Medigap

Pursuant to a congressional request, GAO provided information on Medicare supplemental insurance (Medigap) premiums for standard plans that provide outpatient prescription drug coverage, focusing on: (1) a description of the benefits under the standard plans; and (2) average premiums, which reflect insurance company reporting practices as well as different state regulations.

GAO noted that: (1) GAO obtained Medigap premiums for four standard plans--F, H, I, and J--from insurance commissions in 38 states; (2) plans H and I provide drug coverage with a $250 deductible, 50 percent coinsurance, and an annual limit of $1,250; (3) plan J has the same drug benefit deductible and coinsurance and an annual limit of $3,000; (4) premiums for plan F, the most frequently purchased plan, are presented as a comparison because it does not cover prescription drugs; (5) the insurance companies report their premiums to state insurance commissions; (6) some companies list different premiums that are specific to a certain type of policy; (7) a company may have different premiums for policies that use different age-rating methodologies; (8) premiums may also differ by characteristics of the policyholder, such as gender or smoking status; (9) other companies may report a single sample premium for each age; (10) states may also have regulations that affect the standard premiums, such as not allowing premiums to vary based on age; (11) the average premiums should not be interpreted as the average prices that Medicare beneficiaries are paying for Medigap policies in a given state; and (12) although companies may offer policies at the published premiums, the number of Medicare beneficiaries who are actually paying the premiums was not available from the states, so GAO was not able to calculate the average premiums weighted by the number of policyholders.