Health insurance, particularly Medicare insurance, is a constantly changing thing. In 2010, the standardized Medigap plans changed to add some new plans, eliminate some old plans, and revamp existing plans. In recent months, talk has continued about ways to rework the Medigap plans in a way that will be beneficial to the long-term sustainability of Medicare.
With the debt “crisis” of the summer of 2011, Medicare has been one of the most talked-about places to cut spending. Some of this talk centers around how cutting Medigap plans or changing the way they work will positively affect the spending made on behalf of those on Medicare. While it definitely remains to be seen what will happen long-term, here are a few of the ideas that have been volleyed about concerning Medigap plans and how they work:
- Eliminating first-dollar coverage. One of the major ideas discussed is eliminating plans that cover all of the Medicare “gaps”. These plans, under the current system, are ‘C’ and ‘F’. Many have stated that this first-dollar coverage (i.e. plans that cover everything that Medicare itself doesn’t cover) causes more people to use their insurance more often, and in the long run, costs Medicare money. The point is that Medicare beneficiaries that have a Medigap ‘F’ or ‘C’ don’t have any “skin in the game” – they simply go to the doctor for anything and don’t pay a dime. There have been contrasting studies to show that this does not (or would not) lower costs to Medicare; however, it is uncertain what affect this would have on costs or medical outcomes. The other thing that is uncertain is if people who have these plans would be “grandfathered” in. Medigap plans are “guaranteed renewable”, so that leads one to believe that if you have one of these plans now, your first-dollar coverage would be protected as long as you kept paying the premiums.
- Implementing an overall deductible that Medigap plans cannot cover. Another popular idea that’s been discussed, that is in relation to the previous point, is an overall Medicare deductible. This would apply to both doctor and hopsital visits, and the number mentioned most often is around $550/year. This idea would prevent Medigap plans from covering this overall deductible, so you would have to meet this deductible before your Medigap plan started providing coverage. This will, no doubt, be unpopular with many who are on Medicare and accustomed to first-dollar type coverage.
Overall, it is very uncertain how the debt “crisis” of 2011 and resulting super-committee will affect Medicare itself and Medigap plans. However, what is certain is the significant reductions in coverage will be, in many circle, politically unpopular with the large voting base of seniors.
We advocate staying apprised of all developments and contacting your representatives whenever possible to make them aware of your wishes and concerns over the future of Medicare and Medigap insurance.