As the nation’s population ages and more and more of your clients near Medicare age, Medicare supplement is a product you should stay on top of.
Recent legislative events mean changes are on the horizon and more are likely in the near future. We are at a critical point with the Medicare system right now and modernization of Medicare supplement products, which are also known as “Medigap” products, is essential in order to keep pace with the future of Medicare. Throughout the industry, most feel that changes are overdue.
Last year, a congressional conference report accompanying the Medicare Modernization Act encouraged the National Association of Insurance Commissioners to modernize the Medicare supplement insurance market. As a result, the NAIC, Kansas City, Mo., developed a task force and subcommittee to develop recommendations to restructure the Medigap insurance market. Those recommendations were released in December 2006.
In March, the NAIC approved the following recommendations, which still must receive approval in Congress:
* Introduce two new plan options with higher cost-sharing responsibilities and lower premiums.
* Remove the at-home-recovery benefit from plans D, G, I and J.
* Create a new hospice benefit, which will be added as a basic benefit to all plans.
* Eliminate the preventive care benefit offered in plans E and J.
The benefit has been underutilized due to changes in the Medicare program to include more preventive care.
* Increase the Part B excess benefit in plan G from 80% to 100%, to mirror the benefit offered in Plan F.
* Eliminate plans H, I and J, which had provided prescription drug coverage before Medicare Part D.
* Eliminate plan E, as it will become identical to plan D once other changes are implemented.
At press time, Congress was still working on enacting these recommendations into law, so it’s unlikely that implementation will happen before 2008.
Regardless, the pending changes are still something that advisors should be aware of if they sell Medicare supplement insurance.
Once the proposed changes are approved, insurance companies will have to make the necessary changes by a certain date in order to sell the plans.
Companies will have an option of whether or not they will sell the new plans. Changes will include filing, rate adjustments and other system changes. Additionally, companies will be permitted to offer existing policyholders the opportunity to exchange their current policies for new policies.
For advisors, learning the new plans should not be a huge undertaking, because the recommended changes are fairly modest. However, it is safe to say that many current Medicare supplement policyholders will have questions about the changes. Advisors with senior clients should be prepared to answer those questions and help clients determine if their current Medicare supplement policies are still the best option for their particular situations.
Angie Nekola is a product development manager at Mutual of Omaha Insurance Company, Omaha, Neb. She can be reached at firstname.lastname@example.org.