Medigap Plans

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PostPosted: Thu Jul 15, 2010 6:18 pm   Post subject: Medigap Plans  

Does the Affordable Care Act's provision that one cannot be turned down for insurance coverage due to pre existing conditions (starting in 2014) apply to Medigap plans? Or will seniors still be subject to medical underwriting if they decide to shop for a better deal in the Medicare supplement market?

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PostPosted: Fri Jul 16, 2010 5:15 pm   Post subject:   

Federal and state laws concerning Medicare Supplement insurance provide for guaranteed acceptance if a person applies for a Medicare Supplement policy during the six month period immediately following their enrollment in Medicare Part B. They may still be underwritten for one of the "broader" benefit plans (B thru N) and may not qualify, but they must be accepted for Plan A, if nothing else.



Perhaps a better alternative is to enroll in a Medicare Advantage HMO or PPO (depending on availability in one's area). Many do not charge an additional premium to participate (they get a monthly "capitation" payment from Social Security/Medicare). Enrollment periods, other than initial eligibility, are limited to Nov 15 - Dec 31 for coverage beginning Jan 1 of the next year, and Jan 1 - May 15 for coverage beginning July 1 of that year.



Other than persons now enrolling in Medicare Part B for the first time, the next enrollment period for Medicare Advantage plans begins on November 15, 2010.



The benefits provided by many Medicare Advantage plans are usually more comprehensive than under Original Medicare (with or without a Medicare Supplement policy), and may result in very low out of pocket costs. Medicare rules prohibit a person's preexisting conditions from preventing their acceptance into a Medicare Advantage plan, although preexisting conditions can be excluded from coverage for up to six months (but typically are not).



A preexisting condition is anything for which a person has received advice, diagnosis, or treatment in the six months prior to enrolling.



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PostPosted: Fri Jul 16, 2010 9:45 pm   Post subject:   

If you are worried about pre existing conditions try looking at the medigap plan N it has no underwritting.

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PostPosted: Fri Jul 16, 2010 9:48 pm   Post subject:   

With medicare supplement plans they look back two years for any critical illnesses in underwriting like strokes or major surgeries, not six months.

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PostPosted: Sat Jul 17, 2010 5:19 am   Post subject:   

Quote:
With medicare supplement plans they look back two years for any critical illnesses in underwriting like strokes or major surgeries, not six months.




Medicare Supplement insurance is governed primarily under federal law and the states comport their insurance codes to mirror federal law.



Your statement about looking back is partially correct in the sense that they can look back FOREVER to find conditions in a persons background. However, as a preexisting condition, they can only exclude from coverage for six months anythings for which the insured had diagnosis, treatment, or advice within the six months prior to application. Acceptance for any Medicare Supplement plan can be dependent on underwriting.



Medicare Supplement Plan A is essentially a guaranteed acceptance product. The broader plans are more closely underwritten. But a person can only be turned down for a Medicare Supplement if they are applying outside the first six months following their enrollment in Part B of Medicare. Federal/state laws prohibit denying a person any Medicare Supplement plan if they apply during that period. They can apply for Plan F for example, but only be accepted for Plan A or Plan B.

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PostPosted: Sat Jul 17, 2010 11:41 am   Post subject:   

Quote:
The broader plans are more closely underwritten.


Didn't quite get your point. Can you please explain with an example?

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PostPosted: Sat Jul 17, 2010 2:39 pm   Post subject:   

Sure (and the "anonymous" post above is mine, I wasn't logged in for some reason).



Medicare Supplement plans now come in 14 flavors, alphabetically called Plan A thru Plan N (K&L were added when Medicare Part D took effect 1-1-2006, and M&N were added beginning in 2010). Plans H, I, and J, once known as the only "comprehensive" plans because they included prescription drug benefits that were not provided by Medicare, can no longer be sold, along with Plan E (which includes a "Preventive Care" benefit), although persons who have them cannot be forced to give them up, but can drop the drug benefit if they are enrolled in a Part D Prescription Drug Plan (and receive a premium "adjustment") or switch to any other Plan of their choosing without new underwriting.



Medicare Supplement "Plan A" is known as the "core benefits". All 14 Medicare Supplement plans include these benefits. Since Medicare Supplement laws prevent a person from being denied coverage (assuming they apply during their initial eligibility period), their health history could prevent them from being approved for a "broader" Plan (B thru N, excluding E, H, I, J ).



Medicare's own "Medicare & You 2010" booklet states:



Quote:
The best time to buy a Medigap policy is during the 6‑month period that begins on the first day of the month in which you are both age 65 or older and enrolled in Part B. (Some states have additional open enrollment periods.) After this initial enrollment period, your option to buy a Medigap policy may be limited.



[emphasis added]




They don't say it specifically, but what they are referring to is underwriting. In those first six months, regardless of underwriting, a person must be accepted for at least Plan A. After those first six months, then only state law may be more generous when it comes to applying for and obtaining a Medicare Supplement policy.



Companies underwrite Medicare Supplement differently. The benefits under each of the different plans vary, and certain things, like the "Foreign Travel" benefit in Plans C thru G, are not underwritten dependent on preexisting conditions. The fact is, most of the additional benefits in the broader plans are not affected by preexisting conditions, with the exception of the Part B deductible (which is $155 in 2010), so that's really a non-issue, since almost all Medicare beneficiaries will see a doctor at least once in a year, even the healthier ones, and have to pay the deductible, preexisting conditions or not (so guess what, the Plans that include that benefit, C&F are going to cost about $100 more per year).



But all of the broader plans include coverage for all or some of the Part A deductible, ($1,100 in 2010) which is paid when a person goes into the hospital. In a worst case scenario, there could be as many as SIX Part A deductibles paid in one year -- in 2010, that could total $6,600 ($1,100 per "benefit period" -- it lasts for 60 days after a person is discharged from the hospital, so a readmission within those 60 days is not subject to a new deductible, even if for a different reason). And who's more likely to cause the insurer to pay that? An unhealthy person. So insurers want to know who they're doing business with.



Some companies will accept applicants for Medicare Supplement with a blind eye to everything except the premium. Since people who purchase Medicare Supplement policies tend not to let them lapse, it is as close to guaranteed cash flow as they can get outside or a Medicare Advantage payment. Other companies will use any reason they can find to decline a person for anything other than Plan A.



So, in all reality, the reall concern is the exclusion of benefits for preexisting conditions. And here, federal law controls, and states that there can be no "preexisting condition exclusions" after the policy has been in effect for 6 months, and regardless of what is found in a person's health history, if they have not received advice, diagnosis, or treatment for it in the 6 months prior to applying for the policy, it cannot be used as a "preexisting condition" when it comes to paying a claim.



What a company chooses to consider a preexisting condition for underwriting is a different matter. Unlike the post above that says they can only look back two years, that's incorrect. They can look back to birth. They can consider anything they find as a reason to deny the ISSUE of a policy, except in the 6 month period after a person first enrolls in Medicare Part B as quoted above. But once approved for a policy, only those conditions in the last 6 months can be excluded from paying claims, not the case of whooping cough the insured had in 1933.



Hope this helps.


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CA-licensed Life & Disability Analyst. CA Insurance Lic #0596197. Also investigating insurance company abuses, and providing litigation support/expert witness services. Send me your questions, and I'll send you my answers.
MaxHerr
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MaxHerr
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