Close the Medigap Act of 2025
- Sponsor
- Rep. Doggett, Lloyd [D-TX-37]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jan 22, 2025
Bottom line
This bill aims to expand access to Medigap policies, reduce out-of-pocket costs for Medicare beneficiaries, and increase transparency in the Medigap market, potentially leading to higher premiums for healthier or younger enrollees.
What it actually does
This bill reforms Medicare supplemental health insurance (Medigap) policies by mandating guaranteed issue for all beneficiaries, prohibiting discrimination based on health status or genetic information, and eliminating preexisting condition waiting periods. It also increases the medical loss ratio (MLR) requirements for Medigap policies, prohibits age-based and geographic pricing discrimination, restores access to "first-dollar" coverage plans, and enhances transparency for Medigap brokers and on the Medicare Plan Finder website.
Proponents argue
Proponents argue that the bill will protect vulnerable seniors and individuals with disabilities from being denied Medigap coverage or charged exorbitant rates due to health conditions. They contend that guaranteed issue and the elimination of preexisting condition clauses are crucial for ensuring equitable access to supplemental insurance, reducing financial burdens, and improving health outcomes for those who rely on Medicare. They also highlight the importance of increased transparency and higher medical loss ratios to ensure beneficiaries receive fair value for their premiums.
Opponents contend
Opponents might argue that mandating guaranteed issue and prohibiting age-based pricing could lead to significant premium increases for younger and healthier beneficiaries, making Medigap less affordable for them. They may also contend that restoring "first-dollar" coverage could encourage overutilization of healthcare services, driving up overall Medicare costs. Critics might also raise concerns about potential market disruption for insurers and the administrative burden of new regulations.
The bill is moderately complex due to its technical amendments to the Social Security Act, but its core provisions are understandable with careful reading.
Section 2(a)
Guaranteed Issue and Non-Discrimination for Medigap Policies
This provision amends the Social Security Act to require Medigap insurers to offer policies to all eligible Medicare beneficiaries, regardless of health status, claims experience, or medical condition. It prohibits denying coverage, discriminating in pricing, or excluding benefits based on preexisting conditions or genetic information. It also eliminates waiting periods for benefits. This applies to policies effective on or after January 1, 2026, with a possible phase-in until January 1, 2031.
Supporters argue
Supporters argue this ensures equitable access to essential supplemental coverage, protecting vulnerable seniors and those with disabilities from financial hardship and health-based discrimination. It aligns Medigap with other health insurance reforms.
Critics contend
Opponents may contend that this provision could lead to adverse selection, where sicker individuals disproportionately enroll, driving up premiums for healthier individuals and potentially destabilizing the Medigap market.
Tradeoffs
Balances the goal of universal access and protection for vulnerable populations against concerns about market stability and potential premium increases for healthier enrollees.
Section 2(b)
Medigap Guaranteed Issue Outreach Plan
The Secretary of Health and Human Services is directed to develop an outreach plan to inform Medicare beneficiaries about the changes related to guaranteed issue. This plan requires consultation with consumer advocates, brokers, insurers, the National Association of Insurance Commissioners, and State Health Insurance Assistance Programs.
Section 3
Increased Medical Loss Ratio for Medigap Policies
This section amends the Social Security Act to require that, starting January 1, 2026, Medigap policies must meet a medical loss ratio (MLR) that is equal to or greater than both the current MLR (75% for group, 65% for individual) AND a new percent recommended by the National Association of Insurance Commissioners (NAIC). This aims to ensure a higher percentage of premiums is spent on healthcare benefits rather than administrative costs or profits.
Section 4
Prohibition on Age-Based and Geographic Pricing Discrimination
This section directs the NAIC to revise Medigap standards to prohibit insurers from discriminating in pricing based on age or establishing premiums that apply only to a portion of a county or equivalent area. It also prohibits discrimination against individuals eligible for Medicare due to disability or End-Stage Renal Disease (ESRD) to an extent that jeopardizes access. These revised standards apply to policies sold, issued, or renewed to individuals who first become entitled to Part A or enroll in Part B on or after January 1, 2026.
Section 5
Enhanced Medicare Plan Finder Website Information
This section mandates improvements to the Medicare Plan Finder website. It requires the site to display provider networks, out-of-pocket expenditure reviews (deductibles, copayments, premiums, estimated annual costs), and, until January 1, 2026, information on state-specific guaranteed issue rules. After January 1, 2026, it must include information on the new federal guaranteed issue requirements. The site must also clarify Medigap options, allowing comparison and sorting by premiums, explaining policy value, rating financial stability of issuers, providing inflation rates, and including general information on MA and Part D costs. Public comment and consumer testing are required for new information.
Section 6
Repeal of Prohibition on First-Dollar Medigap Coverage
This section repeals subsection (z) of Section 1882 of the Social Security Act, which currently prohibits Medigap plans from covering the Part B deductible. By striking this subsection, the bill restores the ability of Medigap policies to offer "first-dollar" coverage, meaning they can cover the initial out-of-pocket costs (like the Part B deductible) that Medicare beneficiaries would otherwise pay.
Section 7
Medigap Broker Payment Transparency
This section extends transparency requirements, similar to those for drug and device manufacturers, to Medigap insurance brokers. Starting 12 months after enactment, Medigap issuers must annually report payments or other transfers of value made to agents, brokers, and other third parties representing their policies. This includes recipient name, address, amount, date, form of payment, and other relevant information, which will be made publicly available.
Excludes individuals entitled to Part A solely due to Section 226A (End-Stage Renal Disease or certain disabilities for those under 65) from the guaranteed issue requirements.
Section 2(a)(2)
Why it matters:Could be standard legislative practice to define scope, or potentially to avoid extending guaranteed issue protections to a population group that insurers argue presents higher risk, which could be politically contentious.
Case for: Supporters of this carve-out might argue that extending full guaranteed issue to this specific, often higher-cost population could disproportionately increase premiums for all other Medigap enrollees, making the overall policy less sustainable or affordable for the broader Medicare population.
Case against: Critics would argue that this exception undermines the bill's core principle of non-discrimination, leaving a highly vulnerable group (under-65 Medicare beneficiaries with ESRD or disabilities) without the same protections, potentially facing significant barriers to obtaining supplemental coverage and higher out-of-pocket costs.
Estimated impact: Limits guaranteed issue protections for a specific subset of Medicare beneficiaries, potentially leaving them exposed to health underwriting and higher costs.
Prohibits discrimination in pricing against individuals eligible for Medicare due to disability or ESRD, but only if such discrimination "jeopardizes the access" to the policy.
Section 4(a)(2)(B)
Why it matters:This phrasing might be a compromise to address concerns from insurers about covering high-cost populations while still offering some level of protection, rather than a full non-discrimination mandate.
Case for: Proponents of this qualified language might argue it strikes a balance, allowing insurers some flexibility in pricing for higher-risk groups while preventing outright denial of access, thus maintaining market stability.
Case against: Critics would argue that this "jeopardizes access" clause is vague and could be exploited by insurers to charge significantly higher premiums to disabled or ESRD beneficiaries, effectively limiting their access without outright denying it, thus undermining the spirit of non-discrimination.
Estimated impact: Provides a weaker, more ambiguous protection against pricing discrimination for disabled and ESRD Medicare beneficiaries compared to the general guaranteed issue provisions.