Medicare History

Medicare History

In 1965 President Lyndon B. Johnson signed the Medicare Act. This act promised to improve other health and medical assistance for Americans of all age. One of the primary goals of Medicare is to provide health insurance for seniors above 65 years old and to who have received Social Security Disability for a minimum of two years. Medicare provided around 70% of hospital bills – only 70% reimbursements of the expenses were made. It became necessary to fill the gap – a Medicare supplement plan was formed called “Medigap.”

The first Medicare supplemental policies in 1971 were introduced by Bankers life. Bankers Life signed contracts with a ton of insurance agents to market this big innovation. Because of the involvement of the policies, they gained a 47% share in the market. Many other companies in the industry – such as Mutual of Omaha, United American, and Colonial Life, got a smaller share of the market. This resulted in lower contracts for independent insurance agents who received a percentage of the premium for six years. Bankers Life continued dominating the market and sold its policies through independent agents.

The National Association of Insurance Commissioners (NAIC) standardized the policies and right to sell to the public, in 1981. It led to the creation of Medigap Plans A, B, C, D, F, G, K, L, M and Plan N. Plan A is a basic coverage which is offered to every customer by the insurance company.  Plan J is the most comprehensive coverage, and it pays all deductibles, co-insurance and up to $3,000 annually for pharmaceutical items

Plan F pays the entire Medicare expenses alongside the original Medicare but does not cover medicines. In 2005, Plan F included an astonishing 56% of new sales by the top four Supplemental insurers – Bankers Life,  Colonial Life, United American, and Mutual of Omaha and the majority of Medicare supplement customers signed up for this plan.

In 2004, the U.S federal government established a drug benefit program for Medicare recipients. This program was worth billions of dollars. This program is called Medicare Part D known as Prescription drug coverage. This plan helps pay for prescription medication. 


To find out more about Medigap plans you can visit our website at www.eMedigap-Plans.com, or you can visit our other blog posts. 

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