by Russell Noga | Updated April 30th, 2024
Are you looking into Medicare supplement plans (Medigap)?
Private healthcare insurers offer Medigap plans to beneficiaries of Medicare Parts A & B.
Medicare is a Federally regulated industry, but does the same legislation apply to Medigap plans?
Who regulates Medicare supplement plans?
Who Regulates Medicare Supplement Plans?
Medicare is a federally regulated health insurance for American seniors aged 65 and older. Individuals under 65 may sometimes qualify for Medicare if they have certain health conditions or disabilities.
The Centers for Medicare & Medicaid Services (CMS) regulates the Medicare and Medigap industry, ensuring that all beneficiaries receive the same benefits and that all private healthcare insurers offer Medigap plans with the same benefits. Medicare has set standards for coverage and costs, and the CMS enforces these rules.
Two trusts held and operated by the U.S. Treasury Department pay Medicare-related healthcare bills. Payroll taxes and authorized funds approved by Congress authorize the provision and distribution of funds to the trusts.
Medicare beneficiaries pay a portion of costs through the monthly premiums they make on their policies, along with coinsurance responsibilities and deductibles.
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Who Regulates Medicare Supplement Plan Benefits?
Private healthcare firms run the Medigap industry, offering Medicare Parts A & B plans to beneficiaries. The benefits provided in Medigap plans cover the out-of-pocket costs left by Original Medicare when covering hospital (Part A) and medical services (Part B).
Medigap benefits only apply to these services, and they don’t cover preventative treatments, drug prescriptions, and vision, dental, and hearing services.
There are ten Medigap plans, each offering different benefits. All Medigap plans provide the following coverage.
- Part A coinsurance and hospital costs for up to 365 days after using up Medicare benefits.
- Part A hospice care coinsurance or copayment.
- Part B coinsurance or copayment.
- Blood transfusion costs for the first three pints of blood.
Plans F*, G, and N offer additional Medicare Parts A & B benefits.
- Part A deductible.
- Part B excess charges (Plan N doesn’t cover these charges).
- Skilled nursing facility care coinsurance.
- 80% of emergency healthcare costs when traveling outside the US for 60 days. ($250 deductible and $50,000 maximum apply).
- Unlimited coverage for all out-of-pocket costs.
*Plan F is the only Medigap plan covering the Part B deductible of $226 in 2023. However, you must be eligible for Medicare before January 1, 2020, to qualify for Plan F.
The CMS standardizes the benefits available in each Medigap plan. That means buying a plan G policy (or any other Medigap plan) from a company like Cigna will have the same Part A & B benefits as a plan from UnitedHealthcare or any other Medigap provider.
Medigap plans have different state regulations in Minnesota, Massachusetts, and Wisconsin. These states have different standardized benefits for beneficiaries.
Federal Laws Offer Limited Consumer Protections for Medigap Beneficiaries
Medigap supplement insurance plans must comply with minimum federal requirements and consumer protections. For instance, federal laws stipulate all Medigap plans offer beneficiaries “guaranteed issue rights.”
This means that Medigap providers must offer plans to seniors in the six months after their 65th birthday, also known as the “Open Enrollment” period. During Open Enrollment, the insurer must accept the senior’s application to join its Medigap plan under whichever plan they choose.
The insurer cannot use the applicant’s health status or pre-existing conditions to increase their monthly premiums above the average amount for that policy. The insurer can deny the applicant coverage based on their health status or pre-existing conditions.
Under federal law, the insurer may institute a three to six-month waiting period. During this time, the applicant must make their monthly premium payments, but they don’t have any coverage from their Medigap plan.
Federal law offers other consumer protections for Medigap beneficiaries, including “guaranteed renewability,” where the insurer may not cancel the policy unless the applicant fails to pay their premiums, or they submit false information on their Medigap application.
Federal Regulations and Guaranteed Issue Rights for Medigap Plans
Other federal laws surrounding the regulation of “guaranteed issue rights” for Medigap policyholders and those wishing to join a Medigap plan include instances when a Medicare beneficiary involuntarily loses their supplemental plan coverage.
For instance, if the Medigap plan provider goes bankrupt or stops offering plans in the beneficiaries state. In these instances, the policyholder can apply to another firm and take another policy with the insurer while maintaining guaranteed issue rights preventing the insurer from instituting medical underwriting to determine their health status.
The guaranteed issue right also applies to Medicare Advantage holders wanting to switch to Medigap policies for the reasons mentioned above. They also apply to Medicare Advantage policyholders or those individuals with private group healthcare coverage when an employer or union ends their healthcare plan or retiree coverage.
The guaranteed issue rights also apply to Medigap and Medicare Advantage policyholders when they move to a new state or area where their insurer doesn’t offer coverage. In these instances, the beneficiary or applicant has 63 days to apply for a Medigap policy under these federal protections.
Federal law also requires Medigap plans to have guaranteed issue rights during the “trial” period for Medicare Advantage policies.
For instance, if the Medicare Advantage policyholder decides to switch from MA to Medicare and Medigap in the first year of their policy, the insurer may not refuse their application or require them to undergo a medical underwriting.
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Who Regulates Medicare Supplement Plans Premiums?
While the CMS regulates the benefits in Medigap plans, they have no control over how private insurers set premiums for beneficiaries other than those offered by guaranteed issue rights. As a result, Medigap plan premiums can vary widely between providers.
One insurer may offer cheaper rates on plans than others in one state but be the most expensive provider in another. For instance, Aetna might be the most affordable option for Plan G in Arkansas, and Cigna might be the most costly.
However, Cigna might be the most affordable option in California, and Aetna is the most expensive provider of Plan G.
Likewise, Aetna might be the cheapest option for Plan G in Arkansas but the most expensive option for Plan N. Cigna might be the most costly provider of Plan G, but have the best rates on Plan N.
That’s why it’s important to shop around for Medigap policies from different providers before signing up for any plan.
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If you need advice on Medigap policies, call our team at 1-888-891-0229. We offer a free consultation on Medigap plans.
We’ll match you with the right policy to suit your healthcare needs and budget. We’ll secure the best rate on any plan from providers in your state and get you a free quote.
If you can’t talk to us right now, leave your contact details on our web, and we’ll get a qualified, licensed Medigap agent to call you back.
Frequently Asked Questions
Who is responsible for regulating Medicare Supplement Plans?
Medicare Supplement Plans, also known as Medigap, are regulated by both federal and state authorities to ensure consumer protection and plan consistency.
Which federal agency oversees Medicare Supplement Plans?
The Centers for Medicare & Medicaid Services (CMS), a division of the U.S. Department of Health and Human Services, is the federal agency responsible for overseeing and regulating Medicare Supplement Plans.
What role does the National Association of Insurance Commissioners (NAIC) play in regulation?
The NAIC is a collective association of state insurance commissioners. They develop model regulations and guidelines that states often adopt to regulate Medicare Supplement Plans uniformly.
How do states contribute to the regulation of Medicare Supplement Plans?
States have the authority to regulate and approve Medigap plans offered within their borders, ensuring plans comply with federal guidelines while addressing specific local needs.
What is the significance of standardized Medigap plans in regulation?
CMS establishes standardized Medigap plans with specific coverage benefits labeled by letters (e.g., Plan F, Plan G). This ensures consumers can easily compare plans from different insurers, fostering transparency and fair competition.
How do regulations ensure consumer protection in Medigap plans?
Regulations mandate that Medigap plans provide certain core benefits, preventing insurers from denying coverage or charging higher premiums based on pre-existing conditions. This safeguards consumers from unfair practices.
Can insurance companies modify or alter Medigap benefits as per their preferences?
No, insurance companies must adhere to the standardized benefits outlined by CMS. They cannot alter or modify Medigap benefits, ensuring consistent coverage across plans of the same letter type.
How do regulations prevent Medicare Supplement Plans from misleading marketing practices?
Regulations stipulate that insurance companies must provide clear and accurate information to potential policyholders. Marketing practices are scrutinized to prevent misleading or deceptive tactics.
What role do state insurance departments play in consumer assistance?
State insurance departments offer information, counseling, and assistance to Medicare beneficiaries seeking Medigap coverage. They address consumer inquiries, resolve complaints, and ensure fair treatment.
How often do regulations surrounding Medicare Supplement Plans get updated?
Regulations are subject to periodic updates based on changing healthcare needs, advancements, and legislative changes. CMS, NAIC, and state authorities collaborate to ensure regulations remain relevant and effective.
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Finding the ideal Medicare plan for you doesn’t have to be confusing. Whether it’s a Medigap plan, or you have questions about Medicare Advantage or Medicare Part D, we can help.
Reach out today at 1-888-891-0229 and one of our knowledgeable, licensed insurance agents will be happy to assist you!
Russell Noga is the CEO and Medicare editor of Medisupps.com. His 15 years of experience in the Medicare insurance market includes being a licensed Medicare insurance broker in all 50 states. He is frequently featured as a featured as a keynote Medicare event speaker, has authored hundreds of Medicare content pages, and hosts the very popular Medisupps.com Medicare Youtube channel. His expertise includes Medicare, Medigap insurance, Medicare Advantage plans, and Medicare Part D.