Medigap Insurance:

Effects of the Catastrophic Coverage Act of 1988 on Benefits and Premiums

T-HRD-89-13: Published: Apr 6, 1989. Publicly Released: Apr 6, 1989.

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GAO discussed the potential impact of the Medicare Catastrophic Coverage Act of 1988, on Medigap insurance policies. GAO found that the act: (1) provided new benefits to Medicare beneficiaries by limiting beneficiary out-of-pocket costs for covered services; (2) eliminated restrictions on hospital stays and in-patient co-insurance requirements; (3) increased the limit on skilled home nursing care to 150 days, and changed the computation method for co-insurance payments; (4) extended hospice care benefits indefinitely and clarified intermittent home health service benefits; and (5) limited beneficiary supplementary medical insurance liability to $1,295. GAO also found that the 1987 weighted average loss ratio for six commercial insurers was 104 percent, on total premiums of about $475 million.

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