The Obama administration wants insurance companies to know that it really, really hates the idea of Medicare supplement plans paying the Medicare Part B plan deductible.
This year, the Medicare Part B deductible is only $147.
But a law added recently by H.R. 2 will prohibit insurers from selling new Med supp plans, which are also known as Medigap plans, that pay the Part B deductible to consumers who become newly eligible for Medicare after 2020.
Consumers who already have Medigap coverage with a low Medicare Part B deductible, or no deductible, will be able to keep their plans and trade the plans in for new Medigap plans with low out-of-pocket costs.
But, if an insurer does sell a “zero dollar” Medigap plan to an ineligible consumer after 2020, that insurer will be committing a federal crime, according to William Schiffbauer.
Schiffbauer, an insurance compliance lawyer, has analyzed the enforcement provisions in the law and other provisions in a discussion paper prepared for the Medigap Subgroup, a group of regulators at the National Association of Insurance Commissioners (NAIC).
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The enforcement provision “imposes current Medicare anti-duplication criminal and civil penalties, or imprisonment (up to five years) or both for violations,” Schiffbauer says.
Criminal fines could be up to $15,000 per occurrence for a person other than the issuer of the policy, and up to $25,000 per occurrence for the policy issuer.
The penalties are stricter than the Medigap letter plan standardization penalties, “perhaps to emphasize the serious anti-first-dollar-coverage intent of this provision,” Schiffbauer says.