[Federal Register Volume 65, Number 246 (Thursday, December 21, 2000)]
[Notices]
[Pages 80442-80443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32441]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[HCFA-2092-N]


Medicare Program; Deductible Amount for Medigap High Deductible 
Policy Options for Calendar Year 2001

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the annual deductible amount of $1,580 
for the Medicare supplemental health insurance (Medigap) high 
deductible policy options for 2001. High deductible policy options are 
those with benefit packages classified as ``F'' or ``J'' that have a 
high deductible feature. The deductible amount represents the annual 
out-of-pocket expenses (excluding premiums) that a beneficiary who 
chooses one of these options must pay before the policy begins paying 
benefits.

EFFECTIVE DATE: January 1, 2001.

FOR FURTHER INFORMATION CONTACT: Kathryn McCann, (410) 786-7623.

SUPPLEMENTARY INFORMATION:

I. Background

A. Medicare Supplemental Insurance

    A Medicare supplemental, or Medigap, policy is the principal type 
of private health insurance that a beneficiary may purchase to cover 
certain costs that Medicare does not cover. The beneficiary is 
responsible for deductibles and coinsurance amounts for both Part A 
(hospital insurance) and Part B (supplementary medical insurance) of 
the Medicare program. In addition, Medicare generally does not cover 
custodial nursing home care, eyeglasses, dental care, and most 
outpatient prescription drugs. A beneficiary must either pay the full 
cost of these services, or he or she may purchase additional private 
health insurance to help pay these costs. Medigap policies offer 
coverage for some or all of the deductibles and coinsurance amounts 
required by Medicare. Additionally, Medigap policies may provide 
coverage for some services that are not covered under the Medicare 
program.
    Section 1882 of the Social Security Act (the Act) establishes, 
among other things, minimum standards for Medigap policies. No Medigap 
policy may be issued in a State unless the policy meets one of the 
following criteria: (a) the Secretary has certified it as meeting 
Federal standards and requirements, or (b) it complies with State laws 
established in accordance with section 1882(b)(1) of the Act.
    The Omnibus Budget Reconciliation Act of 1990 (OBRA 90) amended the 
Act by standardizing Medigap benefits and requiring that no more than 
10 Medigap benefit packages, Plans ``A'' through ``J,'' be offered 
nationwide. Three States (Wisconsin, Minnesota, and Massachusetts) 
experimented with standardizing benefits before the enactment of 
Federal standards. These States were permitted to keep their 
alternative forms of Medigap standardization, and we refer to them as 
the ``waivered States.''
    Plan ``A'' is the basic benefit package. It covers Medicare Part A 
hospital coinsurance plus coverage for 365 additional days after 
Medicare benefits end, over the beneficiary's lifetime, Medicare Part B 
coinsurance (generally 20 percent of the Medicare-approved amount) or, 
in the case of hospital outpatient department services under a 
prospective payment system, the applicable copayment, and coverage for 
the first 3 pints of blood per year. Medigap Plans ``B'' through ``J'' 
contain this basic benefit package, as well as different combinations 
of coverage for some or all of the following benefits:
     Medicare Part A inpatient hospital deductibles.
     Skilled-nursing facility coinsurance.
     Foreign travel health emergencies, at home recovery.
     Preventive care.

[[Page 80443]]

     Some prescription drug coverage.
     Medicare Part B excess charges protection.

B. High Deductible Medigap Standard Policies

    Section 4032 of the Balanced Budget Act of 1997 (BBA) added high 
deductible versions of two of the standard Medigap policies or their 
counterparts in the waivered States. In the three waivered States, high 
deductible versions of the plans that most closely approximate the 
benefits contained in Plans ``F'' and ``J'' are authorized by the 
Balanced Budget Act. Unlike the regular versions of Plans ``F'' and 
``J,'' the high deductible versions of these policies do not begin 
paying benefits until the deductible amount is met. Amounts included in 
this deductible are the expenses that would ordinarily be paid by the 
regular version of the policy, including Medicare deductibles for Parts 
A and B. The Plan ``F'' deductible does not include the separate 
foreign travel emergency deductible of $250. The Plan ``J'' deductible 
does not include the plan's separate $250 prescription drug deductible 
or the plan's separate $250 deductible for foreign travel emergencies.

II. Provisions of This Notice

    In 1998 and 1999, the high deductible amount was statutorily-
defined as $1,500 in section 1882(p)(11)(C)(i) of the Act. For 2000, 
the high deductible amount was increased to $1,530, based on the 
percent increase in the Consumer Price Index (CPI) for all urban 
consumers for the 12-month period ending August 1999. For 2001, the 
high deductible amount is increased by the percent increase in the 
Consumer Price Index (CPI) for all urban consumers (all items, U.S. 
city average) for the 12-month period ending August 2000. The percent 
increase in the CPI for all urban consumers (all items, U.S. city 
average) for the 12-month period ending in August 2000 was 3.35 
percent, according to the Division of Labor Statistics, Department of 
Labor. A 3.35 percent increase in $1,530 is $1,581.26. (This figure can 
also be found by dividing the August 2000 CPI (172.7) by the August 
1999 CPI (167.1), which equals 1.0335129. Multiplying this number by 
the 2000 deductible ($1,530) equals 1581.27 which, rounded to the 
nearest $10 multiple, is $1,580. Section 1882(p)(11)(C)(ii) of the Act 
stipulates that this amount ($1,581.26) be rounded to the nearest 
multiple of $10 to find the high deductible amount for the subsequent 
year. After rounding $1,581.26 to the nearest $10 multiple, the 2001 
deductible for the Medigap high deductible options is $1,580. 2

    Authority: Section 1882 of the Social Security Act.

(Catalog of Federal Domestic Assistance Program No. 93.773, Medicare--
Hospital Insurance, and Program No. 93.774, Medicare--Supplementary 
Medical Insurance Program)

    November 6, 2000.
Michael M. Hash
Acting Administrator, Health Care Financing Administration
[FR Doc. 00-32441 Filed 12-20-00; 8:45 am]
BILLING CODE 4120-01-U