Rates Are Rising on Policies That Cover Gaps in Medicare
WASHINGTON (AP) _ Rates for more than 3 million retirees who buy private insurance to supplement Medicare will climb by an average of 30 percent next month.
The Prudential Insurance Company, which sells Medigap policies through the American Association of Retired Persons, said the increase was brought on because elderly customers are filing more claims for services.
Most Medicare beneficiaries buy extra insurance to fill in Medicare’s gaps. The private policies pick up the cost of the first day in the hospital, a portion of doctor bills and other charges that Medicare does not pay.
Peter Ashkenaz, a spokesman for the AARP, said more than 3 million of its members buy Medigap policies through Prudential.
Lania Peterson, a Prudential manager in its Fort Washington, Pa., office, said the actual increases will vary from state to state. They also will vary depending on which of the 10 different Medigap policies a person buys.
``It’s primarily due to the fact that beginning in late 1994 we’ve seen a really significant increase in those medical costs and claims volume,″ Peterson said.
Claims for Medicare Part B services _ doctor bills and other out-of-hospital expenses _ jumped 38 percent in the first half of 1995, she said.
The sharp increase follows two years in which Prudential held the line on premiums for its AARP customers.
AARP recently said it plans to terminate the agreement with Prudential when it expires at the end of December 1997. The organization said it will consider new options for selling supplemental insurance to members.
Medicare beneficiaries also pay a monthly premium of $46.10 to the government for their basic Part B coverage. That premium is scheduled to drop to $42.50 in January 1996. The Republican Medicare reform proposal before Congress would increase it to about $53 a month.
Medigap policies can cost anywhere from $800 to $2,000 a year. The elderly typically pay about $1,200. The most expensive policies offer some prescription drug coverage.