Proposed Medigap Changes Under Consideration

As part of efforts to reduce the federal deficit, lawmakers in Congress are currently considering changes to Supplemental Medicare Insurance - also known as Medigap. Two key proposals under consideration are:

A proposal put forth by President Obama would add a new 30% surcharge to the Medicare Part B premium beginning in 2017 for new beneficiaries that purchase a Medigap plan with very low cost-sharing that covers a large portion of expenses not covered by Medicare, such as Medicare's coinsurance, copayments and deductibles. This proposal is estimated to save the federal government $2.5 billion over 10 years.

Another proposal put forth by the National Commission on Fiscal Responsibility and Reform would change the structure of traditional Medicare by having a single $550 combined annual deductible that would cover both Medicare Part A and Part B. Medicare beneficiaries would no longer be allowed to purchase a Medigap "first dollar" plan that completely fills in the gaps in traditional Medicare. Instead, all Medigap plans would require members to pay a $500 deductible for doctor and hospital visits before their health insurance coverage kicks in. Medigap coverage would be limited to 50% of the next $5,000 in health care expenses. This proposal is estimated to save the federal government $110 billion over 10 years.

Other lawmakers and organizations have put forth similar proposals that would change Medigap. The goal is to reduce Medicare spending by discouraging unnecessary visits to the doctor or the hospital by adding a deductible or other new costs for people who purchase Medigap policies with low cost-sharing.