On one hand, “Medigap,” health insurance coverage that supplements traditional Medicare, is an incredible product. It usually picks up all but a little of people’s out-of-pocket Medicare costs. On the other hand, people must choose among a sea options they are hard-pressed to understand. And, they must pay a lot of money for Medigap, in order not to worry about their out-of-pocket health care costs. Congress needs to stop the Medigap madness.
Jake Johnson reports in Common Dreams about Sen. Elizabeth Warren‘s recent report on how insurance companies encourage insurance agents through money and prizes to upsell people Medigap plans. Even though Medigap is regulated by the federal government, both state and federal governments allow the insurers offering Medigap to run away with the store, scamming “millions of seniors …, offering agents lavish vacations to steer unknowing beneficiaries into more expensive plans,” according to Senator Warren.
The insurance companies offering Medigap profited handsomely off the $16 billion in premiums they collected last year alone. Older adults are “getting fleeced.” Warren wants federal and state regulators to step in.
People in traditional Medicare, who don’t have Medicaid or retiree coverage to fill gaps in coverage, need an affordable Medigap plan. They tend to assume that traditional Medicare with Medigap is less affordable than Medicare Advantage, corporate health insurance coverage. But, should you need costly health care services, traditional Medicare plus Medigap can be far more affordable than Medicare Advantage. Medicare Advantage plans typically come with $5,000 in out-of-pocket costs for in-network care alone. Sometimes these costs are higher; Medicare Advantage plans can set our-of-pocket costs for in-network care as high as $8,300 this year.
Unfortunately, people can’t trust their insurance agents to help them understand the benefits of traditional Medicare over Medicare Advantage. These agents often steer them to Medicare Advantage plans, where they make the biggest commissions. And, when people opt for traditional Medicare, they can’t trust their insurance agents to steer them to the Medigap plan that best meets their needs.
What you can do: Contact your State Health Insurance Assistance Program (SHIP) for free unbiased assistance choosing a Medigap plan.
Warren wants the Centers for Medicare and Medicaid Services, which oversees Medicare, to step in. But, it’s hard to see how additional regulations would help much to protect people from predatory sales agents. The only truly non-predatory solution would be for the government to sell people a government-issued Medigap policy or, better still, cap or eliminate out-of-pocket costs in Medicare.
If Congress were to add an out-of-pocket cap to traditional Medicare, it would reduce people’s need for Medigap coverage altogether. That’s what’s needed. And, it would save Medicare money.
The Congressional Budget Office recently found that a high out-of-pocket cap–$8,500–would reduce Medicare spending. It would also give people the choice of traditional Medicare without having to buy Medigap supplemental coverage.
Here’s more from Just Care:
Leave a Reply