Ingham County Circuit Judge Joyce Dragachuk granted Attorney General Mike Cox’s motion for preliminary injunction to stop Blue Cross Blue Shield of Michigan from increasing rates on policyholders who live outside of Michigan and those who live in Michigan and are covered under employer group policies.

Cox argued Blue Cross’ rate adjustment, which had been ordered by Michigan Insurance Commissioner Ken Ross in June, would have increased rates of up to 66 percent for the 8,600 seniors who purchase Medigap, or Medicare supplemental insurance.

But less than 1,000 of those seniors, who are covered by group plans, live in Michigan, said Helen Stojic, Blue Cross’ director of corporate affairs.

The other 7,600 seniors live outside of Michigan.

“We believe Michigan’s attorney general should stand with us in support of Michigan seniors in need — and not use our courts to advantage those who leave our state and establish residency elsewhere, or who get help from their employers to pay the bill,” said Andrew Hetzel, Blue Cross’ vice president of corporate communications in a statement.

Hetzel said OFIR ordered the Blues on June 30 to increase the discounted Medigap rate — from about $111 per month to the full rate of $191 — because the covered individuals either no longer live in Michigan or are covered by group policies.

Cox also sued OFIR for allegedly violating the Nonprofit Health Care Corporation Reform Act by approving the rate increase without providing 60-day notice to interested parties, including the attorney general.

Dragachuk also granted Cox’s request for OFIR to schedule a rate hearing on the proposed rate increase.

“Today’s decision is a great victory for Michigan seniors who were facing Medigap rate hikes by Blue Cross,” said Cox in a statement Tuesday night. “now my office will have the opportunity to defend seniors through the rate relief process defined in Michigan law.”

Cox said implementation of the 66 percent rate increase would have caused some seniors to drop their coverage, putting their physical and financial health at risk.

Jason Moon, OFIR’s public information officer, has confirmed that Ross issued the order to instruct Blue Cross to come into compliance with state law on Medigap subsidies.

Cox also said he is considering taking legal action against a Blue Cross rate restructuring plan filed Aug. 6 that requests OFIR to allow the Blues to charge different rates and offer different discounts to seniors based on their income.

OFIR has not ruled on Blue Cross’ recent rate restructuring request.

Hetzel has said Blue Cross’ intention is to restructure rates so that seniors with greater incomes pay higher premiums and allow lower income seniors to receive greater rate discounts, which could stimulate more coverage.

An estimated 63,000, mostly low-income Michigan seniors do not purchase Medicare supplemental policies.

Under Blue Cross’ rate restructuring plan, the discounts would apply to seniors with incomes of less than 150 percent of poverty level. they currently pay $111 monthly. Under the proposal, they would pay $95.

Higher-income seniors would pay larger premium rate increases.

For example, seniors with incomes of 150 percent to 300 percent of the poverty level — or $16,245 to $30,630 — would pay $5 more per month.

Seniors with incomes 300 percent to 750 percent would pay $12 more per month. And those higher-income seniors — above 750 percent of the federal poverty level — would pay a $31 per month increase.

If OFIR approves, the new rate structure would go into effect in January.

But Cox said OFIR and Blue Cross lack authority under state law to implement “an unequal distribution of Medigap subsidies to subscribers of their choosing.”

Cox said he will raise the issue at the rate hearing.

Earlier this year, Blue Cross increased Medigap premiums 3.8 percent after OFIR rejected a 31.2 percent rate hike request.

Judge orders Blue Cross to halt its Medigap rate increase