Pre-standardized Medigap plans are plans sold before July 1992.
Before 1980, Medigap plans (also called Medicare Supplement Insurance) were regulated solely by individual states, according to a report by the Office of Inspector General for the U.S. Department of Health and Human Services (HHS). The report states that lack of federal oversight in the Medigap industry allowed marketing fraud and consumer abuse.
Between 1980 and 1990, the federal government, state governments, and the National Association of Insurance Commissioners (NAIC) worked together to help implement the Omnibus Budget Reconciliation Act (OBRA) of 1990. This Medigap reform legislation standardized future Medigap policies, prohibited the sale of any pre-standardized Medigap plan, and helped establish consumer protections.
According to the HHS report, the Act was passed for the following reasons:
- Set minimum standards for Medigap policies
- Prohibit insurance companies from offering more than 10 different plans options (starting July 30, 1992)
- Minimize misleading sales and marketing strategies in the Medigap industry
- Educate consumers who want to purchase Medigap insurance
Pre-standardized Medigap plans still in use
The Medigap reform legislation of 1990 standardized Medigap plans and benefits. Each Medigap plan option is named with a letter and has a specific set of benefits. Currently, there are 10 Medigap plans available for purchase: Plan A, B, C, D, F, G, K, L, M, and N.
Pre-standardized plans were no longer sold after July 1992. However, the plans that were sold before this cutoff date still represent a small portion of the Medigap industry. A 2014 report by America’s Health Insurance Plans (AHIP) found that pre-standardized Medigap plans represented 4% of all Medigap policies in the United States and its territories. In 2014, there was a total of 422,961 pre-standardized Medigap policies still in effect.
If you have a plan that is not available for purchase, such as an older plan or a pre-standardized plan, it is still valid for use.