Since 2011, Blue Cross Blue Shield of Michigan (BCBSM) has not increased premium rates on its Legacy Medigap plans. While this was a benefit to many Medigap customers, it became fiscally impossible for Blue Cross Blue Shield of Michigan rates to remain so low. On July 6, 2016, BCBSM announced that this “rate freeze” is ending. Read on to learn about the rate increase and affordable alternative options.
Who Is Affected?
Nearly 200,000 BCBSM customers will be affected. Seniors over 65 as well as disabled consumers will see their rates change for the first time in five years. Disabled customers will see a higher increase than those over 65.
How Much Is the Blue Cross Blue Shield of Michigan Medigap Rate Increase?
Rate increases vary slightly depending on the region where the BCBSM customer lives, age, and gender. BCBSM has listed specific numbers for senior customers in its press release using its most popular plan with its highest regional increase—Legacy Medigap Plan C in Southeast Michigan. For senior customers located in Southeast Michigan, the monthly rate increase will range from $48 to $177. The lowest rate increase represents a 65-year-old female while the highest reflects an 80-year-old male. The rate increase does not factor in any potential premium subsidies. Other regions of Michigan will see lower increases, though the change will still be significant. Disabled individuals under 65 can expect an increase of about $188 per month.
With the financial support of the Michigan Health Endowment Fund (MHEF), subsidies will still be available. Individuals earning less than $17,820 and couples earning less than $24,030 annually will be eligible for the following monthly subsidies:
- Ages 65 to 75—$40
- Ages 76 and up—$65
- Disabled under 65—$125
When Will New Rates Come Into Effect?
Blue Cross Blue Shield of Michigan Medigap rate increases will not roll out until January 1, 2017. So, rates will remain the same through the rest of the year. BCBSM made the decision to delay rate increases to give its customers time to prepare for the change.
Why Is BCBSM Increasing Rates After Five Years?
The announcement does address BCBSM’s reasoning for the increase, and it isn’t to increase profits. In fact, the insurance company expects to see $249 million in losses because of its low prices. In order to sustain its business, the 2017 rate increases will only allow BCBSM to make $1 for every $1.10 in expenses.
BCBSM explains its three main reasons for the rate increase.
- The end of a subsidy program: A subsidy program initiated in 1980 exempted BCBSM from certain state and local taxes. Since the program has ended in 2014, and BCBSM became a nonprofit mutual insurance company, it has paid over $200 million in taxes and $210 million to the MHEF.
- A rate freeze has ended: A rate freeze for legacy Medigap plans allowed BCBSM to keep its subsidy program (the first in this list) in place. By providing over $690 million in subsidies, BCBSM was able to keep this rate freeze in place until 2016.
- Costs have exceeded rates: BCBSM’s current rate pricing is earning less money than it is spending to provide coverage.
Is Anything Else Changing?
BCBSM will still provide guaranteed issue coverage to all applicants. This means that the company will not deny you coverage based on your current health condition. The company will also begin introducing new Medigap plan options in 2017.
Your Blue Cross Blue Shield of Michigan Medigap rate still will not be affected by your health status. However, your age, gender, and location will be taken into account for yearly increases. Age-based increases will cap (stop increasing) at age 80.
Will You Need to Shop for a New Medigap Plan?
It depends on how the Blue Cross Blue Shield of Michigan Medigap rate increase will affect you. If the rate increase makes your coverage unaffordable, or you simply want to review your options, then yes. You do have the option to shop for a new, more affordable Medigap plan. A licensed health insurance agent can help you review your local options before your rate increase occurs.
What If Your New Medigap Plan Options Are Still Too Expensive?
Current Blue Cross Blue Shield of Michigan Medigap rates are far below market price. The rate increase might make Medigap unaffordable on a limited income. There is an option that will still supplement your Original Medicare coverage and fit into your budget: Medicare Advantage. Medicare Advantage plans boast low monthly premiums. In fact, Medicare Advantage premiums can be as low as zero dollars, and they generally range from $0 to $100. If you decide to enroll in a Medicare Advantage plan, keep in mind that you still have to pay your part B premium.
There are also Medicare cost assistance programs. Many of these programs provide cost savings for your monthly part B, C (Medicare Advantage), and D premiums. To receive help with your Medicare premiums, you must meet certain eligibility requirements.
HealthMarkets Can Help You Review Your Options
The Blue Cross Blue Shield of Michigan Medigap rate increase was not unexpected by the industry, but it may take hundreds of thousands of customers by surprise. If the sudden rate increase will affect your ability to afford comprehensive coverage, contact HealthMarkets. We can help you review the Medigap options in your area, help explore your Medicare Advantage options, and check if you are eligible for any subsidies or other cost reductions. Call us today at (800) 488-7621 or visit us online to find an agent near you.