Insurers could face fines for selling Medigap plans
A new law from the Obama administration will prohibit health insurance companies from selling Medicare supplement plans, or Medigap plans, that help consumers pay their Medicare Part B deductibles. And if an insurer breaks the law, the fine will not be cheap.
Fines could be upwards of $15,000 per occurrence for a person other than the issuer of the policy, and up to $25,000 per occurrence for the policy issuer, reports LifeHealthPro.
This year, the Part B deductible is only $147. But nearly a third of Medicare beneficiaries may face a 52 percent increase in Part B premiums unless the Department of Health and Human Services steps in, FierceHealthPayer previously reported.
The new law, added as part of the Medicare Access and CHIP Reauthorization Act of 2015, will not apply to consumers who already have Medigap coverage with a low Medicare Part B deductible but will apply to those who become newly eligible for Medicare after 2020.
The reason for such hefty penalties for an insurer that sells a "zero dollar" Medigap plan after 2020 is to "perhaps to emphasize the serious anti-first-dollar-coverage intent of this provision," William Schiffbauer, an insurance compliance lawyer, tells LifeHealthPro.
Medigap laws are nothing new. In 1990, Congress required insurers to make comparisons of products easier by initiating standardized letter plan designs, notes the article. In the past, however, insurers have fought against other Medigap-related proposals. Member satisfaction with Medigap coverage, meanwhile, was at 94 percent as of 2014.
- here's the LifeHealthPro article
Medicare Part B premiums may increase 52 percent
Member satisfaction soars for Medigap coverage
The impact of policy changes, long-term forecasting on Medicare spending