On Medicare But Still Seeing High Healthcare Bills? Here’s Why

If you are on Medicare because of a disability and are younger than age 65, you may be paying more for your healthcare costs than those in other states.

Probably not a widely known fact, but individual states get to decide if a supplemental insurance, called a Medigap plan, has to be offered as an option to you.

Confused? So are many who are struggling with medical costs and are unable to afford treatment because the supplemental coverage is not an option for them based on their state law.

In about half of the states, basically twenty states plus the District of Columbia, which in total is home to more than 2 million disabled Medicare beneficiaries, insurers are not required to sell Medigap policies to customers under 65.

In contrast, in some of the other states, insurers cannot turn away applicants if they enroll when they first join Medicare. But, added to the unfair practices, some insurance companies in a few states, like Virginia, can decide to charge higher premiums to younger beneficiaries or those with specific medical conditions, which of course makes their policies more difficult for the patient to afford. This essentially affects those who need coverage the most.

According to the government’s Centers for Medicare and Medicaid Services (CMS), about one-fourth of all Medicare beneficiaries has the supplemental policy, called Medigap, provided and sold by private insurance companies to help pay for costs Medicare doesn’t cover. These costs can include the 20% coinsurance required for medical expenses, including certain drugs, plus deductibles and co-payments.

Essentially, Part A of Medicare is your basic hospital coverage. Part B of Medicare encompasses your basic medical coverage. Both of these parts to Medicare only pay a portion of your healthcare expenses. That is why it is important for many to purchase additional Medicare Supplement Insurance to cover what Medicare does not. With Medicare alone, those expenses have no out-of-pocket limit for beneficiaries and can quickly add up.

CMS also notes that it is important to compare Medigap policies, because costs can vary. The standardized Medigap policies that insurance companies offer must provide the same benefits, but the difference between Medigap policies sold by different insurance companies is their cost.

Why the Inconsistency Depending on Where You Live?

Companies are required by federal law to sell Medigap plans to any Medicare beneficiary who is 65 years old or older within six months of signing up for Part B, which covers doctor visits and other outpatient services. So those over 64 years old have this option, providing they sign up during this guaranteed open enrollment. This federal requirement also states that the beneficiaries cannot be charged higher premiums for their coverage because of their medical conditions.

The issue arises with those younger beneficiaries because Congress chose to leave it to each individual state to determine whether Medigap plans are sold to those younger than age 65 who qualify for Medicare because of a disability. This potentially impacts the more than 9 million people who fall into this category.

Some feel it is extremely discriminatory, but it lacks enough outrage to overcome the financial impact of changing the regulations.

Bonnie Burns, policy specialist for the consumer group California Health Advocates and a member of the National Association of Insurance Commissioners’ Medigap committee said in a recent report published on Time.com, “If it was the reverse – if you were discriminating against somebody because they were 65 or older as opposed to younger – people would be outraged,” she said.

The federal health law also provides no assistance for these younger Medicare beneficiaries. One of its most popular provisions prohibits discrimination by insurance companies in the non-Medicare market based on pre-existing conditions or age, but the law does not tackle the discrimination with Medigap.

Are Changes Coming?

The quick answer is not the changes many are looking for. There are no solutions on the horizon for those caught in this costly scenario.

Essentially, a remedy is not going to happen anytime soon nation-wide, because expanding Medigap coverage could lead to these under age 65 beneficiaries who have disabilities receiving more care, which of course will increase costs for the Medicare program. At the present time, Congress is looking for strategies to that will cut back on Medicare spending, not to increase make any move that will increase it.

And it seems that money, is the deciding factor in all of this. The trade association for the health insurance industry stands in opposition to expanding Medigap to include all Medicare beneficiaries under the age of 65, who suffer from conditions like end-stage renal kidney disease.

Since care is critical to saving their lives, why would coverage be opposed? Well, since treatment for patients is extremely expensive, adding them could increase Medigap premiums for everyone, according to Cindy Goff, a vice president at America’s Health Insurance Plans.

Goff also stated in the interview that Medicare statistics indicate when the program covers older patients (over age 65) with end-stage renal disease, the cost of their care amounts to almost nine times the healthcare costs other Medicare beneficiaries.

Someone would have to pick up the slack, and it would fall on the older adults to do so. While most are on fixed incomes, it is not surprising that a price increase to their premiums could mean that these older Medicare beneficiaries would then be unable to afford the Medigap insurance they are allowed to purchase.

And the concerns about medical bills and rising costs is not limited to those under age 65. Here are a few recent developments that will affect Medigap costs and coverage for those older Medicare beneficiaries who purchase the plan, as reported by the Henry J Kaiser Foundation:

• This past spring of 2015, the House-passed legislation to repeal the Medicare Sustainable Growth Rate (SGR), which includes a provision that would prohibit Medicare supplemental insurance (Medigap) policies from covering the Part B deductible for people who become eligible for Medicare beginning in 2020.

• In a new Kaiser Family Foundation Data Note, review of the legislative proposal found it would affect about 10 percent of 65-year olds on Medicare- but that figure is based on 2010 enrollment figures (the most recent year for which data are available) if the provision had occurred that year.

• Estimated by the Congressional Budget Office (CBO) to produce federal spending cuts of $400 million between 2020 and 2025, the Medigap proposal, is anticipated to bring about a reduction in the use of medical services by increasing the costs of future Medigap purchasers.

Conclusion

Traditional Medicare has cost-sharing requirements, significant gaps within its coverage, and those gaps can mean the difference between patients receiving care or going without. Medigap is a viable solution that can help make health care costs more affordable and predictable for the beneficiaries through its coverage of some (or all) of the uncovered Medicare costs, including deductibles and cost-sharing. But to have it unavailable to those under age 65 with a disability, based upon their individual state’s decision to offer it, leaves out a large segment of those who need it to afford proper medical treatment.

Now, with new legislation proposed, costs are set to rise in the next four years even for those lucky enough to qualify to purchase Medigap coverage, and that coverage will be less inclusive.

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