MEDIGAP PLANS

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These are Medicare supplemental plans that help pay for the deductibles in Medicare A and B. Agents and companies abused the sales by selling the elderly innumerable redundant polices solely for the commissions. Congress finally mandated that only 10 plans could be sold nationally.

Medigap Benefits by Plan

Medigap Benefits A B C D E F G H I J
Basic x x x x x x x x x x
Part A Hospital Deductible x x x x x x x x x
Part A: Skilled Nursing Home Co- Insurance x x x x x x x x
Part B deductible x x x
Foreign Travel x x x x x x x x
At home Recovery x x x x
Part B: Excess Doctor Charges 100% 80% 100% 100%
Preventative Screening x x
Outpatient Prescription drugs Basic Basic Exten ded

Here is a rough comparison from United Seniors Health Cooperative

Plan A: The least expensive and least comprehensive. Best for those that can pay out of pocket expenses

B: Offers the same coverage as A but also covers the $696 deductible. Good if income is limited

C: If you want more coverage and most of your doctors accept Medicare assignment. About the same cost as D, E and G

D: For those whose doctors accept Medicare assignment and who anticipate need for the At-Home Recovery benefit

E: If you are basically healthy and want preventative health services on a regular basis. However you will pay the $120 worth of health screening and preventative health services whether you use them or not.

F: For those whose doctors do not accept Medicare assignment- though recognize that doctors cannot charge more than 115% of the Medicare approved amount.

G: For those whose doctors do not accept assignment and also want the At Home Recovery benefit. Only 80% of the excess doctor charges are covered. The Part B deductible is also not covered. Cost is similar to C, D and E.

H: Least expensive plan offering prescription drug coverage. Reimbursement for no more than 50% of drug bills and a maximum of $1,250

I: More expensive than H because it includes coverage for excess doctor charges and the At Home Recover Benefit

J: The most comprehensive plan and includes all the benefits of the plans indicate above. People who are very sick or who already have high drug expenses would only be able to enroll in H. I, and J if they are eligible for open enrollment.

But the plans vary tremendously in price- even for the same plan. That's why it is imperative to review plans from various companies. But not only that, rates between states vary as to the amount of claims that the companies experience. For example, a no frills plan A in Florida costs the highest nationally at $1,812 with American Republic Insurance Co. That's about 7 times what Anthem Life Insurance Co. subscribers in Texas paid, at $242.

The most comprehensive plan in Florida from American

Pioneer Life Insurance Co. cost $3,985 annually -- three times the $1,126 what South Dakotans pay South Dakota Medical Service Inc.

Pioneer Life Insurance charges $402 for Plan D in Delaware while the identical plan in Florida is $1,971.

Like the man says- it pays to shop.

MEDICARE SUPPLEMENTAL PLANS (Medigap 1998): While Congress chose just 10 policies years ago due to the number of unnecessary policies sold to the elderly, there are still many issues to address and some new ones due to new laws. (Some states have minor revisions or may not allow all 10 plans).

First, if you apply for Medicare Part B (and there is no reason I am aware of why one would not) at age 65, you have the option of getting ANY Medigap policy regardless of your health. But you need to review them careful to see which one might be the best for you and the activities you intend in the future- traveling for instance. But if you were to lose your coverage because of a move, new laws may allow you some flexibility. Those who lose such coverage are allowed 63 days to buy any Medigap policy labeled A, B, C or F regardless of health. (However, this may not take place till 1999.) By the same token, policies F and J may come with high deductibles- $1,500. But that should reduce the premiums- all of which have been escalating tremendously the last few years due to the increased use of home health care.

In context with pricing is the fact that even though all the plans within a state do essentially the same thing and have to pay out the same amount of premium (65%), the prices between companies can vary dramatically. There are effectively three ways a policy is underwritten

Attained Age- Premiums start out low since they are based at you current age- say 65. But as you get older, the premiums will increase- perhaps drastically and perhaps not covered in your anticipated budget.

Issue Age- Whatever you pay when you start is the rate you will pay when you get older (absent a change in all categories within the state). But your premiums when you are younger will obviously be higher than the rates under attained age.

Community Rating- Everyone in the same geographical area pays the same regardless of age and tend to be higher in cost than the other two.

All companies must offer Plan A and then additional core benefits. These include

daily medicare co payment of $191 per day for hospitals stays of days 61 through 90 and $382 for says 91 through 150

the full cost of up to 365 additional hospitals days during your lifetime

the 20% co payment of medicare's allowed amount for doctor's charges

the $764 hospital deduction under medicare part A

the $100 a year part B deductible for doctor's services

the $95.50 per say co payment for days 21 through 100 for skilled care in a nursing home

50% of outpatient prescription drug costs up to a top benefit of $3,000 a year and a $250 deductible

up to $1,600 a year for short term custodial care at home following illness, surgery of injury

100% of the difference between doctor's charges and the amount approved by medicare

up to $120 a year for preventative health screening

80% of the cost of emergency care during foreign travel after a $250 deductible.

The table below shows the discrepancies in different prices from various policies across the U.S. (Weiss):

State Policy A B D G H

Arizona $484- 849 615- 1,268 670- 1,113 795- 1,214 1,117- 1,750

Calif 436- 1,032 585- 1,614 696- 1,623 799- 1,932 1,152- 2,103

Florida 544- 1,812 801- 1,701 951- 1,811 944- 1,953 1,515- 2,837

Iowa 381- 659 509- 951 554- 843 635- 1,060 1,041- 1,410

Penn 466- 958 6356- 1,297 693- 1,236 894- 1,248 1,181- 1,816

MEDICARE SUPPLEMENTAL PLANS: (HIAA 1999) "Nearly nine out of 10 Medicare beneficiaries have some type of private Medicare supplement insurance, and a government survey shows an equal number of them are pleased with their coverage"

MEDIGAP PLANS (2000) Consumer Report ratings of 559 Medicare-supplement policies and 273 Medicare HMOs for 30 cities: Atlanta, Boston, Chicago, Cincinnati, Cleveland, Dallas, Denver, Detroit, Houston, Jacksonville, Fla., Kansas City, Mo., Las Vegas, Los Angeles, Louisville, Ky., Manchester, N.H., Miami, Milwaukee, Minneapolis, New Orleans, New York, Philadelphia, Phoenix, Pittsburgh, Portland, Ore., Raleigh, N.C., San Francisco, Seattle, St. Louis, Tampa, Fla., and Washington, D.C.

This notice announces the annual deductible amount of $1580 for the Medicare supplemental health insurance (Medigap) high deductible policy options for 2001. High deductible policy options are those with benefit packages classified as "F" or "J" that have a high deductible feature. The deductible amount represents the annual out-of-pocket expenses (excluding premiums) that a beneficiary who chooses one of these options must pay before the policy begins paying benefits.

Medigap insurance: (2001) There are 10 different policies available in effectively all states. But which ones to use?  Most representatives of health insurance companies that sell Medicare supplemental policies continue to provide inaccurate information about the time frame in which such supplemental policies can be purchased by Medicare HMO members whose coverage is ending.

Medigap policies are all over the place:  (2001) "A 65-year-old male living in Ft. Myers, Fla. would pay $3,667.18 with Physicians Mutual Insurance Company for Plan J but only $2,712.00 with United Healthcare Insurance Company through AARP -- nearly $1,000 less for an identical policy. -- The same gentleman living in Las Vegas, Nev. would pay $1,543 for Plan G with United American Insurance Company but less than half that ($778) with USAA Life Insurance Company for the same policy. -- A 75-year-old husband and wife living in Tucson, Ariz. would pay a combined rate of $5,953.20(1) for Plan F with Reserve National Insurance Company but only $3,479.60 with American Family Mutual Insurance Company. If they had had the necessary pricing information to compare these identical policies, they would have saved almost $2,500 a year.

Attained-Age Pricing Not Less Expensive in the First Year

The industry has sometimes excused the wide price differences in Medigap premiums by pointing to the different ways it raises rates for existing policyholders in future years. For example, premiums based on "attained-age" pricing, which automatically rise as a policyholder grows older, are supposed to be lower in the first year but higher in future years.

By contrast, premiums based on "issue-age" pricing, which are promised never to rise for an individual unless they are raised for everyone in a particular group, are supposed to be higher up front, but less expensive in the long run.

However, in reality some attained-age policies are actually more expensive than issue-age policies for the same individual and the same plan. For example:

-- A 65-year-old male living in Dayton, Ohio, would pay $1,254.38 with Continental General Insurance Company for Plan A utilizing attained-age pricing but only $771.40 from Nationwide Life Insurance Company using issue-age pricing. One would expect the attained-age policy to be less expensive up front because of the greater likelihood of future premium hikes, but it's actually more expensive. -- Similarly, in McAllen, Texas, World Insurance Company charges $1,911.07 for an attained-age Plan F policy, but Christian Fidelity Life Insurance Company charges only $1,220.00 for the same exact Plan F using issue-age pricing. -- A 70-year-old male living in Morrisville, Penn., would be charged $2,075.80 by Guarantee Trust Life Insurance Company for an attained-age Plan C policy but only $1,454.76 by Philadelphia American Life Insurance Company for an issue-age Plan C. "

Medigap Insurance: (2001) The GAO found that while Medigap plans are widely available to Medicare beneficiaries, the plans have limited benefits and may be costly.

Rate of Increase in Medigap Premiums Slows in 2002 : The rise in Medicare supplemental insurance (Medigap) average premium rates slowed in 2002 to 2.4 percent, compared to average rate increases of 10.9 percent in 2001 and 7.2 percent in 2000, according to a Weiss Ratings Inc. study. Analysts attribute the slowdown to companies no longer offering high-priced plans, insurers leaving the Medigap marketplace, and companies lowering or maintaining their annual premiums due to legislation that helped reduce the costs of claims. Rate increases were the highest in Rhode Island (10.6 percent), New Jersey (9.3 percent), and Florida (8.1 percent). States with the lowest rate increases were Delaware (3.1 percent), Nevada (3 percent), and New Mexico (2.2 percent). Nationally 146 companies offered Medigap plans in 2002, compared with 167 companies in 2000 and 181 companies in 2000..

Just what I taught Monday in a LTC class: (Weiss 2003) Despite standardized benefits for Medicare supplement insurance (Medigap), consumers continue to face significant disparities among Medigap premium rates for identical plans. In analyzing more than 5.5 million premium rates among 103 insurers offering Medigap insurance in 2003, Weiss found that premium rates continue to vary dramatically among all Medigap plans, from a minimum of $352 for Plan A to a maximum of $6,659 for Plan J, revealing a 1,792 percent leap in premiums between the lowest- and highest-cost plans.

While the national average premium rate in 2003 for a 65-year-old female for all plans A through J combined is $1,412, plan rates fluctuate widely nationwide. In reviewing the rates for a 65-year-old woman, Weiss found the following pricing variances: *In Florida, Plan C costs $3,886 with Physicians Mutual Insurance Company, but only $1,116 with Continental Life Insurance Company of Brentwood, representing a 248.2 percent difference in cost. In North Dakota, the same plan ranges from $895 with American Family Mutual Insurance Company to $1,867 with Physicians Mutual Insurance Company, a 108.6 percent difference. *In Montana, premiums for Plan F vary from a low of $974 with State Mutual Insurance Company to a high of $2,032 with Continental General Life Insurance Company, representing a 108.6 percent difference in cost, while rates in Connecticut run from $1,622 with USAA Life Insurance Company to $2,456 with Bankers Life and Casualty Company, a 51.4 percent difference.

Weiss' study also found that Plans A, C, and F are the most widely available, with 92, 84, and 80 companies offering these plans nationwide, respectively, whereas far fewer insurers, 27, 33, and 21, offer Plans H, I, and J, respectively. On average, 12 to 13 insurers write policies for Plans A, C, or F in any given state, while only one or two provide coverage under Plans H, I, or J. "Insurers have been unable to offer Plans H, I, and J at competitive prices, so despite the additional benefits that these plans may offer, such as limited prescription drug coverage, consumers have been primarily interested in the basic Medigap coverage available through Plans A, C, and F," .

New Medigap plans coming:  (WSJ 2004) Right now, there are 10 main Medigap plans, lettered A to J. Each plan offers a list of specific benefits. For example, plan C, the most popular one, offers coverage for skilled-nursing-facility coinsurance (for post-hospital care, for example), foreign-travel emergencies, deductibles that are required under traditional Medicare and other basic benefits like hospital and outpatient coinsurance.

Plans K and L will be added to the mix, but they'll work differently. Instead of offering specific benefits on an item-by-item basis, plan K will pay for 50% of most expenses not covered by Medicare up to $4000 a year out of pocket and then the full medical costs the plan covers after that. Plan L will work the same way, except it covers 75% of traditional Medicare costs, and the out-of-pocket limit is $2,000.

About 23% of Medicare beneficiaries are enrolled in Medigap,

Medigap policies (Weiss 2004) Although Medicare supplement insurance benefits (Medigap) have been standardized since 1992, consumers continue to confront dramatic variations in premium rates for policies offering identical coverage.

The national average cost of a Medigap policy for a 65-year-old female ranged from $1,113 to $3,323. Disparities in pricing on specific plans vary even more dramatically; for instance rates for the popular Plan C varied from a minimum of $615 to a maximum of $6,271. The broad ranges in premium rates for Plans A through J are illustrated below:

2004 Medigap Premium Rates (1)

Plan A Minimum ($):355.32

Plan A Maximum ($):6,460.38

Plan A Average ($):1,113.08

Plan B Minimum ($):602.00

Plan B Maximum ($):3,415.30

Plan B Average ($):1,377.08

Plan C Minimum ($):615.60

Plan C Maximum ($):6,270.80

Plan C Average ($):1,689.28

Plan D Minimum ($):593.00

Plan D Maximum ($):3,373.71

Plan D Average ($):1,387.05

Plan E Minimum ($):732.00

Plan E Maximum ($):3,075.00

Plan E Average ($):1,356.49

Plan F Minimum ($):516.00

Plan F Maximum ($):6,904.80

Plan F Average ($):1,709.83

Plan G Minimum ($):700.80

Plan G Maximum ($):4,624.00

Plan G Average ($):1,435.92

Plan H (2) Minimum ($):1,156.44

Plan H (2) Maximum ($):11,053.54

Plan H (2) Average ($):3,168.49

Plan I (2) Minimum ($):1,415.40

Plan I (2) Maximum ($):8,413.35

Plan I (2) Average ($):3,156.23

Plan J (2) Minimum ($):1,472.52

Plan J (2) Maximum ($):7,258.00

Plan J (2) Average ($):3,323.75

As always, insurance of almost all types is a minefield.

Shop around: (2005) Weiss Ratings released its analysis of Medigap premium rates, proving once again that it pays to shop around. A few highlights: the national average premium for a Medigap policy covering a 65-year-old female ranged from $1,159 to $3,443, with even more startling pricing disparities on specific plans (e.g., premiums for the popular Plan C varied from $651 to more than $9,000).