LANSING, Mich. — A fund created through the restructuring of Michigan’s largest health insurer will spend $44 million next year to begin partially offsetting a spike in the cost of supplemental insurance that covers Medicare recipients’ coinsurance and deductibles.
The Michigan Health Endowment Fund’s initial contribution — which will dampen the impact of Blue Cross Blue Shield ending a five-year rate freeze on its Medigap policies— is more than a third of the $120 million it must spend through 2021.
The fund is frontloading the aid to try to effectively cut the premium hike in half. Blue Cross has estimated that seniors in its most popular Medigap plan in southeastern Michigan will see rate increases ranging from $48 a month to $177 per month.
“The most vulnerable seniors are going to get this help,” the fund’s CEO, Paul Hillegonds, said in an interview.
Enrollment runs through Dec. 15. That is the window to get the full subsidy for 2017. Residents will have to re-apply each year.
The fund estimates that the subsidies will help about 80,000 of the state’s 400,000 people who buy Medigap coverage.
The subsidy will be paid directly to participating insurers, which for now are Blue Cross Blue Shield, Blue Care Network, United Healthcare AARP Medicare Supplement and Priority Health. It is available to residents with a yearly income at or below 150 percent of the federal poverty line — $17,820 for an individual, $24,030 for a couple.
The monthly subsidy is $40 for people age 65 to 75, $65 for those 76 and older and $125 for people under 65 who have a disability.
The supplemental insurance plans typically fill coverage gaps, such as cost sharing, in Medicare Parts A and B — for hospital stays, doctor visits, rehabilitation, lab tests and other services.
Administrators of the fund say they structured the subsidy in close cooperation with senior advocacy groups, insurance companies and state officials. Nonprofits such as Area Agencies on Aging will be available to help residents fill out and submit applications, said Terry Gardner, the fund’s chief operating officer and chief financial officer.
The fund was created in 2013 under a law that enabled Blue Cross Blue Shield to become a nonprofit mutual insurer while ending its exemptions from paying state and local taxes. The insurer is required to use its “best efforts” to make annual “social mission” payments to the fund totaling $1.56 billion over 18 years.
Blue Cross had spent about $200 million a year, or 1 percent of revenue, to lower the cost of its Medigap policies. The subsidy was put in place in 1980.
Once the endowment fund accumulates $750 million, it must keep that amount to ensure the fund earns ongoing investment income.
Early initiatives include nutrition and healthy lifestyles, with a focus on children; healthy aging; and mental health, with an emphasis on children and seniors.
How to apply: visit www.michiganmedigapsubsidy.com ; call 1-866-824-9772 Monday through Friday, 8 a.m. to 6 p.m.; ask for an application, fill it out and send back. Area Agencies on Aging and Medicare-Medicaid Assistances Programs are offering assistance. They are listed at www.mi-seniors.net/regionmap and http://mmapinc.org