Medigap Gap Unduly Burdens Medicare Recipients Under 65

Medicare beneficiaries with disabilities who are under 65 years old have a difficult time obtaining “Medigap” insurance that fills in the gaps in their Medicare coverage, according to a recent article by the Kaiser Family Foundation.  The article argues that there is no longer any justification for the so-called “gap” in insurance coverage for younger Medicare recipients and calls for a change in the federal law that governs Medigap rights and protections. 

People under age 65 can qualify for Medicare through the Social Security Disability Insurance (SSDI) program after a two-year waiting period.  While Medicare covers hospital, medical, and prescription drug costs, individuals are still responsible for paying coinsurance, copayments, and deductibles. Those out-of-pocket expenses can be burdensome and, at times, financially catastrophic.  In order to cover some of those costs, Medicare beneficiaries may buy supplemental insurance, known as Medigap policies. 

Federal law requires insurers to offer Medigap policies to Medicare beneficiaries who are 65 or older, but it has no such requirement to offer coverage to beneficiaries under 65 with disabilities, creating a gap in coverage. Not surprisingly, statistics show that Medicare recipients under 65 are far less likely to have Medigap coverage.  According to the Kaiser report, while about one-fifth of the 56 million people on Medicare have a Medigap policy, only 2 percent of people under 65 on Medicare have this kind of policy. 

Thirty-one states have laws that require Medigap insurers to sell at least one policy to people under age 65 (the Kaiser article lists the states). In addition two-thirds of low-income Medicare recipients also qualify for Medicaid. In states that don’t have laws extending Medigap coverage to younger Medicare beneficiaries, the only option for beneficiaries that do not qualify for Medicaid is to buy supplemental coverage from insurers who choose to sell it—usually with high premiums. For these individuals, who often already face serious financial obstacles, finding affordable supplemental insurance coverage can be difficult. As a result, beneficiaries under age 65 report greater problems with access to health care because of the inability to pay than beneficiaries over age 65.

The Kaiser report suggests that the gap in Medigap coverage may be the remnant of efforts to keep insurance premiums in check.  When the law creating the gap was passed in 1990, Medigap insurers covered the costs for some prescription drugs and there was concern that higher spending on medicine by people under 65 with disabilities would increase insurer’s costs, leading to higher premiums for all.  Because Medicare Part D now covers the costs of drugs and Medigap policies do not, the Kaiser report argues that the justification for the gap no longer exists. The report argues that federal law should close the gap once and for all, making Medigap coverage equally available to all Medicare beneficiaries. 

To read the Kaiser Family Foundation’s article, click here.