Article by Adalardo
Medicare supplement insurance policies have been around for about 45 years now and, as
one might imagine, they have changed throughout the years. Up to this point the changes
have all been beneficial to Medicare recipients; however, that may not be the case going
forward.
The Medicare program was established on July 30, 1965 when it was signed into law by then
President Lyndon B Johnson and was enacted, as a part of Social Security, to help older
Americans aged 65 and older cover hospital and medical expenses. The program would cover
about up to 80% of the Medicare recipients expenses leaving them exposed to the other 20%
plus.
To address this issue there was a part of the Medicare legislation that allowed for
supplemental policies to be sold by private insurance companies to help Medicare
recipients cover the gaps left by Medicare including deductibles, coinsurance, copays,
and excess charges. These plans were descriptively called Medicare supplement insurance
plans or Medigap because the plan covered the “gaps” in Medicare.
The intent of the Medicare supplement policy is to allow Medicare recipients to purchase
coverage that would, along with regular Medicare, reduce or eliminate their financial
exposure to medical bills. The first Medicare supplement plans had very little
standardization and many companies offered widely varying plans with differences not only
in coverage but also in limitations and exclusions. This was the norm for the first 25
years of Medicare supplement offerings and made it awfully difficult for Medicare
recipients to shop for the best coverage and rates.
In 1992, after several complaints over the past quarter century from Medicare recipients
about the confusion of shopping for a good Medicare supplement insurance policy, Medicare
decided to require that all insurance companies that wanted to offer this type of plan be
required to offer plans in a standardized format in which certain benefits would be
grouped and indicated with a plan letter. Medicare also began to automate claims-filing
in which the Medicare recipient did not have to go through the very manual process of
filing their claims with the Medicare supplement companies. The claim would go to
Medicare from the medical office and Medicare would decide if they would cover the
medical bill or not. If Medicare decided to cover the medical bill then Medicare would
file with the Medicare supplement insurance company used by the Medicare recipient for
payment of the difference owed to the medical office.
This level of standardization allowed Medicare recipients, for the first time, to feel
comfortable that if they looked at a particular plan from one insurance company, like a
plan F, that the plan would work identically from any other insurer that offered a plan
F. The benefits would be the same. The doctor’s network would be the same as it is the
Medicare network of doctor’s. And claims-filing would be automated and work the same way.
Because Medicare made the decision on whether a claims should be paid the Medicare
recipient did not have to worry about whether one insurer was better at paying claims
than another.
So, shopping for a Medicare supplement plan has really become as easy as determining
which standardized Medicare supplement plan the Medicare recipient wants, getting pricing
from different providers of that plan and going with whichever company has the best rate.
Although the standardization of Medicare supplement plans are sure to continue going
forward and the plans being offered may change over the years, the ability of Medicare
recipients to have “first dollar” medical coverage with Medicare and a supplement is
likely to end within the next few years. Several legislators have jumped on a study,
that many claim to be flawed data, that indicates that Medicare could be saved by having
Medicare recipients have “more skin in the game” by being responsible for deductibles and
coinsurance. There are several proposals to not allow Medicare supplement insurance
cover the deductibles associated with Medicare and to possibly not include coinsurance
coverage. This could mean that Medicare recipients could be on the hook for up to
thousands in medical expenses in any given year.
Medicare’s come a long way in its 46 years and the benefits have been undeniably good
especially when coupled with a Medicare supplement plan. Although the early years were a
little tough with Medicare supplements not being standardized there have been tremendous
improvements in coverage over the years. It’s possible that we’re, for the first time
since Medicare’s inception, about to see reductions in benefits available.
To know more about Medicare Supplement Insurance please browse Medicare Supplement Insurance