Insurance rates for 200,000 seniors to go up next year

Ian Thibodeau
The Detroit News

Blue Cross Blue Shield of Michigan will increase rates for a Medicare supplement plan covering about 200,000 senior citizens starting in the new year.

Legacy Medigap supplement plan rates will increase Jan. 1, 2017, Blue Cross officials said Wednesday. When the rate increase takes effect, monthly payments for those in Legacy Medigap Plan C, Blue Cross’s most popular Legacy Medigap plan, will increase anywhere from $48 a month for a 65-year-old woman to $177 per month for an 80-year-old man.

Members in southeastern Michigan can expect higher rates than those in the rest of the state because health-care costs are higher there.

Plan C has been Blue Cross’s best deal for legacy Medigap plans for a long time, according to Andrew Hetzel, vice president of corporate communications for Blue Cross. Close to 90 percent of Blue Cross’s Legacy Medigap members are in Plan C.

Members currently pay $122.86 per month for Plan C. Legacy Medigap rates have not changed since 2011. Since 2000, the monthly rate has increased by roughly $33.

Rates for those in Plan A, Medigap Blue, Legacy Low and Legacy High plans will also increase on the first of the year.

Those in the Blue Cross Medicare Advantage plans are not affected by Wednesday’s announcement, Hetzel said.

Members will have until Nov. 14 to re-enroll in Plan C during the open enrollment period for the 2017 year. After Nov. 14, Blue Cross will phase out Plan C, Hetzel said. It will be replaced by a new supplement plan, which opens in 2017.

The rate increases come after a 2013 regulatory act changed responsibility for subsidizing Medigap, which is essentially a voluntary supplement to Medicare that pre-funds a portion of Medicare’s cost-sharing components.

Under the new regulatory act, Blue Cross is no longer tax-exempt or responsible to subsidize Legacy Medigap. Premiums have been frozen since 2011, Hetzel said. Blue Cross will continue to lose money on Legacy Medigap plans. In 2015, the insurance company lost $219 million. It’s projected it will lose $249 million in 2016.

With the rate increase, Blue Cross projects a “loss ratio” over the lifetime of all Medigap products of 110 percent. Currently, it has a loss ratio of 154 percent on those plans.

The rate increases bring Blue Cross’s plans up to market rate, Hetzel said. Members might still qualify for a subsidy under new regulation through the Michigan Health Endowment Fund. All Legacy Medigap members will receive in the mail instructions on how to apply for the subsidy, which is no longer offered through Blue Cross.

The Michigan Health Endowment Fund will begin accepting applications Oct. 1, 2016. The application deadline is Dec. 15.

The rate change, according to Hetzel, affects 4 percent of Blue Cross’s entire membership. Raising rates for legacy plans could “lessen the pressure that our other customers have on their plan premiums.”

Under the new guidelines, Blue Cross will not factor age into rate increases after age 81. Blue Cross also does not use a member’s health status as a rating factor, and will not deny someone with a preexisting condition.

In the October 2016 enrollment period, members will be rated on age, gender and geography, Hetzel said.

Jim McMahon, director of the federal business division for Blue Cross, said some Plan C members might find in the enrollment period that a different plan might better meet their needs.

Medigap plans typically suit people who value freedom of choice in their coverage, as well as those who would rather pay a premium upfront to cover all medical expenses.

Hetzel said Blue Cross is committed to providing the information needed to understand the rate increases and what options are available.

“Many people enrolled in our Legacy Medigap plans today are in the wrong plan,” he said. “Some very healthy older adults that don’t go to the doctor very often ... frankly are better off in a low-premium Medicare Advantage plan that they can get from Blue Cross or another carrier.”

Blue Cross began notifying members of the impending changes in June. In July, members will be notified of rate filing and the new subsidy program. From August to December, Blue Cross is offering support to continue to notify members on pricing.

Hetzel said members should receive letters with Blue Cross information phone numbers by July 15. Members can also access information at

Those with questions about the new subsidy program can call the Health Endowment Fund at (866) 824-9772, or go to

Twitter: @Ian_Thibodeau