You asked if premiums increased for Medicare Supplement plans A through J after disabled individuals on Medicare were allowed by law to purchase them in 13 states. The 13 states were identified in a previous OLR report (2003-R-0091). To obtain this information, OLR called the departments of insurance in the 13 states.

SUMMARY

Data is inconclusive as to whether premiums increase for Medicare Supplement plans A through J when disabled individuals on Medicare are allowed to purchase the plans. Of the 13 states that give disabled individuals access to all 10 Medicare Supplement plans by statute, eight reported no premium increase. The other states generally did not have enough information from which to draw a conclusion.

Connecticut currently requires every insurance company or other entity issuing Medicare Supplement policies or certificates for plans A, B, or C to persons eligible for Medicare due to age to also offer the same policies or certificates to persons eligible for Medicare because of disability (CGS § 38a-495c (d)).

KANSAS

The department indicated that giving the disabled access to the Medicare Supplement plans generally does not drive up plan costs. In addition, Blue Cross/Blue Shield (BCBS) predominately provides such coverage. Other insurance companies are assessed to reimburse BCBS (K. S. A. § 40-21-22).

LOUISIANA

The department indicated that there are increases in Medicare Supplement premiums approximately every 6 months. But, there is no data that links the cost increases to offering Medicare Supplement plans to those with disabilities.

MAINE

The department does not know if Medicare Supplement premiums have increased as a result of offering coverage to disabled individuals, but has not received any complaints regarding this. However, they note that Maine law provides disabled individuals a six-month open enrollment for Medicare Supplement instead of continuous enrollment in an effort to control adverse selection. Adverse selection is the expectation that poorer risks or less desirable insureds will use insurance more frequently than better risks. This reflects the tendency of insureds to take advantage of the favorable options in insurance contracts.

The department also indicated that several large companies stopped offering Medicare Supplement Plan J, a prescription drug plan, over fears that the disabled population would drive up costs.

MARYLAND

The department saw no increase in Medicare Supplement premiums charged to seniors after the disabled were provided access to the plans. However, Maryland permits insurance companies to rate the disabled individuals separately.

In addition, cost concerns from drug companies triggered an amendment to the general law to provide a six-month enrollment for Medicare Supplement instead of continuous open enrollment for disabled.

MASSACHUSETTS

The department has not conducted any studies regarding this matter and therefore does not know if premiums have increased as a result of the disabled population’s use of Medicare Supplement plans.

MICHIGAN

The department saw no increase in Medicare Supplement premiums after the disabled were provided access to the plans.

MISSOURI

The department saw no increase in Medicare Supplement premiums after the disabled were provided access to the plans.

NEW HAMPSHIRE

The department indicated that Medicare Supplement premiums have increased, but the reason is unknown. Costs began increasing a few years after the disabled were permitted access to the plans.

NEW YORK

The department saw no increase in Medicare Supplement premiums after the disabled were provided access to the plans.

OKLAHOMA

According to the department, Oklahoma law permits insurance companies to offer all Medicare Supplement plans to the disabled Medicare recipients. However, because the law does not require them to do so, most companies only offer plan A and one company offers plans A, B, and C. As a result, the department did not have any relevant experience to report.

OREGON

The department saw no increase in Medicare Supplement premiums after the disabled were provided access to the plans.

PENNSYLVANIA

The department saw no increase in Medicare Supplement premiums after the disabled were provided access to the plans.

WISCONSIN

Wisconsin allows insurers to charge different premiums for those under and over age 65 for Medicare Supplement insurance. However, the insurance companies are required to aggregate their data in reports to the department. Therefore, the department does not have information regarding the impact on premiums of offering the plans to the disabled.

JB/SB/PO/KS: nf