Trends in Medigap Enrollment and Coverage Options, 2013

November 2014 Trends in Medigap Enrollment and Coverage Options, 2013 www.ahipresearch.org

LIST OF TABLES AND FIGURES TABLE 1. TABLE 2. TABLE 3. TABLE 4. Distribution of Medigap Companies with Standardized Medigap Policies in Force, by Market Size, December 2013... 5 Number of Companies with Medicare Select Policies in Force and Number of Enrollees with Medicare Select Plans, December 2013... 5 Percent of Companies with Standardized Medigap Policies in Force, by Plan Type, December 2013... 6 Number of Policies, Standardized and Pre-Standardized Medigap Plans, December 2013... 6 TABLE 5. Distribution of Enrollment by Standardized Plan Type, December 2013... 7 TABLE 6. Change in Medigap Enrollment, Standardized Policies, December 2011 to December 2013, by Plan Type... 8 TABLE 7. Medigap Enrollment by Plan Type, State, and U.S. Territory, as Reported to the NAIC, December 2013... 10 FIGURE 1. Number of Medigap Enrollees by State and U.S. Territory, December 2013.... 11 FIGURE 2. Percent of FFS Beneficiaries with Medigap, by State and U.S. Territory, December 2013... 12 APPENDIX A. Medigap Benefits 2013: Standardized Medigap Plans... 13 ii Content and Design AHIP All Rights Reserved: AHIP 2014

SUMMARY This report presents trends in enrollment and coverage options in Medicare Supplement (Medigap) insurance using data on enrollment as of December 2013 from the National Association of Insurance Commissioners (NAIC). The NAIC dataset contains information on most Medigap policies in force in the U.S. and its territories, representing approximately 10.6 million enrollees, with policies from 298 companies. HIGHLIGHTS Between December 2012 and December 2013, enrollment in Medigap increased to 10.6 million, up from approximately 10.2 million in December 2012. 1 Over the last several years, the fastest-growing Medigap plans have included newer standardized Medigap plans that contain enrollee cost-sharing requirements (copayments, coinsurance and/or deductibles). For example the highest rate of growth in enrollment was in Plan N, which includes cost-sharing of up to $20 for physician office visits and up to $50 for certain emergency room visits (waived in some circumstances); Plan N grew by 60 percent between December 2012 and December 2013. The percent of fee-for-service (FFS) Medicare beneficiaries with Medigap plans has been stable since 2010, ranging from 27 to 29 percent each year. BACKGROUND Medigap is a key source of supplemental coverage for Medicare beneficiaries. Seniors purchase Medigap coverage to protect themselves from high out-of-pocket costs not covered by Medicare, to budget for medical expenses, and to avoid the confusion and inconvenience of handling complex bills from health care providers. In 2013, the Medicare program had a $1,184 deductible per benefit period for inpatient hospital care (Part A) and a coinsurance beginning with day 61 of hospitalization. 2 Part B required a 20 percent coinsurance for outpatient and physician care after an annual deductible of $147. 3 In addition, the Medicare program does not have a limit on beneficiaries potential out-of-pocket costs. Appendix A, found at the end of this report, provides detailed information on the benefits and cost sharing features of 2013 Standardized Medigap plans as required by the 2008 Medicare Improvements for Patients and Providers Act (MIPPA). 1 AHIP Center for Policy and Research. Trends in Medigap Coverage and Enrollment, 2012. http://ahip.org/trends-medigap- Coverage-Enroll2012 2 There is no coinsurance for inpatient hospital care for the first 60 days of hospitalization, per benefit period. Beneficiaries would pay $296 in coinsurance per day per benefit period from days 61 to 90; and would pay $592 for coinsurance per each lifetime reserve day per benefit period after day 90 (up to 60 days over lifetime). After that all inpatient costs are borne by the beneficiary. http://medicare.org/index.php/financial-center/social-security/understanding-social-security/item/347- medicare-2013-costs.html 3 Centers for Medicare & Medicaid Services. Medicare costs at a glance. See: http://www.medicare.gov/your-medicare-costs/ costs-at-a-glance/costs-at-glance.html#collapse-4660 1

Standardized Plans. Over the last 20 years, Medigap plans have undergone three major changes to benefit designs. The table below summarizes these major changes. Major Changes to Medigap Plan Benefit Designs Omnibus Budget Reconciliation Act (OBRA 1990), 1990 Medicare Modernization Act (MMA), 2003 Medicare Improvements for Patients and Providers Act (MIPPA), 4 2008 A Required that policies sold after July 1992 should conform to one of 10 uniform benefit packages, Plans A through J. A Eliminated prescription drug benefits. A Authorized two new plans (K and L) with cost sharing features. A Encouraged development of standardized benefit designs with additional cost sharing features. A Eliminated the at-home recovery benefit in favor of a new hospice benefit (described in next bullet). A Added a new core hospice benefit that covers the cost-sharing under Medicare FFS for palliative drugs and inpatient respite care. A Removed the preventive care benefit in recognition of the increased Medicare FFS coverage under Part B. A Introduced two new Medigap policies (Plans M and N) with increased beneficiary cost-sharing features. A Eliminated several standardized plans (Plans E, H, I, and J) that became duplicative or unnecessary due to benefit design changes. It should be noted that all Medigap plans are guaranteed renewable regardless of when they were purchased; therefore, some policyholders continue to maintain plans with previous benefits even though the plans can no longer be sold. Most Medigap plans cover beneficiaries Part A deductible and Part B coinsurance. Two plans standardized Plans C and F currently offer full coverage for the Part B deductible (however, Plan F can also be sold as a high-deductible plan). These two plans also cover Part B coinsurace and copayment amounts, as do most but not all standardized plans. Plans K and L do not cover the Medicare Part B deductible and cover a portion of beneficiaries Part B coinsurance. However, there is a limit $4,800 for Plan K and $2,400 for Plan L in 2013 on beneficiaries annual out-of-pocket costs for Medicare eligible expenses. 5 New Plans M and N entered the market in June of 2010. Plan M covers half of the Part A deductible and does not cover the Part B deductible. Plan N covers all of the Part A deductible and does not cover the Part B deductible. Plan N also includes cost-sharing amounts of up to $20 for certain physician visits and up to $50 for certain emergency department visits. Medicare SELECT plans are identical to standardized Medigap plans but require policyholders to use provider networks to receive the full insurance benefits. For this reason, Medicare SELECT plans generally cost less than other Medigap plans. 4 Effective June 1, 2010 5 Centers for Medicare & Medicaid Services and National Association of Insurance Commissioners. 2013 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare. 2

Waivered States. Three states (Massachusetts, Minnesota, and Wisconsin) offer standardized Medigap plans but are exempt from the OBRA 1990 standardized plan provisions (and subsequent revisions under the MMA or MIPPA). Standardized plans may therefore be changed by waivered states without federal approval. Individuals who purchase Medigap plans in one of these three states may keep their plans if they move to other states. Pre-Standardized Plans. Historically, Medigap changes have been phased in for new purchasers, and existing policyholders were allowed to retain their pre-standardized policies. Although OBRA 1990 prohibited the sale of new pre-standardized plans, some beneficiaries still have pre-standardized policies. METHODOLOGY For this report we analyzed 2013 Medicare Supplement data from the National Association of Insurance Commissioners (NAIC). Insurance companies submit their annual statement data directly to the NAIC using an electronic filing portal. Each state sets its own requirements for filing. Data from five insurance companies in California are not included in the 2013 NAIC data; they are required to report their data to California s Department of Managed Health Care which does not report Medigap enrollment data to the NAIC. We derived the total Medigap enrollment during 2013 by adding two variables together: 1) the number of policies issued before 2011, and 2) the total number of policies issued between 2011 and 2013. The NAIC requires Medigap companies to report these data separately. Only one person is covered per Medigap policy. All analyses in the report contain data from the 50 states, District of Columbia, and the U.S. territories. The territories are: American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and Virgin Islands. The NAIC dataset is structured so that reported enrollment is a point-in-time measure as of December 31, 2013. Other dataset measures, such as those for premiums and claims, are for the full year. Therefore it is possible that a company may submit information on a plan type even though at the end of the year enrollment was zero. To show the number of companies with policies in force as of December 31, 2013, we selected records where the number of people covered was greater than zero. Tables 1, 2 and 3 in this report represent companies with policies in force as of December 31, 2013. Table 6 of this report contains data from the 2012 NAIC Medicare Supplement file. This dataset required two major data cleaning adjustments to reported enrollment, which America s Health Insurance Plans (AHIP) analysts corrected for over- or under-reported data. For more information please refer to the AHIP report for that year. 6 We calculated the percent of FFS beneficiaries with Medigap plans for 2010 to 2013 by dividing the number of Medigap enrollees by the number of Medicare FFS beneficiaries for each year. For the numerator we obtained the number of Medigap enrollees from the current and previous AHIP reports on Medigap Trends. 7 The denominator was the number of Medicare FFS beneficiaries from the Centers for Medicare and Medicaid Services (CMS) data for December of each year. 8 The CMS dataset provided the number of beneficiaries 6 See Trends in Medigap Coverage and Enrollment, 2012; http://ahip.org/trends-medigap-coverage-enroll2012/ 7 Trends in Medigap Coverage and Enrollment (2010 through 2012) at http://ahip.org/ahipresearch/ 8 CMS Medicare Advantage Penetration Reports, 2010-2013, accessed July 29, 2014 at http://www.cms.gov/research- Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/MA-State-County-Penetration.html 3

eligible for Medicare and the number of beneficiaries enrolled in Medicare Advantage. We subtracted the number of enrollees with Medicare Advantage from the number of eligible Medicare beneficiaries to get the number of Medicare beneficiaries with FFS. Figures 1 and 2 show these data by state and territory. An estimate for the percent of new high-deductible Plan F policies sold is from a 2011 AHIP survey of Medigap companies. 9 To determine whether a Medigap plan contains new or innovative benefits we utilized the NAIC variable for plan characteristics, then selected records that contained a flag indicating the addition of new and innovative benefits. For information on types of innovative benefits offered, we referred to an internal NAIC document that contains detailed information on approved new and innovative benefits, by state and company. 10 DATA LIMITATIONS As noted, the total number of enrollees with Medigap is slightly understated because California does not require all insurance companies to report their data to the NAIC; five companies in California are required to report their data to California s Department of Managed Health Care. Data from these companies represent 659,000 Medigap enrollees, about six percent of all Medigap enrollment in the U.S., and are not included in the analyses in this report. Beneficiaries have an option to purchase Plan F as a high-deductible plan. However due to the way data are reported to the NAIC, we are unable to determine what percent of enrollees in Plan F have a high-deductible policy or what percent of companies offer highdeductible Plan F. Therefore, data in this report representing Plan F may also include the high-deductible version. Although data on high-deductible Plan F are not separately reported in the NAIC, a 2011 AHIP survey of member companies showed that enrollment in high-deductible Plan F was between one and three percent of newly-purchased policies between 2007 and 2011. 9 Medigap plans are guaranteed renewable, therefore policyholders may keep their plans even though the plan may have been discontinued or the standard benefit design changed. This report does not make a distinction among standardized Medigap policies in force in December 2013 with respect to whether their benefit designs comply with requirements under OBRA 1990, MMA or MIPPA. This is the first time AHIP includes information on new and innovative benefits in a Medigap trends report. The NAIC Medicare Supplement data for 2013 provides information on whether a Medigap plan contains new or innovative benefits. However, the dataset does not provide information on how many enrollees have access to these extra benefits, nor does it provide information on the type of new or innovative benefit added to the plan. 9 Trends in Medigap Coverage and Enrollment, 2011. May 2012. http://ahip.org/medigap-2012.aspx 10 See NAIC report, accessed September 3, 2014 at http://www.naic.org/meetings1408/committees_b_senior_issues_2014_ summer_nm_materials.pdf?1409258620581 4

COMPANIES OFFERING COVERAGE, DECEMBER 2013 At year end, 10 percent of companies offering standardized Medigap policies covered individuals in 41 or more states or territories; 16 percent of companies covered individuals in 26 to 40 states or territories; 10 percent covered individuals in 11 to 25 states or territories; and 17 percent of companies covered individuals with standardized Medigap plans in 2 to 10 states or territories. Forty-eight percent of all Medigap companies had standardized policies in force in a single state or territory. (See Table 1). TABLE 1 Distribution of Medigap Companies with Standardized Medigap Policies in Force, by Market Size, December 2013 NUMBER OF STATES OR TERRITORIES PERCENT OF COMPANIES 41 or more 10% 26 40 16% 11 25 10% 2 10 17% 1 48% Source: AHIP Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibit, for the Year Ended December 31, 2013. Notes: Data in this table depicting the number of states are based on companies with standardized Medigap policies in force; data do not include companies with only pre-standardized policies in force. The data for standardized policies include Medicare SELECT plans, and those issued in three states (MA, MN, and WI) that received waivers from the standardized product provisions of OBRA 1990. The number of companies with standardized Medigap policies in force reporting to the NAIC for 2013 was 259. The U.S. territories are American Samoa, Guam, Northern Mariana Islands, Puerto Rico, Virgin Islands. Percentages may not sum to 100 due to rounding. Table 2 shows the number of companies with Medicare SELECT policies in force, and the number of Medicare beneficiaries having a Medicare SELECT policy on December 31, 2013. Companies with Medicare SELECT policies in force are located across the country in 43 states. There were no Medicare SELECT policies in force in the U.S. territories on December 31, 2013. TABLE 2 Number of Companies with Medicare Select Policies in Force and Number of Enrollees with Medicare Select Plans, December 2013 Number of Companies with Medicare SELECT Policies in Force Number of Enrollees with Medicare Select Policies 96 783,309 Source: AHIP Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibit, for the Year Ended December 31, 2013. 5

Table 3 displays the percentage of reporting companies with standardized Medigap policies in force on December 31, 2013 by each plan type. The percentages of companies with Plans K and L, which were authorized beginning in 2006, are 15 percent and 16 percent, respectively. In June 2010, new Plans M and N were authorized for sale. Nine percent of companies had policies in force for Plan M and 45 percent of companies had policies in force in Plan N. TABLE 3 Percent of Companies with Standardized Medigap Policies in Force, by Plan Type, December 2013 PLAN TYPE PERCENT OF COMPANIES A 84% B 61% C 76% D 44% E 29% F 83% G 50% H 24% I 24% J 27% K 15% L 16% M 9% N 45% WAIVERED STATE PLANS 28% Source: AHIP Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibit, for the Year Ended December 31, 2013. Notes: The data for standardized policies include Medicare SELECT plans, and those issued in three states (MA, MN and WI) that received waivers from the standardized product provisions of OBRA 1990. The number of companies with standardized Medigap policies in force for 2013 was 259. All plans offering new coverage must offer Plan A. Plans E, H, I and J are no longer sold but some policyholders have retained their coverage for these plans. POLICIES IN FORCE, DECEMBER 2013 According to the NAIC data, 95 percent of Medigap policies in force in December 2013 were standardized plans. Pre-standardized plans, which were no longer sold after July 1992, account for only five percent of all Medigap policies (see Table 4). TABLE 4 Number of Policies, Standardized and Pre-Standardized Medigap Plans, December 2013 POLICIES PERCENT Standardized Plans 10,103,202 95% Pre-Standardized Plans 501,527 5% All Medigap Plans 10,604,729 100% Source: AHIP Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibit, for the Year Ended December 31, 2013. Notes: The data for standardized plans contain both pre- and post-mippa plans. See page 2 for further explanation. 6

Among individuals with Medigap standardized plans, Plan F continues to have the highest number of enrollees, covering 55 percent of policyholders in 2013; Plan C had the second highest share, with 11 percent of the market (See Table 5). TABLE 5 Distribution of Enrollment by Standardized Plan Type, December 2013 STANDARDIZED PLAN % OF ENROLLMENT A 2% B 4% C 11% D 2% E 1% F* 55% G 6% H 1% I 1% J 6% K 1% L < 0.5% M < 0.5% N 6% WAIVERED STATE PLANS 6% * Includes high-deductible Plan F. Although not separately reported by the NAIC, a 2011 AHIP survey of member companies showed that enrollment in high-deductible Plan F was between one and three percent of newly-purchased policies in 2007-2011. Source: AHIP Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibit, for the Year Ended December 31, 2013. Notes: The data for standardized policies include Medicare SELECT plans and those issued in three states (MA, MN and WI) that received waivers from the standardized product provisions of OBRA 1990. Percentages may not sum to 100 percent due to rounding. 7

Table 6 shows the number of standardized Medigap policies in force in December 2011, December 2012 and December 2013, by standardized plan type. As a general rule AHIP does not change or correct the NAIC data even though we are aware that some companies do not report to the NAIC. However, the 2012 report contains two major data cleaning adjustments, to correct for over- or under-reported data in the preliminary NAIC dataset. 11 TABLE 6 Change in Medigap Enrollment, Standardized Policies, December 2011 to December 2013, by Plan Type PLAN TYPE 2011 2012 2013 CHANGE IN ENROLLMENT 2012-2013 PERCENT CHANGE 2012 2013 A 186,941 165,796 159,352-6,444-4% B 430,173 394,166 374,294-19,872-5% C 1,307,991 1,211,857 1,133,744-78,113-6% D 289,196 259,792 232,275-27,517-11% E 131,770 117,022 103,021-14,001-12% F 4,604,164 5,057,890 5,510,183 452,293 9% G 356,444 452,782 556,241 103,459 23% H 58,232 53,090 46,362-6,728-13% I 135,228 127,469 127,076-393 <-0.5% J 752,169 680,916 627,813-53,103-8% K 40,832 43,012 49,674 6,662 15% L 69,896 103,029 42,916-60,113-58% M 596 5,413 4,080-1,333-25% N 265,854 358,165 573,243 215,078 60% WAIVERED STATE PLANS 546,849 548,658 562,928 14,270 3% TOTAL 9,176,336 9,579,056 10,103,202 524,146 5% Source: AHIP Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibit, for the Years Ended December 31, 2011, 2012, 2013. Notes: The data for standardized policies include Medicare SELECT plans and those issued in three states (MA, MN, WI) that received waivers from the standardized product provisions of OBRA 1990. 2011 standardized waiver plan enrollment in Minnesota estimated by AHIP based on information provided by health plan in the state that was not included in the 2011 NAIC dataset. The 2012 data reflect a correction to the original NAIC data for Alaska and Washington, which was estimated by AHIP. The percent change in Plan L for 2012-2013 is driven mainly by the correction of a reporting error in the previous year s submission. This information was obtained via telephone with industry executives. 11 See Trends in Medigap Coverage and Enrollment, 2012; http://ahip.org/trends-medigap-coverage-enroll2012/ 8

FAST GROWING MEDIGAP PLANS Table 6 also shows enrollment in Plan N a new standardized plan with predictable costsharing amounts grew by 60 percent from 2012 to 2013 to approximately 573,000 enrollees, an increase of about 215,000 enrollees from the previous year. Plan G, which covers all Medicare deductible and coinsurance amounts except the Part B deductible, had the second highest rate of growth in enrollment for that same time period: an increase of 23 percent, representing 103,000 enrollees. The largest absolute increase in Medigap enrollment from 2012 to 2013 was in Plan F, which grew by roughly 452,000 enrollees, a nine percent increase over the previous year. The regular version of Plan F provides coverage for Medicare deductibles and coinsurance amounts. Plan F also includes a high-deductible option that allows for a deductible amount of $2,110 (in 2013) before the policy can begin paying benefits. The Medigap plan with the second highest absolute growth in enrollment from 2012 to 2013 was Plan N. MEDIGAP PLANS WITH NEW AND INNOVATIVE BENEFITS Previous AHIP reports on Medigap enrollment and coverage option trends did not include information on Medigap plans with new and innovative benefits. While every new Medigap plan issued must fall under one of the standardized plan types, some states have the flexibility to allow companies to add new and innovative benefits to a standardized Medigap plan sold in the state. These benefits must be cost-effective and may not change the cost-sharing structure or lessen the benefits of the standardized plan. 12 New and innovative benefits vary by company and may include wellness and care management assistance, nurse advice lines, coverage for certain dental or vision services, and other innovative benefits as allowed by each state. 13 An analysis of the NAIC Medicare Supplement data for 2013 shows that 26 companies offer Medigap plans with new and innovative benefits across 36 states. However, the NAIC dataset does not provide information on how many enrollees have access to these extra benefits, nor does it provide information on the type of new or innovative benefits added to the plan. MEDIGAP POLICIES BY STATE Table 7 (see page 10) shows enrollment in Medigap by state including the District of Columbia and U.S. territories and plan type in December 2013. Figure 1 (see page 11) is a map of the U.S. representing the number of Medigap enrollees by state including the District of Columbia and U.S. territories, and Figure 2 (see page 12) is a map of the U.S. showing Medigap enrollees as a percent of Medicare FFS beneficiaries, by state, District of Columbia, and U.S. territories. 12 Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act (MDL 651); http://www.naic.org/store/free/mdl-651.pdf 13 NAIC report: http://www.naic.org/documents/committees_b_senior_issues_140930_medigap_innovative_benefit_survey_ results.pdf 9

TABLE 7 Medigap Enrollment by Plan Type, State, and U.S. Territory, as Reported to the NAIC, December 2013 State PLAN TYPE A B C D E F G H I J K L M N Waivered Pre- Standardized Total Covered Lives (State) AK 292 96 585 82 60 6,561 84 13 348 1,251 88 72 405 267 10,204 AL 896 116,004 7,158 745 343 42,462 5,168 67 223 1,459 389 217 3 5,203 1,073 181,410 AR 728 584 2,372 620 139 57,998 8,262 26 217 4,361 347 262 8 4,886 78,035 158,845 AZ 2,421 1,231 12,123 1,142 729 141,114 20,850 580 1,582 11,742 1,112 730 31 9,948 3,904 209,239 CA 7,913 3,832 16,770 3,155 1,616 228,149 9,235 1,336 5,990 64,423 3,859 1,958 36 25,390 16,563 390,225 CO 1,726 1,241 3,963 1,217 511 96,959 6,198 109 1,496 8,996 669 511 9 6,456 1 2,917 132,979 CT 2,504 3,309 11,822 2,239 1,167 61,723 2,512 626 1,688 24,183 812 644 6,663 4 24,439 144,335 DC 183 107 494 50 52 4,442 109 17 177 1,552 79 48 403 390 8,103 DE 666 989 2,390 2,818 883 23,117 1,439 141 1,437 5,088 570 251 3 6,298 880 46,970 FL 11,902 46,186 83,110 64,496 14,892 290,671 13,202 1,322 7,541 84,634 4,092 3,095 106 29,640 9 28,015 682,913 GA 2,590 4,191 21,389 3,478 10,725 170,824 18,320 134 2,034 13,579 1,514 785 13 18,605 11 8,166 276,358 GU 14 14 128 1 167 1 1 24 2 19 371 HI 148 50 462 33 22 3,179 53 14 70 716 40 15 254 159 5,215 IA 1,217 319 3,329 896 3,422 216,663 6,755 101 328 8,522 143 777 13 6,144 11,422 260,051 ID 654 317 2,050 210 118 42,101 6,114 7 216 3,677 1,214 241 14 2,614 765 60,312 IL 4,985 5,768 27,156 32,809 2,666 473,527 43,189 264 1,864 13,352 1,441 1,794 16 25,484 2,086 22,292 658,693 IN 4,275 3,969 15,474 4,623 3,596 187,869 37,026 693 2,312 12,419 769 1,014 25 22,700 8,984 305,748 KS 1,552 732 19,140 2,227 935 161,536 4,396 104 772 3,823 835 349 7 7,116 4,398 207,922 KY 1,706 7,041 22,945 1,857 5,481 100,527 13,959 2,875 1,140 4,431 473 461 6 10,968 5,923 179,793 LA 593 3,450 3,679 655 265 86,736 13,468 67 761 1,524 1,312 609 2 7,395 3,896 124,412 MA 130 74 1,508 70 98 1,545 112 33 188 732 3,172 248,691 1,781 258,134 MD 8,209 5,695 21,999 3,624 807 98,732 8,212 944 914 12,913 1,159 752 16 13,879 7,643 185,498 ME 1,314 1,157 13,133 734 1,131 40,780 1,420 45 2,290 4,335 228 197 44 3,789 703 71,300 MI 13,583 1,215 188,610 2,087 980 97,098 18,447 204 1,435 8,140 1,085 857 52 25,853 20,171 379,817 MN 293 5,197 238 18 44 1,079 22 58 242 2,274 24 33 218 120,282 4,843 134,865 MO 3,059 3,272 16,039 9,818 1,878 190,604 17,516 675 2,850 12,513 742 851 24 12,553 10,958 283,352 MP 5 11 16 MS 1,448 1,304 4,416 1,251 320 92,626 11,788 79 292 5,578 357 256 3 7,701 2,851 130,270 MT 1,098 436 6,012 583 148 42,672 3,533 51 476 3,478 393 201 2 2,965 1,499 63,547 NC 3,214 7,212 17,648 4,149 2,256 272,116 28,919 717 4,259 33,167 1,097 864 55 18,938 9,354 403,965 ND 204 109 1,087 218 40 46,088 717 33 92 1,141 25 36 439 543 50,772 NE 753 940 4,319 810 91 113,279 8,045 111 341 5,235 120 341 30 3,117 4,861 142,393 NH 1,344 900 3,802 560 1,472 36,465 2,055 340 503 16,900 381 647 169 11,608 3,331 80,477 NJ 10,531 4,245 98,207 3,224 777 156,873 23,535 4,050 20,644 67,397 1,855 1,282 16 44,797 35,313 472,746 NM 984 943 2,457 460 140 29,492 2,011 80 1,074 5,081 264 213 8 2,472 1,388 47,067 NV 1,043 656 2,150 561 242 43,704 4,170 612 731 4,655 557 424 2 5,436 1,004 65,947 NY 18,070 37,692 39,120 2,400 7,773 184,444 7,385 5,002 10,832 8,709 2,526 3,372 51 31,650 3 10,772 369,801 OH 4,325 5,185 72,683 12,036 4,230 159,954 31,103 1,135 5,195 17,857 1,328 8,097 2 34,662 12,512 370,304 OK 3,202 1,550 4,892 3,118 700 117,117 9,865 166 701 5,972 1,450 1,757 13 7,493 4,753 162,749 OR 1,499 564 4,797 889 368 86,277 6,411 129 983 4,435 752 351 17 7,543 3,718 118,733 PA 6,875 44,104 239,248 15,089 19,496 138,460 19,717 18,581 14,916 22,751 2,032 1,428 14 38,202 40,848 621,761 PR 21 42 561 24 23 1,948 68 31 66 1,350 14 6 57 132 4,343 RI 455 245 25,982 97 78 7,890 195 14 148 1,093 56 173 2 1,804 240 38,472 SC 1,885 3,742 8,434 17,819 544 120,123 17,841 246 1,122 9,663 752 739 8 12,774 4,014 199,706 SD 425 165 809 80 202 55,806 2,192 14 90 1,198 54 99 1 789 2,491 64,415 TN 2,321 3,234 14,879 6,094 3,104 100,083 15,820 342 879 6,889 689 447 7 11,470 21,036 187,294 TX 10,418 5,803 27,774 12,208 2,099 401,474 76,114 2,144 6,737 39,863 5,031 3,558 57 31,844 13,825 638,949 UT 741 510 3,519 1,434 468 34,172 3,612 505 466 2,990 472 198 1 3,082 1,505 53,675 VA 3,300 4,836 12,267 2,193 2,408 207,690 14,029 970 7,377 29,490 844 590 18 11,798 14,371 312,181 VI 114 72 616 30 7 3,973 20 18 55 502 36 16 2,160 32 7,651 VT 1,305 1,227 14,610 5,485 2,181 4,479 664 268 39 5,602 114 70 3 3,089 2,229 41,365 WA 3,302 1,247 13,646 811 765 140,115 4,895 122 3,982 9,503 4,885 736 1 17,870 50 20,307 222,237 WI 5,089 29,662 800 39 44 1,230 68 10 71 354 32 191,791 11,307 240,497 WV 1,284 1,336 8,832 596 396 58,610 3,563 102 6,610 4,163 315 267 5,043 7,660 98,777 WY 549 293 2,106 313 89 26,849 1,837 35 279 2,134 277 225 1,525 1,044 37,555 Total Covered Lives (All States) 159,352 374,294 1,133,744 232,275 103,021 5,510,183 556,241 46,362 127,076 627,813 49,674 42,916 4,080 573,243 562,928 501,527 10,604,729 Source: AHIP Center for Policy and Research analysis of the National Association of Insurance Commissioners (NAIC) Medicare Supplement Insurance Experience Exhibit, for the Year Ended December 31, 2013. Notes: The data for standard policies include Medicare SELECT plans, and those issued in three states (MA, MN, WI) that received waivers from the standard product provisions of OBRA 1990. NAIC data does not include all Medicare Supplement Insurance covered lives in California. 10

FIGURE 1 Number of Medigap Enrollees by State and U.S. Territory, December 2013 OR 118,733 CA 390,225 WA 222,237 NV 65,947 ID 60,312 UT 53,675 AZ 209,239 MT 63,547 WY 37,555 CO 132,979 NM 47,067 ND 50,772 SD 64,415 NE 142,393 KS 207,922 TX 638,949 OK 162,749 MN 134,865 IA 260,051 MO 283,352 WI 240,497 AR 158,845 IL 658,693 MS 130,270 LA 124,412 MI 379,817 IN 305,748 TN 187,294 AL 181,410 OH 370,304 KY 179,793 GA 276,358 PA 621,761 WV 98,777 VA 312,181 NC 403,965 SC 199,706 NY 369,801 ME 71,300 NJ 472,746 MD 185,498 DE 46,970 DC 8,103 VT 41,365 NH 80,477 MA 258,134 RI 38,472 CT 144,335 HI 5,215 AK 10,204 PR 4,343 VI 7,651 FL 682,913 GU 371 AS 0 MP 16 Source: AHIP Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibit, for the Year Ended December 31, 2013. 11

FIGURE 2 Percent of FFS Beneficiaries with Medigap, by State and U.S. Territory, December 2013 OR 29.3% CA 11.8% WA 28.2% NV 23.2% ID 33.2% AZ 31.9% UT 25.0% MT 39.6% WY 43.3% CO 28.2% NM 19.0% ND 51.5% SD 50.8% NE 54.0% KS 50.8% TX 25.7% OK 29.7% MN 31.3% IA 54.8% MO 34.6% AR 33.9% WI 36.3% IL 37.1% MS 27.6% LA 22.4% MI 28.8% IN 35.3% TN 22.9% AL 25.3% OH 28.6% KY 28.2% WV 32.2% GA 26.6% SC 28.5% PA 41.8% VA 28.7% NC 30.4% NY 17.5% ME 29.8% NJ 39.1% MD 22.9% DE 29.9% DC 10.7% VT 35.6% NH 34.1% MA 27.3% RI 30.1% CT 30.9% HI 4.2% AK 13.6% PR 2.2% VI 42.0% FL 28.8% GU 2.7% AS 0% MP 0.8% Source: AHIP Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibit, for the Year Ended December 31, 2013. Number of people with FFS Medicare: Centers for Medicare and Medicaid Services; accessed August 11, 2014 at http://www.cms.gov/ Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/MA-State-County-Penetration.html 12

Appendix A Medigap Benefits 2013 Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up Part B coinsurance or copayment Standardized Medigap Plans A B C D F * G K L M N Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes *** Blood (first 3 pints) Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes Part A hospice care coinsurance or copayment Skilled nursing facility care coinsurance Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes No No Yes Yes Yes Yes 50% 75% Yes Yes Part A deductible No Yes Yes Yes Yes Yes 50% 75% 50% Yes Part B deductible No No Yes No Yes No No No No No Part B excess charges No No No No Yes Yes No No No No Foreign travel exchange (up to plan limits) No No Yes Yes Yes Yes No No Yes Yes Out-of-pocket limit ** N/A N/A N/A N/A N/A N/A $4,800 $2,400 N/A N/A Source: 2013 MEDIGAP GUIDE; https://www.ahinsuranceservices.com/documents/2013_ ChoosingaMedigapPolicy.pdf Notes: This table reflects the benefit design for standardized Medigap plans under the 2008 Medicare Improvements for Patients and Providers Act (MIPPA) *Plan F also offers a high-deductible plan. If the beneficiary chooses this option he/she must pay Medicare covered costs up to the deductible amount of $2,110 in 2013 before the Medigap plan pays anything. ** For Plans K and L, after meeting the out-of-pocket yearly limit and the yearly Part B deductible ($2,110 in 2013), the Medigap plan pays 100% of covered services for the rest of the year. *** Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits, and up to a $50 copayment for emergency room visits that don t result in an inpatient admission. ACKNOWLEDGEMENTS For further information, please contact Aparna Higgins, Senior Vice President, Private Market Innovations and Director of AHIP s Center for Policy and Research, 202.778.3200; or visit our website at www.ahip.org/ahipresearch. Teresa Mulligan, Senior Director, AHIP s Center for Policy and Research compiled and analyzed the data. 13

America s Health Insurance Plans 601 Pennsylvania Ave., NW South Building Suite Five Hundred Washington, D.C. 20004 202.778.3200 www.ahip.org 14