The National Association of Insurance Commissioners has announced plans to send a letter to Congress in which it will petition against proposed changes regarding supplemental Medicare insurance, also known as Medigap insurance. While the federal government hopes to save money from the change, the NAIC claims that the new regulations would force recipients to pay more for Medigap insurance. Around 7 million recipients currently pay for such policies, aimed at funding medical expenses that Medicare does not cover.

Florida's deputy insurance commissioner explained that the letter will inform Congress of the problems the new proposals could cause for insurers and beneficiaries. The changes could even violate federal and state laws, which require benefits to be renewable and guaranteed. Previously, changes to Medigap regulations only affected new policies, but the new proposal would affect existing policies as well, causing some to have to make difficult financial decisions. Officials with the NAIC fear this could cause senior citizens living on fixed income to become confused when the changes come into effect.

Experts say the changes would require beneficiaries and insurers alike to adapt to significantly different payment systems. Insurers would need to recalculate premiums and costs, while beneficiaries would be required to make a payment before Medigap coverage even begins, and then pay an additional fee to ensure that all medical bills are covered for a full year.

Estimates show that the federal government could save $53 billion in 10 years if the changes are approved. The Congressional Budget Office claims that beneficiaries will be less likely to use nonessential medical services if they must pay a greater share of coverage, resulting in fewer Medicare claims overall. Some studies suggest that beneficiaries with Medigap insurance policies use more Medicare services on average.

What do these changes have to do with estate planning? First, if Medicare recipients have to pay more in premiums, it can drain a person's estate, leaving them with less to pass on to heirs in the future. However, experienced Florida elder law attorneys understand how to help a person preserve his or her assets while still receiving Medicare or Medicaid assistance. Whether through trusts, annual gifting or other options, there are ways to make sure you retain assets so they can be passed down to your loved ones.

Source: All Headline News, "Insurance Commissioners to Tell Congress Not to Change Medigap Policies," Sept. 19, 2011