There are several changes coming to the current standardized Medigap (Medicare Supplement) insurance policies in 2010, changes that will affect future coverage options and premiums. These changes will apply to all companies offering Medicare supplement insurance policies.
The coming changes were brought on by the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA), in which the National Association of Insurance Commissioners (NAIC) was asked to modernize review the current Medigap plan coverage. The idea was for the NAIC to determine if changes needed to be made to the standardize plan benefits to reflect changes that have occurred in the marketplace since the standardization of Medicare Supplement plans in 1990.
Upon completion of the review, the NAIC recommended several changes which have since been approved and will to go into effect on June 1, 2010. The primary changes are listed below:
Two New Medigap Plans To Be Added
Two new Medigap options will now be available – plan letters M and N. These plans will introduce additional cost-sharing for Medicare recipients, such as co-pays, and small coinsurance exposure in exchange for slightly lower premiums than the traditional plans.
Three Medigap Benefits Will Be Changed or Eliminated
The commission concluded that the “excess charages” benefit should be changed to only offer 100% coverage, and suggested the removal of two other benefits cut due to the coverage being historically underutilized and inconvenient to use. As a result, the “preventative care not otherwise covered” and “at home recovery” benefits will no longer be offered with new Medigap plans sold after June 1, 2010.
As a result of these changes, four current Medigap plan designs – E, H, I and J – will no longer be available. If a Medicare Supplement recipient is currently using one of these plans they will be allowed to keep it, however these plans just will not be sold after June 1, 2010.
With these four plans not being offered after June, most advisors are recommending their clients avoid these policies. Since no new clients will be able to purchased plans E, H, I or J, those that remain on these plans could well find themselves facing large rate increases in two to three years as the claims cost for those covered by these old plans will continue to raise over time. Given this fact, it makes the most sense to obtain coverage with a Medicare Supplement insurance plan that will still be available for purchase in future years, such as the popular Medicare supplement plan F.