Medicare Supplement insurance has not changed ever since it was standardized in 1992. However, for the first time since this standardization, the policies changed on June 1, 2010. These changes will greatly affect those who enroll in a policy after that date and probably also those who currently benefit from a Medicare supplement.
In the past, Medicare Supplement policies ranged from Policy A to Policy J. Each had its own advantages. It will not change – they will continue to be standardized; however, “modernized” policies will have new benefits. In addition, some of the policies available in the past are no longer available and new policies that were never available before were added. If you are 65 years old after June 2010 or want to substitute your present policy, you need to be knowledgeable about the modifications and what they imply for standardization. Such changes are as follows:
First and foremost, some of the policies have been canceled – these are E, H, I and J. After June 1, 2010, you can’t register for any of these policies. Even existing policyholders who have one of these policies will not be forced to abandon or separate them. Most analysts however agree that the removal of these option policies will have an adverse effect on interest rate hikes in the future for these policies.
Second, hospice palliative care was included in the benefits component of all remaining policies. Whatever the package you buy, this benefit will be included. Then, the “Additional Cost of Part B” benefit was increased to 100% on Policy G. The benefit was previously 80% on Policy G. Increasing it to 100% is consistent with Policy F and other policies that insure this benefit. Even “preventive care” and “at home recovery” have been completely removed from all policies that contain them. These benefits were deemed unnecessary after careful consideration because of their low usage.
Changes to standard Medicare Supplement policies do not retroactively affect your insurance if you now have a Medicare Supplement policy; however, most financial advisers believe that since the old schemes constitute a “closed” block of activity, the rates will be affected. In simple terms, if there are no young people on the “old” schemes, they will age without young people offsetting this aging, which will likely result in more demands and higher rates.
Whether you are new to Medicare or have an existing policy, it is important to follow these changes and their impact on you. Some people may need to re-evaluate their current policy before 6/1 to see if it makes sense to have the same insurance. Insurance companies have had to submit their tariffs again for approval. After these have received approval from the state insurance departments, the “modernized” regimes will be available in all states. Medigap policies, which offer the same benefits, are sold at incredibly different premium rates, according to an independent ratings and rating analyst, White Ratings, Inc. For example, while insurers must offer the standard benefits of the policy F, they do not control how much they charge for the policy.