Medigap plans can be a great way to keep your out of pocket costs down. However, it can sometimes be tricky to get the plan you want. It all depends on guaranteed issue rights.

Guaranteed issue right: Your right to a Medicare Supplement plan, aka a Medigap policy, without medical underwriting

Medical Underwriting

Medical underwriting is the process by which insurance companies use your health history to decide how much, if any, coverage they will provide for you and at what cost. Insurers consider people who are older or who have preexisting conditions to be a greater financial risk. They see them as more likely to actually use their insurance coverage and that could cost the insurer more than a beneficiary who had few or no medical conditions. For this reason, they use medical underwriting to increase premiums for people with preexisting conditions and sometimes they deny them coverage altogether.

Starting in 2014, the Affordable Care Act eliminated medical underwriting for private health plans. However, a Medigap plan is not a true health plan. It does not provide actual health benefits. Instead, it covers expenses that Medicare leaves on the table, costs like deductibles, coinsurance, and copays. Unfortunately, that is why Medigap plans, life insurance policies, and long-term care insurance still use medical underwriting.

Guaranteed Issue Rights: Initial Enrollment

Not everyone on Medicare will be eligible for a Medigap plan. Everyone 65 and older who qualifies for Medicare does. This is a guaranteed issue right. They get a 6-month Medigap Initial Enrollment Period that starts when they sign up for Part B. During that time, they will not face medical underwriting.

Unfortunately, the federal government does not give guaranteed issue rights to people who qualify for Medicare based on a disability or end-stage renal disease. That decision goes to the states they live in. At this time, four states (Arizona, Kentucky, Nevada, Ohio) do not offer coverage to this age group at all. Twelve states and D.C. do not require companies to provide coverage but some insurers do so voluntarily. The remaining states require coverage though, depending on the state, it could be limited to certain Medigap plans or premium rates could be higher for people under 65.

Guaranteed Issue Rights: Changing Medigap Plans

You would think that once you are already on a Medigap plan, it would be easy to change to a different one later on. You may want one that offers more or less coverage or one that offers a better rate. Unfortunately, that could get expensive because medical underwriting will come into play, even when you want to change plans within the same insurance company!

Thankfully, the federal government has established some additional guaranteed issue rights that may help. Honestly, I wish there were more of them.

Loss of Healthcare Coverage

• You lose access to a non-Medicare supplemental policy, e.g., an employer-sponsored health plan or COBRA coverage.
• You want to switch from Program of All-Inclusive Care for the Elderly (PACE) to Original Medicare within your first 12 months of being on Medicare.

Medicare Advantage Issues

• You leave a Medicare Advantage plan because it did not follow the rules or it misled you.
• You move out of your Medicare Advantage network and you change to Original Medicare.
• You want to switch from a Medicare Advantage plan to Original Medicare within your first 12 months of being on Medicare.
• You want to switch back to a Medigap plan within 12 months of switching from a Medigap plan to a Medicare Advantage Plan.
• Your Medicare Advantage plan ends through no fault of your own and you change to Original Medicare.

Medigap Issues

• You leave a Medigap plan because it did not follow the rules or it misled you.
• You lose access to your Medicare SELECT plan because you moved.
• Your Medigap plan ends through no fault of your own.

Some states also add their own guaranteed rights to the mix. Connecticut, Maine, and New York offer them year-round for people over 65! Massachusetts has guaranteed issue rights from February 1 to March 31. Be sure to check for guaranteed issue rights in your area. MedicareResources.org offers an easy-to-use state by state guide.

 

Medigap eligibility for Americans under age 65 varies by state | MedicareResources.org. (2021). MedicareResources.org. https://www.medicareresources.org/medicare-eligibility-and-enrollment/medigap-eligibility-for-americans-under-age-65-varies-by-state/#federal

Medigap Enrollment and Consumer Protections Vary Across States. (2018). KFF. https://www.kff.org/medicare/issue-brief/medigap-enrollment-and-consumer-protections-vary-across-states/

What It Means To Cover Preexisting Conditions | Health Affairs Forefront. (2022). Health Affairs Forefront. https://www.healthaffairs.org/do/10.1377/forefront.20200910.609967/full/