As the open enrollment period for Medicare Advantage (MA) approaches, individuals currently enrolled in private managed-care plans have the opportunity to either switch to a new plan or revert to original Medicare until March 31. However, it is essential to be aware of certain complexities associated with this transition, particularly concerning Medigap insurance plans.
Medigap insurers often have the authority to refuse coverage based on applicants’ medical history or existing health issues, a process known as medical underwriting. This situation is particularly pertinent for those wishing to switch to original Medicare while simultaneously acquiring a supplemental Medigap policy to help offset out-of-pocket expenses.
According to Kata Kertesz, managing policy attorney at the Center for Medicare Advocacy, it is crucial for individuals to consider these factors: “If someone is in a Medicare Advantage plan for several years and then wants to switch to original Medicare, they may find they can’t switch and also get a Medigap plan.” There are various reasons for wanting to exchange an MA plan for traditional Medicare. Although MA plans commonly offer lower premiums and additional benefits such as vision and hearing coverage, they often feature limited provider networks and may impose rigorous prior authorization requirements.
Furthermore, with the decline in profits for Medicare Advantage plans in recent years, an increasing number of these plans are exiting markets previously served, leaving members with diminished choices. A recent study published in JAMA indicated that approximately 10% of MA plan members will be displaced from their plans this year due to this trend.
For those contemplating a transition to original Medicare, obtaining a Medigap plan can present challenges. Federal regulations afford a one-time, six-month window for individuals aged 65 and older who are newly enrolled in Medicare Part B to secure any Medigap plan without undergoing medical underwriting. Once this initial sign-up period concludes, the guarantees for obtaining coverage become significantly limited.
However, certain conditions provide guaranteed access to Medigap plans without the need for underwriting:
- Residents of Connecticut, Massachusetts, or New York can apply for a Medigap policy at any time throughout the year without undergoing underwriting. In Maine, there exists an annual one-month window during which Medigap insurers must offer Plan A to all applicants without underwriting.
- If an individual selects a Medicare Advantage plan upon first becoming eligible for Medicare Part A at age 65, they are permitted to switch to original Medicare within the first year and subsequently apply for a Medigap plan, a provision often referred to as the “trial right.”
- Should a Medicare Advantage plan cease operations or discontinue services in a specific area, affected members may switch to original Medicare and obtain a Medigap plan either 60 days prior to or up to 63 days following the termination of their MA coverage. During this special enrollment period, they cannot be denied coverage based on health status.
- Individuals who relocate outside the service area and lose access to their Medicare Advantage providers can also transition to original Medicare and apply for a Medigap policy within the same timeframes as outlined above.
In addition to these federal provisions, some states may have more generous qualifying events that offer additional opportunities for Medigap coverage. It is advisable for individuals to consult with a counsellor at the State Health Insurance Assistance Program (SHIP) for free, unbiased guidance on navigating Medigap options tailored to their unique circumstances.
For those who do not meet the criteria for guaranteed access to a Medigap plan without underwriting, it is still possible to secure coverage, though premiums may be higher, and plans may implement waiting periods of up to six months for pre-existing conditions.
It is noteworthy that in recent years, Medigap insurers have experienced increased claims on premiums, leading to tighter underwriting practices. The range of health conditions that may lead to denial of coverage is extensive, including, but not limited to, Alzheimer’s disease, asthma, cancer, congestive heart failure, diabetes with complications, end-stage renal disease, hypertension, and stroke.
Applicants for Medigap plans that require medical underwriting will typically need to complete a health questionnaire, and insurers are increasingly requesting consent for a background check on prescription drug history, which can significantly influence coverage decisions.
In summary, while transitioning to original Medicare can offer new opportunities, it is imperative for individuals to fully understand the implications of Medigap coverage and seek appropriate guidance to navigate this complex landscape effectively.