The New 2010 Modernized Medicare Supplement Plans: Positive Changes in the Midst of Health Care Reform

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As a result of the implementation of the most recent Medicare Modernization Act, Medicare supplement plans are changing once again. Insurance companies selling Medicare supplements must begin offering these new changes to the plans on or before June 1, 2010.

Evolution of Medicare supplement insurance from standardization to modernization has taken place during the last twenty years. It has been a long and arduous road for consumers, insurance agents and insurance companies. The challenges have been many, but the results have been positive. A brief history is in order before I explore the new changes for 2010. My focus is on Medicare supplement insurance. A discussion of Medicare Advantage is for another day.

The Omnibus Budget Reconciliation Act of 1990 (OBRA 90) limits Medicare supplement policies to ten standard plans labeled A through J. Each standard plan contains a core benefit package. Plan A consists of the core benefits alone; plans B-J contain additional benefits such as coverage of copayments for care in a skilled nursing facility, benefits for at-home help, coverage of physician charges in excess of Medicare's approved amount, and limited coverage for prescription drugs. All Medicare supplement insurance policies currently issued must conform to one of the ten standard plans, although beneficiaries may renew non-standard plans issued before July 1992.

The Balanced Budget Act of 1997 authorized the offering of a high deductible F and J policy. Beneficiaries purchasing these plans must pay a deductible amount larger than traditional Plans F or J before the standard Medigap Plan F or J benefits begin.

The 2003 Medicare Prescription Drug Improvement and Modernization Act (MMA) created the Medicare Part D prescription drug benefit, and as a result made changes to the sale of Medigap policies containing outpatient prescription drug benefits (H, I, and J). Effective on or after January 1, 2006 Plans H, I, and J may still be issued, but may no longer include prescription drug coverage. The MMA also established two new standard plan types (K& L) with benefits specified in federal law. Both new plans have the same hospitalization benefits as the original standard plans and differ from plans A through J in that they provide less coverage for physician and other part B services.

As a result of the implementation of the most recent Medicare Modernization Act, Medicare supplement plans are changing once again. Insurance companies selling Medicare supplements must begin offering these new changes to the plans on or after June 1, 2010. Here is a summary of changes for 2010 Medicare supplement plans effective June 1, 2010:

Innovative Benefits, such as eyewear or hearing aid benefits

New Hospice Benefit

All plans will now include the Hospice Benefit as part of the “Core Benefits.” Medicare pays for all but very limited co-payments for outpatient drugs ($5). Included in all Oklahoma Medigap plans and Texas Medigap plans is a benefit to pay this co-payment will be included.

Medicare provides coverage for inpatient respite care up to 5 days less a co-payment amount of 5% of the daily benefit. The new Hospice benefit will pick up this 5% co-pay.

New Plans

The new regulation also makes the following two new plan options available to beneficiaries, which have higher cost–sharing responsibilities and lower estimated premiums:

  • New Plan M includes 50 percent coverage of the Medicare Part A deductible and does not cover the Medicare Part B Deductible. Plan M has all the core benefits plus the foreign Travel Emergency Benefit.
  • New Plan N does not cover the Medicare Part B deductible and adds a new co–payment structure of $20 for each physician visit and $50 for each emergency room visit (waived upon admission to the hospital). Plan N has all the core benefits plus the foreign Travel Emergency Benefit.

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