Medigap plans rise in popularity but coverage geographically sparse, AHIP says
More than a third of Medicare fee-for-service beneficiaries had supplemental Medigap coverage at the end of 2016, according to a new report from America’s Health Insurance Plans.
The number of people with Medigap, which helps patients cover out-of-pocket costs after fee-for-service Medicare coverage is applied, increased to 13.1 million in 2016 from 12.3 million a year earlier, and the percentage of traditional beneficiaries with the extra coverage increased to 34% from 31% in 2013, according to the report.
AHIP found that a large percentage of Medigap enrollees had incomes below $30,000 (36%) and were from rural areas (41%).
While Medicare Advantage remains popular with private payers, Medigap has also quietly been increasing membership this decade. MA finished 2017 with nearly 21 million enrollees, a nearly 8% increase over the previous year. That eclipsed the 13 million in Medigap plans.
Medigap helps beneficiaries who have Medicare Parts A and B with out-of-pocket costs like copays, coinsurance and deductibles. Private payers offer Medigap, which also covers services that Parts A and B might not, such as care outside of the U.S.
Medigap plays a key role for many seniors. The Commonwealth Fund reported last year that more than one-fourth of Medicare beneficiaries spend 20% or more of their incomes on premiums and medical care, including out-of-pocket costs. Medicare members spent an average of $3,204 per year on out-of-pocket costs.
Medicare enrollment will rise steadily in the coming years as more baby boomers age into the program. The number of beneficiaries is MA is expected to jump, and it's likely Medigap will see similar heightened interest. More payers are offering managed care plans for Medicare and Medicaid, and gap coverage plans may spread as well.
AHIP found that unlike MA, which has a handful of payers with large percentages of plan enrollment across the country, Medigap plans are less widespread. The report noted that 45% of companies offered standardized Medigap plans in only one state or territory.
The group said just 9% of payers offering standardized Medigap policies cover people in 41 or more states or territories. Another 16% covered members in 26 to 40 states or territories, 14% in 11 to 25 states or territories and 16% in two to 10 states or territories.
Of the more than 12.6 million Medigap members in 2016, AHIP found the highest enrollment in:
Florida (834,958 covered lives)
- America's Health Insurance Plans State of Medigap 2018