How does PPACA, or “Obamacare”, affect Medicare supplement insurance. This is a good, and common, question. It’s one that we get asked frequently since the bill was passed into law a couple of years ago. The short answer is that PPACA does not directly impact Medicare Supplement insurance in any way.
The bill does not apply to supplemental, or secondary, policies in the same way that it applies to primary insurance or “under-65” insurance. So, for people on Medicare, there is minimal impact overall and no impact to their Medicare supplement coverage. Medigap plans (another name for Medicare Supplements) are still standardized into the ten plans that were established in June 2010. These plans are set forth by the government – private companies that offer Medigap plans must go by these coverage outlines, but they can set their prices however they want.
Although Medigap plans are not directly affected, the PPACA does affect Medicare in some ways, primarily in the areas of Medicare Advantage (the private plans that replace Medicare) and Medicare Part D (Rx coverage for people on Medicare). For Medicare Advantage plans, the bill took some money away from the plans in the form of reimbursement rates. This is where part of the money to pay for the under-65 portion of the plan comes from. Medicare reimburses the private Medicare Advantage companies a certain amount per person for those who elect Medicare Advantage instead of Medicare itself. Decreasing this amount will obviously decrease the level of coverage (or added benefits) that these plans can offer.
For Part D, the biggest change is the reduction and eventual elimination of the Part D donut hole. This is the portion of Part D coverage during which the insured must pay the largest portion of their cost. In the past, the individual was responsible for paying the full retail costs of medications during this coverage “gap”. Because of the PPACA, this gap is being reduced each year up until 2020, at which time consumers will pay 25% of the retail costs of medications during the coverage gap (instead of the 100% that they were responsible for in 2010 before the bill).
For Medicare Supplements, many people believe “Obamacare” will have a “trickle-down” effect on Medigap insurance companies, particularly those who also are involved in the under-65 insurance market. There have been several companies that have pulled out, or reduced, their service areas for under-65 insurance, and some feel that this will affect their profit needs/motives in the Medicare supplement market.
If you have questions about this information or wish to discuss this further, you can contact me at 877.506.3378 or online at Secure Medicare Solutions.