Substitute Insurance

Since the Medicare Modernization Act (MMA) has been passed and implemented, and is the law of the land, it is important that you understand the lay of the land if you are on Medicare (or have a family member that is). The MMA created permanent, wide-ranging changes to the kinds of Medicare supplement plans insurance companies can provide after June 1, 2010. Much of it will sound like alphabet soup, but a dozen can be ignored almost completely in any coverage of changes, as four were simply eliminated (E, H, I and J) and eight are essentially unchanged (A, B, C, D, F, G, K and L). That leaves Plan F as the most comprehensive one now, and two new supplement plans (M and N) are lower-cost choices that require some cost sharing by the insured.

As determined by the Centers for Medicare and Medicaid Services (CMMS), the phased-out plans (E, H, I and J) will not even be available for purchase after June 1 of this year, although you can keep the coverage if you are already enrolled and wish to retain it. Alternatively, you can convert your particular supplement plan to another one offered by your insurance company, and many observers believe Plan F is the alternative of first choice (of the insurers, at least). Of course, your situation (or your eligible loved one’s) is unique, and all factors need to be weighed when making these sorts of coverage and feature determinations.

Use a little wisdom

There are several important considerations related to the conversion option and opportunity in the MMA. Whenever your phased-out plan, for instance Plan J, is no longer offered by your insurer, which means no new premiums are coming in from new policyholders. It is not much of a stretch to see how this might become an opportunity for the insurer to get rate hike approvals on renewals for those people who insist on remaining in a discontinued plan.

Another problem may arise when you try to get into a new plan after your conversion opportunity period has passed. In states with open enrollment laws, such as Missouri and California, it would not be a problem, but in other states you might be faced with the entire medical underwriting and examination process. At that time, you could conceivably be denied coverage because of poor health and/or serious pre-existing ailments.

New supplement plans

New Medicare Plans M and N will require increased out of pocket costs for the insured for claims. On the other hand, the monthly premiums will be reduced for these two plans compared to those offering more comprehensive coverage, like Plan F, for example. Plans M and N do not cover the Part B deductible or Part B excess costs in states where it is allowed (which is not all states, of course, as Ohio is one state that forbids it). As far as Part A deductible is concerned, Plan M covers 50% while Plan N covers 100% of it.

Both M and N pay 100% of Part B Coinsurance except for a co-pay of up to a $20 on office visits and $50 for the emergency room for Plan N. Plans K, L, M and N are the plans in the new lineup that most closely mirror the Medicare Advantage package. These plans require increased cost sharing, and cannot be packaged with the Part D prescription drug coverage. Like all Medicare supplements, Part D coverage has to be bought as a standalone option. Should some future health care reform ever limit Medicare Advantage coverage, then Plans K, L, M and N will be the ones most suitable as low-cost alternatives.

Benefit changes, too

Compared to the supplement plans available before June 1, three significant changes have been made to the offered benefits, depending on chosen coverage. With the removal of Plans E, H, I and J, preventative treatment that Medicare does not cover, and at-home recovery benefits, are not available any longer. These plans, and these particular benefits, were phased out because the benefits were limited, hard to administer and not widely selected by consumers. Instead, the CMMS added a Part A hospice co-insurance benefit as a core component in each new plan.

Insurers have not all been approved to sell the new supplemental plans in the states where they are doing business. One of the hoped-for advantages of the MMA is lower monthly cost for people choosing to convert, as well as people healthy enough to get underwritten for new coverage. Time, of course, will tell.

Chris Brines is a representative of medicalsupplementshop.com. Our medicare supplemental insurance experts make the process of selecting a good Medicare supplement very easy by offering free advice about the Medicare Supplement plans offered in your area. We compare all Medicare Supplement Plans and prices to make sure you save as much money as possible while still receiving excellent coverage!