Health Insurance for the Elderly:

Owning Duplicate Policies Is Costly and Unnecessary

HEHS-94-185: Published: Aug 3, 1994. Publicly Released: Aug 3, 1994.

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Pursuant to a congressional request, GAO reviewed Medigap insurance policies, focusing on the: (1) potential for duplicate coverage among elderly Medicare beneficiaries; and (2) necessity for a beneficiary covered by an employer-sponsored retiree plan to purchase a Medigap policy.

GAO found that: (1) owning multiple health insurance policies to supplement Medicare is both costly and unnecessary; (2) about 3 million elderly Medicare beneficiaries paid about $1.8 billion in 1991 for potential duplicate coverage; (3) employer-sponsored plans usually provide reasonable comprehensive coverage; (4) about 500,000 Medicare beneficiaries who were also eligible for Medicaid spent about $190 million on unnecessary supplemental insurance; (5) employer-sponsored plans have become less attractive because of increasing costs and tighter eligibility requirements; (6) federal Medigap requirements provide a one-time open season for people to purchase Medigap insurance; and (7) Congress could change the federal Medigap law to guarantee a Medigap open season for retirees whose employer-sponsored plans are terminated or substantially changed or require a periodic open season for all Medicare beneficiaries.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Section 4031(a) of the Balanced Budget Act of 1997 amended section 1882(s) of the Social Security Act to require Medigap insurers to offer policies to persons whose employer-sponsored Medicare supplement plans terminate. Insurers cannot discriminate in pricing the policy because of health status, claims experience, receipt of health care, or medical condition, nor can they impose a pre-existing condition exclusion under the policy.

    Matter: Congress may wish to consider amending the law to provide a mechanism for retirees to obtain Medigap insurance when a Medicare beneficiary's plan is subsequently modified or discontinued by the employer.


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