Medicare: Supplementary âMedigapâ Coverage (CRS Report for Congress)
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| Release Date |
Oct. 2, 2007 |
| Report Number |
RL31223 |
| Report Type |
Report |
| Authors |
Jennifer O'Sullivan, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
Summary:
Medicare is a nationwide health insurance program for the aged and certain disabled persons.
Although the program provides broad protection against the costs of many, primarily acute care,
services, it covers only about one-half of beneficiaries' total health care expenses. Most individuals
have some coverage in addition to basic Medicare benefits. Some persons have additional benefits
through a managed care plan. Most other individuals have some supplementary coverage through
private insurers or public programs such as Medicaid. Private supplementary coverage can be
obtained through an individually purchased policy, commonly referred to as a "Medigap" policy.
It can also be obtained through a current or former employer. Some persons have both types of
coverage.
Beneficiaries with Medigap insurance typically have coverage for Medicare's deductibles and
coinsurance; they may also have coverage for some items and services not covered by Medicare.
Individuals generally select from one of 10 standardized plans, though not all 10 plans are offered
in all states. The 10 plans are known as Plans A through Plan J. Plan A covers a basic package of
benefits. Each of the other nine plans includes the basic benefits plus a different combination of
additional benefits. Plan J is the most comprehensive.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L.
108-73 ) added a new voluntary prescription drug benefit under a new
Medicare Part D. It also made a number of changes to the Medigap requirements. The first
significant change was the addition of two new standardized plan types, Plan K and Plan L. There
are two key differences between the benefits included under these options and those offered under
Plans A-H. First, Plans K and L eliminate first-dollar coverage for most Medicare cost-sharing.
Second, both Plans K and L include an annual out-of-pocket limit on Medicare cost-sharing charges.
The second major MMA change was the prohibition, beginning January 1, 2006, on the sale
of Medigap policies with prescription drug coverage. Individuals who had such policies could renew
them provided they did not enroll in a prescription drug plan under the new Part D. Alternatively,
if they enrolled under Part D, they could continue to enroll in a Medigap plan, but without drug
coverage.
MMA also required the Secretary of the Health and Human Services to request the National
Association of Insurance Commissioners (NAIC) to review and revise the Medigap benefit packages,
taking into account changes made by the new law. The NAIC announced its recommendations in
March 2007. The Children's Health and Medicare Protection Act of 2007 (CHAMP), as passed by
the House on August 1, 2007, incorporates these recommendations, as well as making additional
Medigap changes. This report will be revised as circumstances warrant.
