Although there will be several changes to Medicare supplements, one of the largest wholesale change will be the existing Medicare supplement plans A through G being dumped. This will be what is referred to as the “old” Medicare supplements. Here is the confusing thing. There will be (what is going to be dubbed) the “new” Medicare supplement plans A through G, and well they are exactly the same supplements as the “old” ones.
No one is quite certain why the government would come up with this particular idea, but it may have something to do with risk pools and re-setting rates. However, more on that in a bit, after a short discussion of risk pools. When the old plans are booted out and the new ones come into play, each group of people will then be in what is called a “closed risk pool.” The ones in the old plans will be grandfathered in, which might sound great, but their rates will likely go up because they are in a closed risk pool.
The rates for any closed risk pool generally tend to be higher because the pool of insured’s is “closed” for business. Now here is the interesting thing that may cheer up many Americans: when they initially get a chance to take advantage of the fall out. Come June 1, 2010, when the old goes out and the new comes in and two closed risk pools are created, insurance companies are going to reset rates because of the fierce competition that will result for health insurance customers.
So there may be some terrific deals to be had when this happens. The question will be how long the rate wars will continue and what will be the outcome later. It’s hard to guesstimate what the Medicare supplement insurance market will do in terms of costs for premiums.
