LANSING, Mich. (AP) — Insurance regulators have told Michigan's largest health care provider to give seniors who purchase Medigap coverage more time to prove they live in the state so they can avoid a large rate increase.
A significant number of in-state Medigap customers have complained to the state Office of Financial and Insurance Regulation that Blue Cross Blue Shield of Michigan sent them letters in early July incorrectly classifying them as out-of-state residents and giving them just 30 days to prove they live in Michigan, the agency said Tuesday in a release.
Agency head Kevin Clinton has ordered the insurer to extend the time period to 90 days, giving seniors until Oct. 17 to prove they live in Michigan.
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Where a senior lives can mean a significant difference in payments for Medigap coverage, which supplements the health care coverage offered by the federal Medicare program. Michigan residents now pay a discounted rate of $121 a month for Medigap coverage, while out-of-state residents must pay $194 monthly, according to Blue Cross spokeswoman Helen Stojic.
In-state and out-of-state residents used to pay roughly the same premiums. But in June, when Blue Cross was granted a 9.05 percent rate increase for its 200,000 Medigap customers, the company's subsidy for out-of-state customers was removed, increasing those rates by 75 percent.
Clinton said determining where customers live must be done carefully.
"Seniors should be given ample time to prove they live in Michigan," he said.
Blue Cross sent 8,900 letters this summer to customers with out-of-state addresses and other indicators that they weren't Michigan residents, telling them of the rate increase and giving them the chance to prove they were in-state residents, Stojic said. The insurer defines an out-of-state resident as anyone living outside of Michigan for more than six months each year.
"Blue Cross has the same objective as our regulator, to make sure people who live in Michigan get the Medigap discount. This is part of the process to achieve that," she said.
The insurer sent follow-up letters announcing the extended reply period to customers on Monday.
The agency said Michigan customers who think they have incorrectly received the Blue Cross residency verification letter and haven't been able to get the insurer to change their designation through an appeal should contact its toll free number at (877) 999-6442 for assistance.
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