Legislator files bill to restore Medicare supplement

After the Delaware Supreme Court stayed a proposed change to Medicare supplement insurance for state retirees, a state legislator has filed a bill that would give former state employees the option to keep their existing supplement or choose a new Medicare Advantage plan.

Rep. John Kowalko, D-Newark, filed a bill Oct. 20, and said the bill, when passed, will allow the Legislature to fulfill its promises and obligations to its retirees by allowing them to choose between a new Medicare Advantage option or the existing Medicfill plan.

The legislation comes on the heels of a lawsuit over the Delaware State Employee Benefits Committee’s decision to require state retirees holding Medicare supplement plans to switch to a Medicare Advantage plan. RiseDelaware Inc., a nonprofit organization formed by Kowalko and advocating on behalf of retirees, filed a lawsuit over the change. 

On Oct. 18, Delaware Superior Court Judge Calvin Scott ruled that all retiree plans in effect prior to Oct. 3 shall remain in full force until a trial can be held on the merits in Superior Court in New Castle County. A trial date has not yet been set. 

Under state law, the state must provide its approximately 30,000 state retirees with a Medicare supplemental plan, which the state previously provided through a Highmark BCBS plan known as the Medicfill Medicare Supplement Plan. Under the Medicfill plan, retirees were not limited to a specific network of doctors, and they were not required to obtain prior authorization from the insurance company before receiving treatments ordered by their doctors.

The committee voted in February to have the switch take effect Sunday, Jan. 1. However, at the time of the adoption, no contract had been negotiated with Highmark, so terms of the plan were not known. Letters extolling the benefits of the switch were sent out to Medicare-eligible retirees in June, but a formal contract with Highmark was not executed until Sept. 28, according to court documents. 

On Sept. 25, RiseDelaware and former state Sen. Karen Peterson and Department of Justice retiree Thomas Penoza filed their suit.

The lawsuit stated that new rules require doctors and hospitals to abstain from administering tests and treatments unless the insurance company authorizes them. The plaintiffs sought to have Scott rule that the committee violated state law by adopting the new Medicare plan, and to stop the state from implementing it.

Attorneys representing Delaware Department of Human Resources Secretary Claire DeMatteis and Delaware Office of Management and Budget Director Cerron Cade, the two named defendants in the suit, argued that the court did not have the authority to grant a stay, but Scott disagreed, saying that the committee has no statutory directive to force all retirees from their state-subsidized benefits to a Medicare Advantage plan or lose benefits.

Scott also agreed with RiseDelaware’s argument that state retirees would be irreparably harmed without the stay, as they would be forced to change their health insurance coverage, since the deadline for switching benefits is Monday, Oct. 24.

Kowalko said, “This legislation will enable the state to comply with the court’s directive and assures retirees that they will have options to prepare for their and their families’ futures. If retirees choose the supplement option they will be lowering the substantial risk to their healthcare access that the Medicare Advantage privatization edict puts in jeopardy.”