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Medicare supplement modernization will take effect in June -- part 2

Wednesday, April 7, 2010

The Medicare supplement modernization that begins June 1 will bring about the biggest change to Medicare since Part D was added in 2005. Medicare is an important subject for a large proportion of the population in this area -- it is especially important for those on Medicare or those with a parent on Medicare.

For these folks it is important to be aware of any changes that are being made which often bring confusion and frustration.

Last week's column included some of the history of Medicare, a summary of Medicare supplement modernization, and other information. Modernization will change the Medicare plans that companies can offer after June 1. Currently, the "Standardized Medicare Plans" that can be offered to Medicare beneficiaries include Plans A through M, high deductible Plan F and high deductible Plan J.

When modernization takes place June 1, companies will be able to offer 11 plans -- Plans A to D, Plans F and G, Plans K, M, N and high deductible F.

Plans to be eliminated in June will be Plan E, Plans H to J and high deductible Plan J. Prescription drug benefits were removed from plans H, I and J by the Medicare Modernization Act of 2003.

Plan G's excess charge benefits have been changed from 80 percent to 100 percent. Plans E, H, I, and J have become unnecessary and/or their coverage's duplicate other plans.

Plans M and N are being created with the Medicare supplement modernization. These plans will give options for a lower premium and a higher cost sharing. This will be an opportunity for those wanting to save on premiums and willing to share on the cost of the benefits.

Plan M includes 50 percent coverage of the Part A deductible and no coverage of Part B deductible.

Plan N includes 50 percent of the Part A deductible but no coverage for the Part B deductible. Also Plan N's coverage for the Part B co-insurance (as part of the basic benefits) is subject to a new co-pay structure. The co-pay is up to $20 for office visits and up to $50 for emergency room visits. Plan N is similar to a Medicare Advantage Plan.

A hospice benefit is being added to all plans that did not have a hospice benefit. The hospice benefit covers cost sharing for all Part A eligible hospice and respite care expenses.

For the standardized policies with effective dates prior to June 1, 2010, the law requires that carriers wishing to offer any Medicare supplement plan must offer at least Plan A. the new rules expand this requirement.

Effective in June, if a carrier wishes to offer any plan(s), they must offer in addition to Plan A either Plan C or Plan F.

It appears that it may vary from one company to another how they might deal with policyholders and certificate holders to move from a standardized plan to a modernized plan.

Missouri has a provision that any policyholder within 30 days of their annual policy anniversary, has a guaranteed issue right to purchase the same plan under which they are covered from any issue. If they have a plan that has been discontinued, they have a guaranteed right to Plans A, B, C, F F-high deductible, K or L.

Since Medicare policies are guaranteed to be renewable, companies will have to maintain the standardized plans where the policyholder continues to renew the policy each year, including the discontinued plans. This indicates that as long as the premiums are paid, there is not a fear of losing coverage. It may be well to consider alternatives, because some of the current plans without new policy holders will have major premium increases.

Now, after saying all of this, it is easy for those on Medicare to have concerns. You really do not need to be too concerned with some of the changes. Most of those with supplements will not notice any changes. Most will not need to do anything and the change from Medicare supplement standardized plans to the Medicare supplement modernization plans will be smooth.One of the things that will be occurring in the next few weeks is a lot of publicity about the changes that will be taking place.

Many contacts will be made to those on Medicare in a number of ways. Just don't let any of them get you confused. Even though I have gone over a number of changes, it is not necessary for a person to know all of the changes.

Leonard Ernsbarger
Leonard At Large