One of the best benefits for individuals with disabilities in Michigan is officially going away November 14th, 2016 (with an effective date no later than December 15, 2016). That is the last day that Michiganders with Medicare can sign up for Blue Cross Blue Shield of Michigan’s Medigap Legacy Plan C.
Legacy Medigap was a special benefit whose fate was sealed when the Michigan legislature allowed Blue Cross to become a nonprofit mutual insurance company in 2013. Many individuals with disabilities could afford the $122.86/month Medigap Plan C premiums, which provided them with better and broader health care while minimizing the use of Medicaid. Now even those under age 65 that remain on the Legacy Medigap plans will begin paying a whopping $314.87/month starting in January — over $1,632 to $1,872 more than those same individuals would pay if they were age 65.
At those high rates, why would anyone still enroll in Legacy Medigap? Despite what insurance companies will try to tell you, Medigap remains the Medicare gold standard. If an individual has high medical needs and if an individual can afford it, Medigap should always be considered.
But why consider Blue Cross Legacy Plan C at this point? A couple of possible reasons. First, it is the only plan that we are currently aware of that will not consider certain underlying health factors (e.g., BMI, smoking) when setting premiums. Second, while Blue Cross says it will guarantee issue certain new Medigap plans, a Medigap Plan F will start at an even higher rate of $394.54/month in January for those under age 65.
We continue to research what other companies might have Medigap options (and there are a couple). But Medigap for individuals under age 65 is not a robust market because (a) this demographic is (wrongly?) considered risky by insurers and (b) Blue Cross Legacy has dominated the Michigan market for decades that there has been little reason for other insurers to compete.
For a few years, most individuals with disabilities will be able to minimize the rate impact by enrolling in a subsidy if income is less than $17,820/year ($1,485/month) for individuals or $24,030/year ($2,002/month) as a couple. There is no asset test to qualify for this subsidy! To get the subsidy, you can enroll at http://michiganmedicaresubsidy.com or by calling by calling (866) 824-9772 by December 15th. For 2017, the subsidy will be $125/month for those under 65 with a disability, which brings the 2017 rate increase for Legacy Plan C down to a more modest $67/month next year.
At best, these subsidies are a temporary fix. The legislature only allocated funds for the subsidy for up to five years. In talking to the Michigan Health Endowment Fund, these subsidies will likely be decreased each year and could be exhausted in just four years. But for now, eligible clients might as well take advantage of it.
As for the fairness of treating those under 65 differently? A recent article by the Kaiser Family Foundation demonstrates that those under 65 barely cost Medicare more than those over 65. (See that article here.) In other words, Blue Cross Blue Shield of Michigan should be pressed as to why they are charging those under 65 such wildly higher Medigap rates. But that is probably for a future blog entry.