Insurance CEO explains why beneficiaries are facing unprecedented premium increases – with no increase in benefits! – and how to keep costs down
The rumors are true: Blue Cross Blue Shield of Michigan (BCBS) is increasing rates on their Legacy plans by as much as 250% for the upcoming year!
Many Michiganders were in disbelief when they received letters this summer notifying them of the changes to BCBS’ plans. Half of Michigan’s Medicare beneficiaries are enrolled in BCBS plans, so it’s not surprising that this has been the talk of the town. From Baby Boomers to their parents, Michigan’s seniors are scrambling to decide what to do before the time they have to switch plans runs out.
If you’re a current BCBS client, surely your heart sunk when you received a letter in July announcing the rate hike. To date, this change is only effecting Michigan BCBS plans, but our phones have been lighting up with BCBS from other states worried that their plan could be next to experience huge rate increases.
Also called their Legacy MediGap plans, Michigan BCBS’s popular Medicare Supplement plans have been subsidized for decades. BCBS argues this subsidy made current rates artificially low and that the new prices will be on par with other insurance carriers’ prices.
(Let’s be honest – some of you won’t read this whole article, so let me cut to the chase.)
There is only one way for you to find out if you are overpaying for your Medicare plan: by comparing the current Medicare Supplement options!
Plan History & Assessing the Change
Beginning in 1980, Michigan Public Act 350 exempt BCBS from paying state and local taxes and allowed them to subsidize their plans (through the taxes they weren’t required to pay, as well as by adding surcharges to their other policyholders). In 2013, BCBS requested the state of Michigan repeal this Act. The State agreed, but required BCBS to keep their rates unchanged until January 2017 to allow seniors time to review their options.
BCBS has frozen – or not increased – their subsidized premiums over the past five years which is why, BCBS says, enrollees will see such a significant hike in rates beginning in 2017: their rates had been artificially low due to the subsidy and unchanged rates.
Whether you’re a Michigander on a BCBS plan whose rate is increasing, or you’re not affected by the happenings in Michigan, it’s good practice to review your health care plan annually, for several reasons. BCBS of Michigan is surely not the only carrier changing rates for 2017, and it’s important you check to see if more affordable options are available for you. The good news is, a licensed Agent can do all the hard work of researching plans for you and an Agent’s assistance costs you nothing!
Your health care needs change all the time so it’s crucial you assess your coverage to ensure it’s providing everything you need. If you’re on a restrictive plan like a Medicare Advantage plan, the network of allowed doctors and covered drugs are ever-changing. Your favorite doctor could be removed from a Medicare Advantage plan at any time – leaving you stuck without your preferred providers! Take the time to make sure your coverage matches your needs.
Regardless of the reason, it’s highly suggested that you regularly review your health insurance coverage and budget, as well as your health care needs, each year. You wouldn’t diagnose your own illness without the help of a doctor, so why would you assess your Medicare coverage without the help of a licensed Medicare Agent?
Back in Michigan, Robin will surely be shopping for new plan options. When her Blue Cross premium increased 260%, she told BCBS, “I can’t afford this nor do I qualify for the subsidies. I am on Social Security and there have been minimal increases, at best, but not [enough] to cover insurance raises.” Rather than directly contacting BCBS to hear their other limited options, I’d suggest to Robin that she check with an insurance agency that works with several top-rated insurance carriers to ensure she gets the best coverage at the lowest cost!
Pro Tip: Make sure your agent thoroughly explain the quotes, the company’s’ rate increase history, and the company’s’ financial ratings. These factors may help avoid huge rate hike surprises in the future, similar to the surprise thousands of folks in Michigan got! Remember, not all agents are created equal! Make sure you have a stellar agent by reading these tips.
Also, be careful of who you give your personal information to. My Medicare Partners provides you with a Member Reference Number so you can be sure it’s us calling you and not some random telemarketer. Be sure to not give out your personal information until you feel comfortable with and have spoken to the individual trying to assist!
Pro Tip: Take our your Medicare red, white, and blue card and look at your Medicare Claim Number. Does that number look familiar? Depending on whose Social Security benefits you’re drawing from, the Medicare Claim number may be your or your spouse’s Social Security number! Keep that card in a safe spot!
How This Affects Seniors’ Bottom Line
While younger Medicare recipients will see a smaller increase, older enrollees may be shocked by the huge rate hikes. For seniors on restricted incomes, a premium increase of 250% is just not acceptable, regardless of the reasons!
This announcement comes as more seniors feel the hardships of miniscule increases in Social Security income, tight retirement budgets, and the ever-increasing costs of…well, everything! Almost half of seniors survive on incomes lower than twice the federal definition of poverty; this is a huge increase from 33% of seniors living in poverty in 2013!
How Insurance Rates are Determined
Even though all Medicare plans are standardized (in other words, a Plan N is a Plan N is a Plan N….), rates between carriers can vary greatly. Each state determines the type of “rating”, or system of determinants, all insurance companies operating in that state must use. Premium rating varies by state and are determined one of three ways (premiums may also rise due to inflation or other factors): attained age, issue age, and community age rating.
Michigan is an Attained Age state, which is bad news for the seniors living in Michigan. New rates – both from BCBS and other insurance carriers – will be based on your current age, not the age you were when you first enrolled in the BCBS Legacy plan.
Keep in mind that although the state determines which method all insurance companies will have to use to set rates, prices themselves may vary from company to company.
Not only is this a good time to review your coverage, but it’s a great time to get updated, accurate quotes from a variety of insurance providers. All Medicare Supplement plans are standardized, meaning that a Plan G offers all the same benefits, whether you purchase it through BCBS, United Health Group, or Mutual of Omaha. The only difference from one company to the next is the premium price you pay. Otherwise, all co-pays, deductibles, and out of pocket costs (or lack thereof!) are the same and are determined by the federal government. To find out which rating method your state uses or to get customized, free quotes, contact My Medicare Partners!
Your Medicare Options
Medicare enrollees have two options to enhance their Original Medicare coverage: they can select a Medicare Advantage plan or a Medicare Supplement plan. Additional coverage helps greatly reduce the costs a person could face if they only have Original Medicare. With Original Medicare only, which is when a person only enrolls in Medicare Part A and Part B, you could face as much as 100% of hospitalization costs for the remaining Medicare-approved bill and 80% of doctors bills! When it comes to Original Medicare, the sky is the limit, and not in a positive way. There are no caps on the amounts you could be liable to pay out of your own pocket!
Choosing a Medicare enhancement such as a Medicare Supplement or Medicare Advantage can allow you to predict and reduce healthcare costs. Rather than being stuck paying 80% of bills and high hospital co-pays, people with Medicare enhancements face much lower – or no – out of pocket costs when seeking medical care. However, there are large differences in the benefits of a Medicare Supplement and a Medicare Advantage plan.
Plus, Medicare Supplement plans provide you ultimate flexibility – whether you’re on a road trip or babysitting your grandchild.
People who are enrolled in any Medicare Supplement plan (such as the BCBS Legacy) have the option to switch to a different Medicare Supplement plan at any time. If you are a MediGap enrollee, I recommend you stick with a MediGap plan, but that you switch Drs/ providers, . Imagine going from the ultimate freedom you have now – no referrals, no networks – to a plan with many more restrictions. Again, there’s no waiting periods or deadlines to switch your Medicare Supplement plan – change plans at any time!
In my experience, people who switch from Medicare Supplement plans to Medicare Advantage plans are disappointed and quickly switch back when they’re able to (more on this later). While they pay less in premium for a Medicare Advantage plan, they often pay more in out of pocket costs while access healthcare through an MA plan than they do with a Medicare Supplement plan.
Michigan BCBS is not recommending current Legacy enrollees adjust their budgets and stay on the plan. While BCBS cannot explicitly recommend people switch to a Medicare Advantage (MA) plan due to insurance regulations, all BCBS correspondence clearly highlights the “benefits” under their MA plans.
What they neglect to tell people is that Medicare Supplement and Medicare Advantage plans are two very different options to supplement your Original Medicare. Medicare Supplement plans offer much more convenience, flexibility, and cost protection than Medicare Advantage plans do.
When You Can Make Changes to Your Coverage
All Medicare enrollees should audit their coverage each year. Even if you’re happy with your plan, it’s still important to check the plan’s proposed rate changes. While all plans are standardized and offer the same coverage (ex. All Plan F offer the same benefits), the premium prices do vary from insurance carrier to carrier. While your plan may have had the lowest cost when you first enrolled in it years ago, the cost may now have surpassed other carriers’ costs. The only way to see if you truly are paying the best rates for your coverage is by getting up to date quotes!
Michiganders – or anyone for that matter – who are researching new plan options may be surprised to learn that there are some deadlines to follow to enroll in certain circumstances. Depending on which plan you currently have and which plan you’d like to enroll in, you may have important dates to pay attention to. Remember, it’s important you get quotes from several top-rated carriers to make sure you’re getting the most affordable price for your chosen plan.
Medicare Supplement → Medicare Supplement
As mentioned before, Medicare Supplement beneficiaries can swap plans any time. Whether you are simply switching Plan letters (ex. Switching from a Plan F to a Plan G) or changing insurance carriers (ex. Switching from Blue Cross to Manhattan Life), Medicare Supplement beneficiaries have freedom of when they can make changes.
Medicare Supplement → Medicare Advantage
Medicare Advantage plans can only be enrolled in and disenrolled from during special times of year. Each year from October 15 – December 7, the Annual Election Period (AEP), also known as Open Enrollment, occurs. During this time, Medicare-eligible people can enroll in a Medicare Advantage (also known as MA or MAPD) plan. They can also enroll in a Part D prescription drug plan during the AEP. Plans selected during the AEP become effective on January 1 of the following year.
Then, from January 1 – February 14, the Annual Disenrollment Period takes plans. During this time – you guessed it! – folks can come off their MA and/or Part D plan.
Medicare Supplement → Original Medicare only
Of course, the third option is to be left with Original Medicare’s coverage only. As you might already know, the “Medicare” most of us are familiar with from a young age is Medicare Parts A and B. Part A of Medicare covers, in simplistic terms, your hospital “room and board,” while Part B covers doctors visits and preventive care. Medicare A and B alone are often called “Original Medicare only.”
Original Medicare sounds great; what more could you need than hospitals and doctors? Unfortunately, enrolling in Original Medicare only leaves Seniors and Baby Boomers exposed to high financial costs.
Drugs, for one, are an important part of your daily health routine. Prescription medications are not covered under Original Medicare, even though you’re required by law to have prescription coverage!
Another risk often not mentioned are the high out of pocket costs under Original Medicare’s coverage.
We all know how costly medical care can be and how quickly those bills can snowball, and under Original Medicare only, you leave yourself exposed to potentially high costs. When it comes to Original Medicare, the sky is the limit – and not in a good way. There is no maximum on the out of pocket costs you could face under Original Medicare!
This is why many Medicare beneficiaries choose to reduce their out of pocket costs by enrolling in either a Medicare Supplement or Medicare Advantage plan. And as you could see from the infographic, Medicare Supplements provide much more freedom than Medicare Advantage plans.
For more information about the BCBS Legacy plan and the limited subsidies available, visit the Michigan Health Empowerment Fund.
To receive up-to-date quotes on the plans offered by the top-rated carriers in the area, contact My Medicare Partners at 844-305-6169 or firstname.lastname@example.org