On July 6th, Blue Cross Blue Shield of Michigan announced they had filed new rates for the Blue Cross Blue Shield of Michigan Legacy Medigap plan with the Michigan Department of Insurance and Financial Services. This change will affect about 200,000 Michigan residents currently enrolled in the Legacy Medigap plan.
What are the proposed rate changes?
According to the Detroit Free Press on July 6th, rate increases will range from roughly $48.00 per month for a 65-year-old female to an increase of $177 for an 80-year-old male. Medicare eligible individuals under age 65 on this plan face a proposed $192 per month rate increase.
When will they take effect?
The rate increase would be effective on January 1, 2017.
How do I know If I am on a Blue Cross Legacy Medigap Plan?
Currently, the Legacy Medigap Plan C carries a monthly premium of $122.86 and the rate has not increased in five years. That premium is the same for everyone on the plan regardless of place of residence, age, or gender.
Why are they rates increasing?
The Blue Cross Legacy Medigap program has been priced below the actual cost providing the benefits under the plan. Blue Cross projects a loss of $249-million for the program this year. On a per-person basis, this means that Blue Cross pays out $1.54 for every $1 in premium collected from Legacy Medigap enrollees. Even with the 2017 rate increase, Blue Cross Estimates they will pay out $1.10 for every dollar they collect in premium on the plan. Unlike other Medigap plans, this plan is not rated for age, area of the state or gender.
What are my options?
1. Stay on the plan. Blue cross will not be terminating the plan, so you can remain covered after the rate increase. However, new enrollment in the plan will be closed November 14, 2016. A subsidy of between $40 and $125 monthly is available to individuals who stay enrolled in the plan. To qualify for the subsidy, income must be under $17,820 for a single, under $24,030 for a couple.
2. Move to a new Medigap (Medicare Supplement) Plan. You could shop to find a new Medigap plan that is cheaper, but you will have to pass medical underwriting. The only exception is individuals who are still in their Medigap Open Enrollment Period. Medicare only grants you a “guaranteed issue” period when “Your Medigap insurance company goes bankrupt and you lose your coverage, or your Medigap policy coverage otherwise ends through no fault of your own.” Because Blue Cross Blue Shield of Michigan is not ending the Legacy Medigap plan, you would not have a guaranteed issue right. The new Medigap company can ask you about your medical history, height, weight, and prescription drugs you are currently taking. The new company can decline to offer you a policy, so it is important that you do not terminate your current Blue Cross Policy before you have written confirmation your new policy has been issued.
3. Change to a Medicare Advantage Plan. These are not Medigap plans, but a different way to get your Medicare benefits. These plans, that combine medical and often prescription drug benefits, do not medically underwrite during the Annual Election Period from October 15th to December 7th. However, if you opt for this choice, you must act by December 7th. Since these plans are different that Medigap plans, you should discuss all the benefits of these plans with a qualified agent before deciding if this option makes sense for your situation.
It is critical for seniors to review their options during the upcoming annual election period to determine which option may be the best choice. Seniors with questions can contact Rob Williams, Medicare Specialist at Okun Insurance at 269-903-0680 or firstname.lastname@example.org.