Medigap enrollment increases as out-of-pocket expenses rise for seniors due to holes in Medicare coverage.
– AHIP has released data showing that enrollment in the Medicare Supplement, Medigap, has seen a steady increase from 2014 to December 2015. The data represents statistics from 11.8 million enrollees with policies from 305 separate insurers.
The steady increase is due to the standard deductible, and rising out-of-pocket costs for Medicare members, AHIP says. As an essential source of Medicare supplemental coverage, Medigap fills a critical need in the healthcare coverage ecosystem.
The report states that in 2015, Medicare Part A had a $1,260 deductible per benefit period for inpatient hospital care and coinsurance beginning with day 61 of hospitalization. Part B required a 20 percent coinsurance for outpatient and physician care after an annual deductible of $147.
The AHIP data showed four main trends within the Medigap data:
All Medigap enrollment increased from 11.2 million in December 2014 to 11.8 million in December 2015.
Plan G enrollment, which provides coverage of all Medicare deductible and coinsurance amounts except the Part B deductible increased by 28 percent from 2014 to 2015, or by 198,000 enrollees.
Enrollment in Plan K, which provides partial coverage for coinsurance and copayments and has an out-of-pocket limit of $4,940, also increased by 28 percent from 2014 to 2015, or by 16,000 enrollees.
An increase in the percent of fee-for-service (FFS) Medicare beneficiaries with Medigap plans increased from 30 percent in 2014 to 32 percent in 2015.
A partial explanation for the increase in Medigap coverage is directly related to the shifting sands of Medicare coverage since 1990, which has left beneficiaries and payers in flux.
This began in 1990 with an omnibus spending plan that required Medigap plans sold after 1992 to conform to one of 10 uniform benefit packages.
Then in 2003, the Medicare Modernization Act (MMA) required elimination of prescription drug benefits, authorized two new plans (K and L) with cost-sharing features, and encouraged development of standardized benefit designs with additional cost sharing features.
More cuts came in 2008 with the passage of the Medicare Improvements for Patients and Providers Act (MIPPA). This legislation led to the elimination of at-home recovery benefits to be replaced with hospice care. It also included the removal of preventive care benefits in response to increased FFS coverage. 2008 did see the introduction of two new Medigap policies (Plans M and N) with increased beneficiary cost-sharing features.
Medicare SELECT plans are identical to standardized Medigap plans but require policyholders to use provider networks to receive full benefits. This results in Medicare SELECT plans to generally cost less than related Medigap plans.
In April 2015, Congress passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).
MACRA states that as of January 1, 2020, Medigap insurance carriers may no longer sell Medigap plans covering the Part B deductible to newly eligible Medicare recipients. Only individuals who are age 65 before 2020 or those Medicare eligible due to a disability will qualify.
Three states maintain waived Medigap plans, exempt from all legislative changes from 1990 on. The three states (Massachusetts, Minnesota, and Wisconsin) continue to offer standardized Medigap plans. Individuals who had purchased Medigap plans in these states do have the ability to keep their coverage if they move out of the three waiver states.
According to the NAIC data, 97 percent of Medigap policies in force on December 31, 2015 were standardized plans. Pre-standardized plans made up only three percent of existing Medigap policies.
Medigap plans are “guaranteed renewable” regardless of when they were purchased. This means Medigap policyholders can maintain their coverage and not have their policy cancelled if there is continued payment of premiums.
AHIP noted that Medigap plans with the highest rate of growth offered the beneficiary a predictable and consistent premium. This feature was especially important to fixed-income Medicare members.
It also saw plans that mirrored features seen in traditional commercial products (coverage for copayments, coinsurance, and deductibles) favored by consumers.