The Need to Standardize Medicare Supplements
Prior to the 1980s, insurance companies offered supplemental insurance policies to Medicare beneficiaries to give them extra coverage. There were many plans offered by many insurance companies. Unfortunately, Medicare beneficiaries began to experience high-pressure sales tactics, deceptive advertising, and substandard and overpriced insurance policies.
In 1980, the “Baucus Amendment” was passed. This was formally known as the Medigap Fraud and Abuse Prevention Act. It standardized the Medicare Supplement plan offerings to help consumers compare the different benefit packages. Before this amendment, there were countless options that people could choose from, making the selection of a plan very confusing.
To prevent further abuse, the government passed the Medicare and Medicaid Patient and Program Protection Act in 1987. With this new bill, it became a felony to provide false medical information when applying for a Medicare Supplement.
Although a number of other amendments were passed over the years, one of the most significant was the Consolidated Appropriations Act in 2001. This bill allowed people who experienced sudden life changes or whose supplement went through changes to be able to purchase a new supplement without being denied due to preexisting health conditions.
The Introduction of Part D
As we previously mention in A Brief History of Medicare Part 2, Medicare began to offer coverage for prescriptions in 2003 through the new Medicare Part D, which is offered by private insurance companies. Part D would become commonly available through Medicare Advantage plans and also Stand-Alone Prescription Drug plans.
Because Medicare Supplements do not offer coverage on prescriptions, most people on a Supplement also purchase a Stand-Alone Prescription Drug plan in order for their medications to be covered.
Fun fact: While many Medicare Advantage Plans are available with a $0 monthly premium, all Stand-Alone Prescription drug plans will have some kind of monthly premium.
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