. You should keep these notices in case you decide
later to join a Medicare Prescription Drug Plan. 40
If your Medigap policy includes creditable coverage
and if you decide to join a Medicare Prescription Drug Plan, you won’t
have to pay a late enrollment penalty as long as you don’t drop your
Medigap policy before you join the Medicare Prescription Drug Plan. You
can only join a Medicare Prescription Drug Plan between November
15—December 31 each year unless you lose your Medigap policy (for
example, if it isn’t guaranteed renewable, and your company cancels it).
In that case, you can join a Medicare Prescription Drug Plan at the time
you lose your Medigap policy.
Can I join a Medicare Prescription Drug Plan and
have a Medigap policy with prescription drug coverage?
No. If your Medigap policy covers prescription
drugs, you must tell your Medigap insurance company if you join a
Medicare Prescription Drug Plan so it can remove the prescription drug
coverage from your Medigap policy and adjust your premium to reflect the
removal of your Medigap prescription drug coverage. Once the drug
coverage is removed, you can’t get that coverage back even though you
didn’t change Medigap policies.
What if I decide to drop my entire Medigap
policy (not just the Medigap prescription drug coverage)?
If you decide to drop the entire Medigap policy,
you need to be careful about the timing. For example, you may want a
completely different Medigap policy (not just your old Medigap policy
without the prescription drug coverage), or you might decide to switch
to a Medicare Advantage Plan (like an HMO or PPO) that offers
prescription drug coverage.
If you drop your entire Medigap policy and the
prescription drug coverage wasn’t creditable or you go more than 63 days
before your new Medicare coverage begins, you have to pay a late
enrollment penalty for your Medicare Prescription Drug Plan, if you
choose to join one.
You can join a Medicare Prescription Drug Plan or
Medicare Advantage Plan between November 15—December 31 each year. Your
coverage will begin on January 1 of the following year.
The complete guide - Choosing a Medigap Policy:
A Guide to Health Insurance for People with Medicare (pdf) - can be
downloaded by
clicking here.
Keep up with the latest news for senior citizens, baby
boomers
June
30, 2010 – Since the prescription drug program was added to Medicare,
the program seems to many senior citizens to be in a constant state of
change and increasingly complicated. Now, what has always been the most
stable and least complicated part of Medicare – Medigap insurance – has
undergone major changes. Effective June 1, new standard policies were
introduced (M and N) and several old policies will no longer be sold (E,
H, I, and J) and other policies were changed.
Seniors don't need to give personal info to anyone,
checks being mailed automatically to eligible Medicare recipients - June
11, 2010
