What If You Want To Switch Medigap Policies?

As we travel through life, we face many changes — jobs, cars, homes, and more. In most cases, we can prepare for what’s coming and anticipate what we have to do.

Then, we get to Medicare, an entirely new and different world with Part D prescription drug plans, Medicare Advantage plans, and Medigap policies. Once we figure out what these are and what we need, we run into, “What if we want to make changes?”

With Part D drug and Medicare Advantage plans, there are well established procedures and timelines for changing plans. The fall Open Enrollment Period, October 15-December 7, is for adding or changing both types of plans, and the Medicare Advantage Open Enrollment Period, January 1-March 31, is exclusively for switching Advantage plans.

The question then is, “When can you change a Medigap policy (Medicare supplement plan)?”— a good question indeed and one that I am getting more frequently these days. Here’s one that came in just last week.

“Five years ago, I chose Plan G from (insurer A) because I had a great experience with them. Then, two years ago, my wife chose a plan from (insurer B). She has a free gym membership with a pool and I have to pay for just a gym. If I want to switch, must I wait until open enrollment in October? How would I do this? Will I lose any significant coverage? Where do I start?”

It’s time to tackle the subject of changing a Medigap policy.

Is There An Open Enrollment Period For Medigap Policies?

Yes, there is but it’s a one-time thing. The Medigap Open Enrollment Period is a six-month period that starts the first month someone has Medicare Part B and is 65 years or older. It cannot be changed or restarted.

This period is important because it comes with a guaranteed issue right to get a Medigap policy. That means an insurance company cannot deny the application or charge higher premiums because of any preexisting medical conditions. At the end of the six months, the guaranteed issue right goes away and an insurer can apply medical underwriting to any application.

After that, there is no annual open enrollment to change plans as there is for drug and Advantage plans.

So, If There Is No Open Enrollment, When Can You Change a Medigap Policy?

If you have a policy, applying for a new one can happen at any time during the year.

However, if you’re looking to get out of Medicare Advantage and into a supplement, there is only one opportunity to make that change: the fall Open Enrollment Period. That’s the annual opportunity to disenroll from an Advantage plan.

[PS: The topic of switching from an Advantage plan to a supplement is a different ballgame and not the focus of this Q&A.]

What Is The Process For Changing Medigap Policies?

There are basically four steps.

1. Research your options (plans, benefits, premiums).
2. Find a new policy.
3. Submit an application to the new policy.
4. Wait for confirmation of the new Medigap plan before giving up your current one.

Only four steps but the reality is much more complicated. The insurer will likely apply medical underwriting, which can take time and may lead to a denial of the application.

Will The New Medigap Plan Work The Same As The Previous One?

My client is worried about losing benefits, which is not a reason to worry. If he switches to another Plan G, he won’t lose anything. Medigap policies are standardized. Plans of the same letter must cover the same benefits. In the three states with their own standardization models (Connecticut, Massachusetts, Wisconsin), a specific type of plan covers a specific set of benefits.

What Is A Birthday Rule?

It is an opportunity for enrollees to switch Medigap plans once a year, during a specified period, without having to answer health questions.

This is a rule that’s driven by a state so not every state has a birthday rule. The number of states offering this annual opportunity seems to change every time I check. There are also some states with pending proposals to implement one.

Here are some points.

• Birthday rule is a generic title that applies to an annual period during which an enrollee can change a Medigap policy without medical underwriting.
• Most states center this rule around the enrollee’s birthday, such as 30 or 60 days beginning with the birthday.
• A few states have connected the period to the policy’s enrollment date (when it first took effect).
• Most rules allow you to change to a plan with the same or fewer benefits, such as Plan G to Plan N.
• However, a couple of states limit the change to the same type of plan, such as Plan G to Plan G or plans sponsored by the same insurance company, which does not offer as much flexibility.

If you’re curious about your state, check the insurance commissioner website or talk with your trusted independent agent.

Is There A Downside To Birthday Rules?

This is a relatively new phenomenon so some who could benefit from the change don’t know about it. My client received a postcard a month before his birthday, alerting him about his state’s rule.

Some discussions on the web have noted that monthly premiums may be higher in states without the annual opportunity to change. Also, these rules may have an impact on the availability of plans. If more states adopt a rule, I suspect we’ll learn more about these concerns.

Why Is Everything So Different For Medigap Policies As Compared To Part D Drug And Medicare Advantage Plans?

The short answer likely has to do with the entity that controls the plans. The federal government is in charge of drug and Advantage plans. Even though these plans are sponsored by private insurance companies, the government has established the rules, regulations, and quality ratings. The plans have contracts with the federal government.

Both the federal and state governments have a hand in regulating Medigap policies. The federal government mandated several things, including the standardization of Medigap policies (creating the alphabet soup of lettered plans), guaranteed issue, guaranteed renewability, minimum benefits and offerings. Then the states take over with their own regulations, which, in many cases, exceed federal standards. States govern insurance company and agent licensing, policy pricing, benefits, and special enrollment situations.

Three states, Connecticut, Massachusetts, and New York, are the best examples of state control. Medigap insurance companies must sell a policy at any time to any eligible beneficiary (enrolled in Part A and Part B), regardless of age or health status. This is often referred to as continuous open enrollment.

Should You Switch Policies?

One of the main reasons for wanting to change is to save money on monthly premiums. I have heard about some, like my client, who want better benefits and also those who have had issues with customer service and billing.

Before tackling a change, consider these points.

• Know that the process can take time so don’t wait until the last minute.
• Do a comprehensive review of available plans. If the options aren’t much better, do you really want to switch?
• Research your state’s rules.
• If your state has a birthday rule and you meet the requirements, your application should be approved. Watch for confirmation of the new policy.
• If no speical rules in your state, be ready for the application process and medical underwriting. Every insurer has its own procedure and questions. If your application is denied, you may decide to apply to a different company.

The process of changing plans is often daunting and success depends on many factors, some beyond your control. So, understand fully why you want to change plans, how will you benefit, and tackle the hoops that lie before you.