Medigap Legislation Would Provide New Consumer Rights

Medigap Legislation Would Provide New Consumer Rights

Below is a summary of Rep Jim McDermott’s newly introduced Medigap Consumer Protection Act of 2016. We support this long-awaited legislation to update the Medigap program and add new consumer protections, including the right to purchase a Medigap to those with disabilities and/or end stage renal disease (ESRD).

Medicare provides affordable health insurance to 57 million American seniors and people with disabilities. However, there are gaps in the program’s benefit package. Beneficiaries are expected to pay a significant amount of out-of-pocket costs through deductibles and coinsurance, and traditional Medicare currently lacks a limit on catastrophic expenses. As a result, approximately 11 million beneficiaries choose to enroll in supplemental Medigap policies, which provide additional benefits and help reduce out-of-pocket expenses.

Although Medigap plans are an important insurance product for millions of Americans, many of the laws governing the Medigap market have remained largely unchanged since 1990. In particular, consumer protections have lagged behind other forms of insurance, leaving beneficiaries subject to discriminatory market practices, lacking sufficient information about their plan options, and at times enrolled in lower quality coverage.

The Medigap Consumer Protection Act provides the first major update to the laws governing Medigap plans in more than two decades. It will improve the beneficiary experience by:

— Expanding guaranteed issue rights to prevent issuers from denying coverage to individuals with disabilities and End-Stage Renal Disease, as well as other beneficiaries who are not currently protected.

— Calling on the National Association of Insurance Commissioners to update medical loss ratio standards to improve the efficiency of Medigap policies.

— Placing limitations on pricing Medigap products based on beneficiary age.

— Requiring Medigap issuers to price their products by county level.

— Improving the Medicare Plan Finder website to facilitate beneficiary access to information and increase consumer understanding of available plan options.

— Restoring access to popular Medigap plan options that provide first-dollar coverage of the Part B deductible.

— Increasing transparency by requiring issuers to publicly disclose payments made to brokers that sell Medigap policies.

The Medigap Consumer Protection Act makes these long overdue updates to federal law. It will significantly improve the beneficiary experience and strengthen the health security of millions of Americans enrolled in Medicare. I hope you will join me in supporting this important legislation.

Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.