subject: Medigap Insurance May Handle Fewer Medical Bills [print this page] When youre new to Medicare, you may not realize how much health care is not covered. Few beneficiaries know about the recent talk of reducing the benefits of Medigap Plans, either. These plans have filled in the gaps in Medicare coverage quite nicely. Health Affairs and the Robert Wood Johnson Foundation examined how reducing the benefits of Medigap Insurance Plans would affect Medicare beneficiaries.
Approximately 10 million Medicare enrollees have a Medigap Plan now. Ten different versions of Medigap Insurance are currently available, depending on state law. Most states offer at least some of these standardized policies, but three states have somewhat different versions. In Massachusetts, Minnesota and Wisconsin, Medigap Plans must comply with different standards than in other states.
Studies show that those who have Medicare Supplement Insurance use more health care services than those who are only enrolled in Medicare alone. Medigap Plans provide what's known in the industry as "first-dollar" coverage. That means that Medigap Plans cover Medicare co-payments, co-insurance and the Part A and Part B deductibles that people with just Medicare have to pay for on their own.
Several commissions and government panels have proposed limiting this first-dollar coverage so beneficiaries will use less health care decreasing federal Medicare spending. Critics charge that reducing Medigap Plan coverage would be detrimental to those living on a tight budget and/or already in poor health.
It all comes down to whether the first-dollar coverage is encouraging beneficiaries to get unnecessary medical care. If it is not, then reducing this coverage might limit some expenses in the short term, but increase costs for skilled nursing care and hospitalizations in the long run.
Will Medigap Plans Be Barred From Offering First-Dollar Coverage?
In the summer of 2011, bipartisan deficit-reduction discussions focused on reducing first-dollar coverage in Medigap Plans. One proposed change would require Medigap enrollees to pay an annual surcharge of $530. According to the committee, that would help the federal government save up to $53 billion over a 10-year period.
The verdict is not yet in on how to trim Medicare and Medicare Supplement Insurance Plans to help reduce the federal deficit, but beneficiaries can do some financial planning of their own. Studies by insurance companies have indicated that the vast majority of Medicare beneficiaries have not been able to find the best way to reduce their out-of-pocket costs. That's largely believed to be the result of having such a complicated array of Medicare Supplement Plans. Not only are there 10 different versions of Medigap Insurance, but there may be about two dozen separate versions of Medicare Advantage Plans in a single region.
One study found that Medicare beneficiaries were least likely to invest in any plan to supplement their Medicare benefits when faced with too many choices. Another study indicated that those who did pick a supplemental plan rarely found the plan that would help them save the most on health care. Regardless of what happens to Medicare and Medicare Supplement Insurance Plans in the future, why not save all you can right now?
Online resources are available to show exactly what Medigap Insurance offers, but Medicare Advantage Plans are much harder to pin down because they include a greater variety of options. Medicare beneficiaries can consult with insurance agents who specialize in supplementing Medicare at no charge. Some insurance brokers also offer free informational presentations to help beneficiaries understand their options. Taking advantage of free resources now could help to reduce future medical expenses.
by: Wiley Long
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