Legislation aims to boost Medigap MLR

Sen. John Kerry (D-Mass.) and Rep. Pete Stark (D-Calif.) introduced bicameral legislation today that would require Medigap insurance plans to spend at least 85% of every premium dollar on medical care in the group market and 80% in the individual market.

Current law upholds the medical-loss ratio provisions outlined in the Medigap Medical Loss Ratio Improvement Act of 1990, which required Medigap insurers to spend 75% of premiums on medical care in the group market and 65% in the individual marketplace. This bill—which retains the name of the original legislation—would become effective in 2014 to give insurers some time to adjust to the change.

“This important bill will provide seniors in Medigap with consumer protections like those already in place for Medicare Advantage enrollees,” Rep. Frank Pallone (D-N.J.), ranking member on the House Energy and Commerce Health Subcommittee, said in a news release. “More than 9 million Medicare beneficiaries have Medigap policies and their premium dollars should be spent on medical care.”

Several groups have endorsed the legislation, including the National Council on Aging, Families USA, AARP and the Alliance for Retired Americans.