In Switching to Original Medicare, Beware of Medigap Plan Refusals

It’s open enrollment season for Medicare Advantage, when people currently enrolled in private managed care plans can either enroll in a new one or switch to original Medicare through March 31.

But there’s a catch: If people want to switch to Original Medicare and buy a Medigap supplement insurance plan to cover some costs, they may not be able to do so. Medigap insurers can generally deny coverage to applicants whose medical history or current health problems could make their coverage expensive, a process called medical underwriting.

“We really want people to consider this,” said Kata Kertesz, a policy attorney at the Center for Medicare Advocacy. “If someone has had a Medicare Advantage plan for several years and then wants to switch to Original Medicare, they may not be able to switch and also have a Medigap plan.”

There are many reasons why people might want to trade in their MA plan for traditional Medicare. Although MA managed care plans are generally less expensive and offer benefits not available in original Medicare, such as coverage for vision and hearing services, they have smaller provider networks than the original program and, sometimes, extensive prior authorization requirements.

Additionally, as Medicare Advantage plan benefits have declined in recent years, a growing number of plans are withdrawing from areas they previously served, leaving members with fewer options. This year, an estimated one in ten MA plan participants will be forced to abandon their plan for this reason, according to a study published in JAMA in February.

“We’ve seen some Medicare Advantage plans that have completely left the market and stopped issuing plans,” said Emily Whicheloe, director of education at the Medicare Rights Center.

For those considering switching to Original Medicare, getting a Medigap plan can be tricky. Federal law provides a one-time, six-month opportunity for people 65 or older and newly covered by Medicare Part B to enroll in any Medigap plan without underwriting. However, after this initial enrollment period ends, there are fewer coverage guarantees.

But some exist. Here are some key circumstances and time frames in which people are guaranteed a Medigap plan without having to go through underwriting:

• People who live in Connecticut, Massachusetts, or New York can sign up for a Medigap policy at any time of the year without underwriting. In Maine, there is a one-month window each year during which Medigap insurers must offer Plan A to everyone without underwriting. (Plan A offers less comprehensive coverage than some other standardized plan types.)
• People who enroll in a Medicare Advantage plan when they first become eligible for Medicare Part A at age 65 can switch to Original Medicare within the first year and also purchase a Medigap plan. This is sometimes called the “right to trial.”
• If a Medicare Advantage plan leaves Medicare or stops providing services in an area, affected enrollees can switch to Original Medicare and purchase a Medigap plan either 60 days before or up to 63 days after their MA coverage ends. During this special registration period, they cannot be refused or charged more based on their health status.
• If an individual leaves the service area and no longer has access to their Medicare Advantage plan providers, they can switch to Original Medicare and apply for a Medigap policy either 60 days before or up to 63 days after their MA coverage ends. This usually happens when someone notifies the plan of their permanent move or the plan finds out about it, said Bonnie Burns, an education, policy and technical assistance consultant with California Health Advocates who specializes in Medicare and Medigap coverage.

There are other circumstances in which an individual may qualify for a special enrollment period under the federal rules, and states may offer additional qualifying events that are more generous than the federal standards.

Patient advocates point out that it’s often helpful to work with a State Health Insurance Assistance Program, or SHIP, counselor to get free, unbiased help in determining Medigap coverage options. SHIP Advisors can help applicants identify potential ways to qualify for Medigap coverage without underwriting at the federal and state levels.

Individuals who do not qualify for a guaranteed entitlement to a no-underwrite Medigap plan may still be approved for coverage. However, premiums may be higher and plans may impose a waiting period of up to six months for coverage for pre-existing conditions in certain circumstances.

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In recent years, some Medigap insurers have devoted an increasing percentage of their premiums to medical claims, putting pressure on profits, Burns said. “Underwriting for Medigap insurers has tightened significantly recently,” she said.

The list of health conditions for which Medigap insurers could deny coverage is long, including Alzheimer’s disease, asthma, cancer, congestive heart disease, diabetes with complications, end-stage renal disease, high blood pressure and stroke, among others, according to a KFF review of applications from major insurers.

When people apply for a Medigap plan that will be medically underwritten, they will typically be asked to fill out a health questionnaire, said Nick Ortner, a senior actuary and consultant at Milliman and a member of the Society of Actuaries. Increasingly, insurers are asking people to agree to a prescription drug background check, Ortner said.

“Oftentimes, prescription drug history can be the primary factor in an underwriting decision,” he said, rather than a physical exam or review of medical records.

However, insurers do not all have the same underwriting rules. Again, a SHIP advisor can be helpful in directing people to specific companies that accept applicants with a particular medical diagnosis, or that have different wait times or coverage exclusions.

“They have access to a Medigap comparison tool in addition to what’s on medicare.gov that can give you a very good estimate of what you can pay for these Medigap plans,” said Ryan Ramsey, associate director of health coverage and benefits at the National Council on Aging.