Medigap Issuers Face Spike in Small Problems That Got Serious

What You Need to Know

Medicare supplement policies, or Medigap policies, operate under different regulations than Medicare Advantage plans.
Medigap issuers have troubles of their own.
One reason: Newly discovered problems tend to be more serious than newly discovered problems used to be.

Issuers of Medicare supplement insurance policies are facing stress of their own this fall.

Manoj Pawar, the chief medical officer at Mutual of Omaha, a major Medicare supplement insurance policy issuer, said in a recent interview that one main reason is the lingering effect of COVID-19 on people’s health and their use of health care services.

Health insurers noticed a dramatic decrease in health insurance claims during the early years of the COVID pandemic, partly because some doctors were too busy responding to COVID to handle other kinds of care, and partly because patients were afraid of catching COVID at health care facilities.

“People weren’t even getting screening tests,” Pawar said.

What it means: Insured patients are now finding out that neglected small problems have turned into big, costly problems, Pawar said.

For Medicare Advantage plan issuers, that’s combining with tighter federal subsidy rules and regulatory framework changes to make this a terrible year.

For Medicare supplement insurance issuers, it’s pushing premiums higher.

For a client, a neglected small problem that becomes a big problem is a catastrophe. It could force the client to give up on any plans to retire in Hawaii or open up a bait shop in Maine, and it could replace glamorous restaurant meals with whatever snacks happen to be left in the hospital or cancer treatment center vending machine.

Pawar thinks it’s important for anyone who’s talking to the clients to tell them to get their checkups.

The two Medicare gap fillers: Medicare is a federal program that pays for care for about 64 million people who are 65 or older, have severe kidney disease or are disabled.

“Original Medicare” is based on a framework developed in 1965 and exposes enrollees to many deductibles, coinsurance bills and other out-of-pocket costs.