Medicare Supplement (Medigap) Coverage for Medicare Beneficiaries Brian Webb Manager, Health and Life Policy Nat l Assoc. of Insurance Commissioners February 6, 2009
Original Medicare Created in 1965, Medicare provides coverage to over 35 million Americans over the age of 65. Structure of Original Medicare plan is based on typical coverage in 1965. There are two basic parts to Original Medicare Part A (inpatient hospital) and Part B (doctor/outpatient)
Part A Coverage Key benefits: Inpatient Blood (you pay: first 3 pints + 20%) Home Health (you pay: 20% for durable medical equipment) Hospice (you pay: $5 copay for Rx; 5% for respite) Inpatient Hospital (you pay: $992 for first 60 days; $248 per day for days 61-90; $496 per day for days 91-150; all for 150+, excluding 60 lifetime reserve days) Skilled Nursing Facility (you pay: $124 per day for days 21-100 this is NOT long-term care)
Part B Coverage Key Benefits: Outpatient Blood (you pay: first 3 pints + 20%) Clinical Lab Services (you pay: nothing) Preventive Services and Screenings (you pay: typically 20% of approved amount) Physician Services (you pay: $131 deductible + 20%) Outpatient Mental Health (you pay: 50%) Outpatient Hospital (you pay: typically 20%)
Part B Coverage Additional Benefits: Ambulance and Other Transportation Approved Transplants Dialysis Prosthetics and Orthotics Diabetic Testing Supplies Various Outpatient Therapies Emergency Room Services Cost-sharing required for most
Medicare Supplement Coverage Due to coverage gaps in the Original Medicare plan, most seniors have some kind of supplemental coverage Over 10 million seniors have Medigap coverage through private plans that offer standardized options.
History of Medigap Medigap standardized plans were developed by the National Assoc. of Insurance Commissioners through unique delegation by U.S. Congress under OBRA 90 The NAIC s model for state law was approved by the federal government States (other than WI, MA, MN) are required to adopt the NAIC model to retain regulatory authority of these plans
Medigap Coverage Currently 14 standardized plans up from 10 in 1990 (including, two high deductible options) All carriers must offer at least the Basic (A) plan: Medicare Part A hospital coinsurance (days 61-90 and 91-150) Medicare Part B coinsurance Blood deductible (3 pints) 365 Additional inpatient days
Medigap Coverage Plans B-L include additional coverage options: Medicare deductibles and coinsurance Preventive screening services Emergency care while traveling outside US Excess charges Limited at-home recovery Skilled Nursing Facility (SNF) coinsurance Until 2005, plans H, I and J also offered limited outpatient prescription drug coverage
Medigap Coverage Plans F and J have a high-deductible option set at $2,000 for 2009 Plans K and L are prescribed by federal law (MMA) They require cost sharing for Part A and B expenses at 50% and 75%, respectively They include an annual Out-of-Pocket limit of $4,620 for K and $2,310 for L (2009) - indexed for inflation and coverage for hospice cost-sharing They do not cover the Part B deductible or the cost of the first 3 pints of blood
New Coverage Options for 2010 On September 24, 2008, the NAIC adopted changes to the Medigap model updating the standardized plans and including GINA and MIPAA requirements States must adopt the GINA provisions by July 1, 2009 States must adopt the updated benefit plans by September 24, 2009 Updated plans may be effective June 1, 2010
Key Changes to Medigap Plans Overall = Reduces number of plans from 14 to 11 Eliminates Plans H, I, and J, which became duplicative after drug benefits were eliminated Eliminates Plan E which became duplicative after other changes made Creates new plans M and N which have higher beneficiary cost-sharing options Eliminates outdated At-Home Recovery benefit Creates a new Hospice benefit, which is added to every plan as part of Basic (Core) benefits Eliminates outdated and underutilized Preventive Care benefit
Most Popular Medigap Plans Beneficiaries overwhelmingly choose plans that cover all deductibles and coinsurance Manageable costs budgeted over 12 months Less hassle no doctors bills
Medigap Consumer Protections If enrolled during the open enrollment period (a six-month window beginning at age 65 or older AND enrollment in Part B) a person cannot: Be denied coverage for health reasons Be charged more because of health history or medical conditions premium can vary based on age Be excluded coverage due to a preexisting condition for more than 6 months less if have creditable coverage Same protections if a person loses creditable coverage, if gap does not exceed 63 days (examples) Coverage must be renewed
Other Supplemental Coverage Medicare Select Same 14 standardized plans, but use network providers and negotiate charges Result is less flexibility, but lower premiums Medicare Advantage Private HMO, PPO or fee-for-service plans Typically have low cost-sharing and additional benefits May have Rx coverage States only regulate licensure and solvency plus brokers and agents who sell the products Not guaranteed renewable Medicare Medical Savings Accounts
Contact Information Brian Webb Jane Sung Manager Senior Health Policy Analyst Health and Life Policy and Health Counsel NAIC NAIC 202-471-3978 202-471-3979 bwebb@naic.org jsung@naic.org