*This is an archive page. The links are no longer being updated.
1992.07.26 :  Regulation -- Medigap

Contact: Bob Hardy (202) 690-6145        
July 26, 1992

       Finding Medigap policies that best fit their health needs
and pocketbooks will now be easier for Medicare beneficiaries,
thanks to intensive efforts by the Department of Health and Human
Services and state governments.
       "Now Medicare beneficiaries can make more informed choices
and buy only the supplemental coverage they need," said HHS
Secretary Louis W. Sullivan, M.D.
       With the implementation of new federal Medigap requirements,
which must be in force by July 30 in nearly all states, Medicare's
35.5 million beneficiaries will be offered the choice of up to 10
newly available Medigap policies with standardized benefits and
simplified wording.  The benefit packages were developed by the
National Association of Insurance Commissioners under federal law.
       Medigap policies are supplementary insurance plans that help
fill gaps in Medicare coverage.  Some cover part or all of Medicare
deductibles and coinsurance payments.  Many pay for items and
services not covered by Medicare. 
     HHS' Health Care Financing Administration, state insurance
departments, industry representatives and consumer groups have been
working during the past year to assure that new Medigap plans
offered for sale will meet the reforms required by federal law. 
For example, the law specifies that: 

     o    With few exceptions, all new plans sold nationwide must
          conform to the 10 standardized benefit packages developed
          by the National Association of Insurance Commissioners
          last year.

     o    A basic "core" plan, with minimum benefits and cheapest
          price, must be offered by any insurer selling any Medigap
          policies in a state.  It may offer up to nine more plans-
          -with varying benefits and prices--depending on a state's
          requirements.  A state does not have to permit the sale
          of all nine additional plans.

     o    Each of the 10 plans has a letter designation.  Plan "A"
          offers the most basic coverage probably at the cheapest
          cost, while Plan "J" provides the most extensive benefits
          probably at the highest cost.  The supplemental coverage
          under a "Plan A" is the same nationwide, regardless of
          where it is sold and by which insurance company.

     o    Insurers nationwide must use uniform wording and specific
          formats in describing benefits.  This makes it easier for
          consumers to compare services and costs offered by
          competing insurers to determine which plan best fits
          their needs.

       "The reforms, particularly those making information
understandable, will be a boon to beneficiaries and their
families," said William Toby Jr., acting HCFA administrator.  HCFA
is the federal agency that runs the Medicare and Medicaid programs.
       Toby noted that HCFA's role of directly overseeing state
regulation of Medigap insurance is mandated by a 1990 law.  The 
states historically have been solely responsible for regulating
insurers and will continue to do so as long as they enforce all
federal requirements.
       Toby also noted some exceptions to implementation of the
Medigap reforms.  For example, the standardization of benefits
generally does not apply to plans issued or sold prior to the
implementation of the new federal rules.  In a few states, however,
existing Medigap plans may be required to change over to the
standardized plans when they come up for renewal.  Questions on
which of the standard plans are offered and on existing Medigap
plans should be referred to state insurance departments.
     Massachusetts, Minnesota and Wisconsin already offered 
alternative standardized Medigap policies that meet federal
requirements, so no regulatory changes are needed there.  
       The new Medigap plans will not be required immediately in
Montana and Oregon, although insurers may be offering them there. 
That is because legislation is needed to implement the new Medigap
reforms in those states, and their legislatures did not meet in
*This is an archive page. The links are no longer being updated.
1992.

       A special kind of supplemental policy called Medicare
SELECT--which can be a variation of any of the 10 Medigap plans or
another alternative plan--is available in Alabama, Arizona, 
California, Florida, Indiana, Kentucky, Michigan, Minnesota,
Missouri, North Dakota, Ohio, Oregon, Texas, Washington and
Wisconsin.  Beneficiaries choosing this option are expected to be
charged a lower premium for agreeing to use health care
professionals in a network of "preferred providers" approved by the
Medicare SELECT insurer.  However, if the beneficiary chooses to
use a non-network provider, Medicare will continue to pay its share
of the bill.

       "We are pleased to see that Medicare SELECT is available. 
We believe this kind of approach offers beneficiaries both good
value and good quality health care.  We look forward to seeing more
of this kind of innovative, coordinated care option in the future," 
Toby said.

       Inquiries and complaints about the availability and
marketing of Medigap policies, including possible illegal
practices, should be directed to state insurance departments.  HCFA
operates a toll-free hotline for reports of Medigap fraud and
abuse.  The number is 1-800-638-6833.

       Details on the new standardized Medigap plans are available
in the "Guide to Health Insurance for People with Medicare."  This
publication was developed jointly by HCFA and the National
Association of Insurance Commissioners.  Single copies are
available free from the Consumer Information Center, Department 59,
Pueblo, Colo.  81009.  Requests should specify the title and
publication number 518-Y.

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