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Last week the Obama administration proposed an effort to raise $2.5 billion over the next 10 years by implementing a surcharge to Medicare enrollees who purchase Medicare supplements. This surcharge would affect all new enrollees who purchase Medicare supplements by adding an average of 15% to the premium on their Medigap policy. Those currently receiving benefits and those near retirement would not be affected.

One official said, "Of particular concern are Medigap plans that cover substantially all Medicare copayments, including even the modest copayments for routine care that most beneficiaries can afford to pay out of pocket." Administration officials explain that the reason for the surcharge is that since there is so little out-of-pocket charge seniors often do not think about the costs associated with the care they receive.

Bonnie Burns of California Health Advocates warns that this surcharge would be terrible for consumers. Burns, along with several insurance industry representatives and consumer advocates, agree on the need for affordable insurance costs for seniors.

Burns said, "Blaming Medigap issuers and customers for any over-use of care seems particularly unfair because federal law prohibits sellers of Medigap insurance from determining whether the care a policyholder has received is medically necessary." Instead, she encourages the government to guard against Medicare by requiring providers to document that the care received is medically necessary.

This surcharge plan will go into the federal fiscal 2013 budget proposal, beginning October 1st, and if passed would take effect in 2017.

Please give us your feedback!
Have any of your clients asked you about this surcharge? What do you say to them about it? How do you think it will affect your Medicare Supplement business in the future?

Source: LifeHealthPro

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