New Changes in Medigap

Q. I hear medigap policies will be changing soon. What do I need to know?

A. Yes, people buying Medicare Supplement Insurance (commonly known as medigap) will have different options starting on June 1, 2010. But the first thing you need to know is that if you already have a medigap policy, or buy one before June 1, you can keep that same policy and its benefits will not change.

Medigap provides a way for people enrolled in the traditional Medicare program to buy private insurance to cover some of Medicare’s out-of-pocket costs (such as copays for doctors visits) and a few extra benefits (such as coverage for medical emergencies overseas), depending on the kind of policy chosen.

Why is medigap changing?

Medigap insurance became standardized in the early 1990s. Instead of a huge number of policies that people had great difficulty choosing among, the number was reduced to 10. These 10 plans were each labeled with a letter of the alphabet—A through J—and each represented a different set of defined benefits. Several years ago, Congress added two more benefit packages (K and L) and a lower-cost high-deductible variant to policies F and J. But, starting June 1, when federal legislation passed in 2008 goes into effect, the options will again be simplified to 10. In addition, a few benefits will be eliminated because they’re now considered outdated.

How will medigap options change?

 Medigap policies E, H, I and J (including the high-deductible J) will no longer be sold. (But if you have one of these policies before June 1, 2010, you can keep it indefinitely if you wish.)

 Two new medigap policies, M and N, will become available. They provide most of the core benefits. But plan M pays only 50 percent of the Medicare hospital deductible. Plan N requires a copay of up to $20 toward the cost of office visits and up to $50 for emergency room visits.

 Existing medigap policy G will cover 100 percent of excess Part B charges—in cases where doctors and other providers charge higher than the Medicare-approved amounts for services—instead of the 80 percent it covers now.

 A new hospice benefit—to cover 100 percent of out-of-pocket costs for drugs and respite care under the Medicare hospice benefit—will be added to the packages provided by policies A, B, C, D, F, G, M and N. Plan K will cover 50 percent of those costs and plan L will cover 75 percent.

 None of the new policies will continue to include a benefit that covers the cost of preventive care services, because it has become outdated. Medicare now covers many of these services, and under the new health care law most of them will be free of charge from Jan. 1, 2011.

 None of the new policies will include a benefit for at-home recovery, which Medicare officials say is outdated and seldom used.

For more detailed information, see the Medicare publication “2010: Choosing a Medigap Policy.”

To compare benefits among different medigap policies available in your area, go to the Medicare website, click on the “Resource Locator” tab and select “Health Plans” on the drop-down menu. Then click on “Find & Compare Medigap Policies.”

Patricia Barry is a senior editor at the AARP Bulletin.