Payers can play a key role in helping consumers understand their Medigap benefits and policy options through greater benefit and price transparency.
Bonnie Burns, a training and policy specialist at California Health Advocates, has been advocating for consumers in the Medicare space for over four decades, including in the area of Medigap benefits. She was involved in the lawsuit that initiated standardization of Medigap policies in the 1990s.
Her job, she told HealthPayerIntelligence, is to help consumers understand their Medicare coverage options.
“I’m coming at this from a very different point of view,” Burns explained. “Our goal is to make sure that people understand what those benefits are and how to use them and what it’s going to cost.”
She plays a crucial role because, for the average consumer, understanding Medigap policy options is no simple task.
As consumers navigate decisions about Medicare coverage, payers can support them by understanding why consumers choose Medigap, the challenges that consumers face in comprehending their coverage options, and by actively moving toward greater benefit and price transparency.
WHAT ARE MEDIGAP POLICIES AND WHAT DO THEY COVER
Medigap policies provide coverage for areas of care that Original Medicare does not cover. For modern-day policies, according to Medigap rules, Medigap coverage includes:
- Part A hospital coinsurance for days 61 through 90
- Part A hospital lifetime reserve coinsurance for days 91 through 150
- 365 lifetime hospital days beyond Medicare coverage
- Parts A and B three-pint blood deductible
- Part B 20 percent coinsurance
These benefits were the result of a law passed by Congress in the early ‘90s that called for the standardization of Medigap policies in 1992, largely in reaction to marketing abuses.
Standardization meant that each type of Medigap policy would cover its own list of services, independent of what state the consumer lived in when they purchased it or what payer sold the plan to the consumer.
Massachusetts, Minnesota, and Wisconsin also enforce their own Medigap standardization requirements specific to each state. These states have four “rider” packages that encompass broad categories of special benefits which payers can add to their Medigap policies.
Elsewhere in the nation, payers can also offer innovative benefits, available as a rider or embedded in their Medigap policies.
Payers use a variety of names to distinguish these policies, but ultimately offer a broad range of benefits—including social determinants of health benefits—without much standardization regarding benefit amounts, copays, source providers, or how consumers access them.
Unlike Medicare Advantage, there is no ratings system for Medigap policies since these policies are supposed to be largely the same across payers.
The main distinction between Medigap policies lies in the price.
Medigap policyholders pay a Medigap premium, which goes to the payer, on top of the Part B premium. Most plans also require policyholders to cover the Part B deductible, however, plans C and F cover the Part B deductible.
Payers set their own premiums using one of three methods or “ratings”: issue-age-rated policies, attain-age-rated policies, and community-rated policies.
Issue-age-rated policies and attain-age-rated policies center on the policyholder’s age. For the former, premiums are settled based on the policyholder’s age when they start the policy—the younger the starting age, the lower the premium—and they do not change after that.
Attain-age-rated policies are like issue-age-rated policies in that young age equates low premium. These premiums rise with each passing year, as the policyholder grows older.
Both issue-age-rated and attain-age-rated policies’ premiums are also impacted by inflation.
In contrast to these age-related ratings, community-rated policy premiums stay the same across all ages, year after year. However, this does not protect consumers from increases. The price could still fluctuate based on inflation.
Payers are not obligated to offer Medigap policies. However, if they are going to offer a Medigap policy, they must also offer Medigap Plan A and Plan C or F.
Medigap policies are not available on HealthCare.gov. Instead, consumers access these plans by going to payers and insurance companies directly. That being said, Medicare does offer a Medigap policy search engine to help consumers compare policies and identify payers or insurers to contact.
In order to have a Medigap policy, the consumer must already have Medicare Part A and Part B. Medigap policies are automatically renewed every year if policyholders pay their premiums. A Medigap policy can only cover one person.
There are currently ten basic Medigap policies and two high-deductible policies for consumers to select.
CONSUMERS CHOOSE MEDIGAP POLICIES OVER MA FOR BUDGETING, NETWORK
Consumers may not have many Medigap options like they do with Medicare Advantage, but people want the policies to help budget their healthcare expenses, according to Burns.
“They never have to worry about co-payments. They never have to worry about an annual limit and whether or not they’re going to meet it. They just go to get their healthcare expenses, Medicare pays, the Medigap pays, and normally they would never see a bill,” Burns said.
Plan G policyholders are an exception to this, the policy specialist noted. Plan G policyholders will see a bill for the initial deductible. But otherwise, as with other policyholders, they will not be charged for anything that Medicare covers.
Despite the fact that Medigap policyholders tend to be lower income, only five percent of Medigap policyholders struggled to pay their bills in the past year in 2017, a study from America’s Health Insurance Plans (AHIP) found. Among other Medicare enrollees, 12 percent struggled to meet their bills.
Source: Healthpayer Intelligence