What is Happening With Blue Cross Legacy in Michigan?

Blue Cross Blue Shield of Michigan is having a huge rate increase on their Legacy Medicare Supplement (Medigap) premiums for nearly 200,000 Michigan residents effective January 1, 2017.

This premium has been kept artificially low for all subscribers because Blue Cross has been able to subsidize this Legacy program since 1980. In return for subsidizing premiums, Blue Cross was exempt from paying state and local taxes. However, they lost their tax-exempt status in 2013 and will no longer subsidize Legacy after this year. They didn’t raise rates in 2013 or after because of a special agreement that froze Legacy’s premiums until July 2016.

Instead of having premiums for everyone be $122.86 per month for their Medigap Plan C, Blue Cross will now be basing your premiums on your age, gender, and area you live in. These rates are proposed to increase almost $50 per month for a 65-year old woman and over $175 per month for a man in his 80’s. Men will pay more than women for the new rate.  Older folks will pay more than younger folks.  And, if you live in Southeastern Michigan, you will pay more than your fellow Michiganders up north.

Why Are Legacy's Rates Going Up So Much?


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The Legacy program currently loses a significant amount of money. For every $1 they charge in premium, they pay out about $1.59 in claims. This is illustrated from my rate quoting tool as I've shown below:

2016 is the last year of the low rates. Blue Cross estimates losing about $250 million this year on the Legacy program. Even next year after the massive rate increases, they still estimate paying out $1.10 in claims for every $1 they charge in premium, so the plan will still not make money for the insurer.

Any insurance company's Medigap premiums are based on the amount of claims that they pay out. A big reason why Legacy loses so much money is because, along with low rates, they pay out more in claims, on average, than other insurance companies with identical plans. Why? Because Legacy is a guarantee issue plan, no matter your age or your health.

All Medigap plans thru all insurance companies allow you to sign up with no underwriting when you first start Medicare Part B and are 65 or older; however, all other companies ask health questions if you look to sign up with, or switch to, their plan outside of this initial Open Enrollment window. This means other companies will turn down folks who are managing chronic health conditions, or don’t otherwise meet their health criteria. This means they pay out less in claims compared to Legacy who will accept anyone, even someone with an upcoming surgery or even a terminal illness.

I Heard I May Qualify For a Subsidy. Will This Help Much?

Maybe. You can see a chart below which summarizes how much of a subsidy you could qualify for based on two factors: your age, and whether your income is at or below the amounts shown below. (Update: the income amounts went up considerably for 2018 which makes it easier to qualify for.)


Income - Single

Income - Married

Subsidy Amount

Under 65




65 - 74




Age 75+




There are a few things to point out about this subsidy:

  1. It will cover only a portion of the cost increase depending on your age, gender, area you live in, and income amount.
  2. This subsidy is only going to be around for a 4-year period. The purpose of it is to ease the transition into higher rates for lower-income Legacy subscribers.
  3. And, this subsidy is available to seniors who have a Medigap plan with Blue Cross along with some other companies.

That last point is key because not only can you get a more cost-efficient plan through a different insurance company that provides identical or equivalent coverage to your Legacy plan now, but you can then save even more if you qualify for this subsidy!

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So, What Are My Options?

This really depends on your health. Each Medigap insurance company asks slightly different health questions when they determine if they will accept or decline you, or if they accept you, how much extra you pay for certain health conditions like diabetes, a recent stroke, being overweight, etc. It’s critical to talk with an independent insurance agent, not to a captive agent only able to sell you Blue Cross plans. An independent agent, like me, is able to offer Medigap plans offered by several insurance companies who all have different premiums for the exact same plans. Also, I know what companies are best for specific health issues and can find the most cost efficient plan based on your specific situation.

Call me at 866-240-8639 to discuss your specific options.