Some Medicare Advantage plan members feel trapped, finding it too expensive to revert to Original Medicare. Here’s what to be aware of and how to avoid the same situation.
Consumer Rescue’s special features columnist, Abe Wischnia, a registered Medicare counselor, answers your questions.
Question:
I’ve been in a Medicare Advantage plan for over 10 years. How can I get supplemental health coverage for pre-existing conditions if I switch from Medicare Advantage to Original Medicare? (David S.)
Answer:
Smith’s question is not uncommon. He expressed to me that as he gets older and his healthcare needs increase, he is concerned about the challenges seniors face in Medicare Advantage plans, particularly when it comes to accessing specialized care.
A significant issue is the “prior authorization” requirements, which these plans have been accused of improperly using to delay or deny treatments in an effort to control costs.
Related: Why would Medicare Advantage cancel a patient’s surgery at the last minute?
While Smith hasn’t experienced a denial yet, he’s worried about his future health needs. It’s easy to understand why he wants to switch.
Medicare Advantage plans have been accused of making millions of improper prior authorization denials each year.
As a registered Medicare counselor with the national State Health Insurance Assistance Program (SHIP) for nine years, I’ve spoken with many Medicare Advantage members who want to switch to Original Medicare due to denials, delays, and limited access to out-of-network specialists, especially for cancer and heart problems.
Why you need a Medicare Supplement (Medigap)
A Medicare supplement plan, also known as Medigap, is a type of private insurance to help cover the out-of-pocket costs that Original Medicare (Parts A and B) does not pay for. If you’re enrolled in Original Medicare, you need a Medigap plan to protect yourself from unknown costs.
For example, there is a $1,676 deductible if you’re hospitalized for up to 60 days and additional daily co-insurance costs for longer stays. There also are other deductibles. When you visit a doctor or other outpatient provider, Medicare pays 80% of the approved charge and you are responsible for the other 20%. But, 20% of how much? If you have a serious illness or need extended care, those costs can become substantial. There is no ceiling for how high those out-of-pocket costs could be.
Medicare Supplement (Medigap) plans are standardized policies that are regulated by federal and state laws but sold by private insurance companies. They’re divided into ten categories. Depending on the category, the plans will cover anywhere from some to all of those costs. They can be used with any hospital, doctor or other provider who accepts Medicare, anywhere in the U.S.
When you first enroll in Medicare (at age 65 or on retirement if you’ve been working past that age), you have a “guaranteed issue right.” That means you can buy a Medigap plan without being asked about pre-existing conditions. Insurance companies can’t deny you or charge you a higher premium.
However, if you don’t enroll in a Medigap plan then, you might not be able to get one later. For Smith – and for many others – the issue is not how to get a Medigap plan, but whether they even can.
Why switching from Medicare Advantage back to Original Medicare can be almost impossible
If you’ve been in a Medicare Advantage plan for more than a year, you might not be able to get a Medigap plan. After that first year, insurance companies can screen you for health issues and decline to sell you a plan because of pre-existing conditions. Unless you have a lot of money and can afford to go without a Medigap to cover all of those copays, you might find yourself effectively trapped in your Medicare Advantage plan.
Getting a Medigap plan can be easy if you live in these states
There is good news for Medicare beneficiaries who live in:
- Connecticut
- Massachusetts
- Maine
- New York
Those states require insurance companies to sell a Medigap plan to any applicant over 65, regardless of pre-existing conditions or medical history. California gives a guaranteed issue right each year if your Medicare Advantage plan increases premiums or copays or reduces benefits. If you live in one of these states and want to take advantage of these rights, contact your state’s SHIP program to understand how it works.
However, Smith lives in North Carolina. Unfortunately for him and others on Medicare, his state does not offer that protection.
Medicare has special exceptions for some people
A frequently-used guaranteed issue right comes with Medicare’s 12-month trial period. If, when you first enroll in Medicare, you join a Medicare Advantage plan, you have the right to switch to Original Medicare during the first 12 months and still get a Medigap plan.
A similar trial right applies if you were in Original Medicare but switched to Medicare Advantage for the first time since becoming eligible. If you disenroll within 12 months, you can return to your previous Medigap policy if it’s still available.
Smith has been with his Medicare Advantage plan for 10 years, so this doesn’t apply to him.
Medicare rules also provide a guaranteed issue right if you lose coverage because your Medicare Advantage plan discontinues or leaves your area. This happens frequently as plans enter and leave markets due to business needs.
Sometimes, plans do not renew their contracts with certain providers, triggering guaranteed issue rights. Timing is critical in these situations, so you should talk to your state’s SHIP program.
It’s possible that one of these exceptions might apply to Smith, but he won’t know until the fall, when his Medicare Advantage plan sends out the legally required “Annual Notice of Change.” The plan must notify him of changes for the following calendar year.
It’s very important that everyone with a Medicare drug plan or Medicare Advantage plan reads their copy of this notice when it arrives in late September or early October.
There is another guaranteed issue right for people in retiree plans that provide Medicare coverage. It triggers if the plan terminates involuntarily because of an event such as bankruptcy or company acquisition.
Can you get a Medigap if you move?
You have the right to purchase certain Medigap plans if you move out of your Medicare Advantage plan’s service area. You can buy a Medigap policy even if other Medicare Advantage plans are available in your new area. The reason for the move is irrelevant.
That might be a possibility for Smith, as he could reduce his cost of living by moving to an adjacent county. Of course, he would have to be sure the new location is outside his current plan’s service area.
A Medigap Underwriting Holiday
On rare occasions, an insurance company will declare an “underwriting holiday” for Medigap plans. Blue Shield of California did this a few years ago. It offered to sell Medigap plans without regard to pre-existing conditions to anyone over 65 dropping Medicare Advantage to move to Original Medicare. The company did this two different years, and many Medicare beneficiaries in California took advantage of it.
However, I have been unable to find evidence of any other company doing the same thing.
Sometimes people needing a Medigap get lucky
Sometimes, companies will quietly accept people without a guaranteed issue right and sell them a Medigap plan despite pre-existing conditions. They don’t announce it publicly; they just do it. The only way to know is to call and apply.
However, timing is important. You have to do this during Medicare’s Annual Enrollment Period (October 15 to December 7)] or during the Medicare Advantage Open Enrollment Period in the first quarter of the year.
Smith will try this. While I wouldn’t bet money on his chances of success, it’s worth a shot. The worst that can happen is they say no.
When you enroll in Medicare, think long-term
Medicare Advantage has grown to where more than 50% of Medicare enrollees are now in Medicare Advantage plans. There are many factors to consider when deciding how to structure your retirement plan. Good and bad reasons exist for choosing Medicare Advantage, but it’s important to think about your later years. A few years down the road, it may be too late to change your mind.
Ask Abe at Consumer Rescue
Medicare is complicated. There is no doubt about it. But I’m more than happy to answer your questions. You can reach me through the button below.
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