The New Health Care Law and Medigap

Your questions answered

by: Susan Jaffe | from: AARP Bulletin | December 6, 2010

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Q: I have a medigap policy. Will it change under the health care reform law?

A: No. Medigap plans — also called Medicare supplemental plans — are a special kind of health insurance regulated by other federal and state laws. The new law currently does not change most medigap policies, though there may be changes later on, says Bonnie Burns, policy and training specialist at California Health Advocates, a consumer health advocacy group. These plans have a very specific purpose: to fill in the payment gaps in traditional Medicare coverage. They only kick in when you are responsible for a share of the bill, including copayments and deductibles but excluding monthly premiums.

There are several health care reform rules that don't apply to medigap plans. Because Medicare doesn't cover beneficiaries' children, medigap plans don't have to follow the new law's requirement that private insurance plans cover young adult children under their parents' insurance.

The New Law and You

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The law also requires most private or employer insurance plans to remove limits on how much they will pay for medical care annually and over a member's lifetime. Medigap plans have no annual or lifetime limits on the amount they pay, says Burns, who serves on a medigap committee of the National Association of Insurance Commissioners. They have only a set limit on what portion of the beneficiary's bill they cover, not how much they will spend in any time period.

The new law also prohibits insurers from discriminating against people when they get sick or if they have a preexisting health condition. Insurers selling medigap coverage already have strict rules requiring them to accept anyone who applies at these times:

if you involuntarily lost your health insurance.
if you apply during the open enrollment period.
if you apply within six months of enrolling in Medicare Part B and you are 65 years old or older.

At other times, the insurer can decline to cover medical care for a preexisting health condition but only for up to six months. If you have questions about your individual situation, contact your state health insurance assistance program.

People under age 65 in Medicare have no guaranteed right to buy medigap coverage unless the state where they live requires insurers to do so. (See a list of those states.)

Susan Jaffe of Washington, D.C., covers health and aging issues and writes the Bulletin’s weekly column, Health Care Reform Explained: Your Questions Answered.