When a person first signs up for Medicare (assuming he/she follows the rules for the Initial Enrollment Period or the Special Enrollment Period), he/she can choose between Original Medicare and Medicare Advantage. If the person chooses Original Medicare, he/she can sign up for Parts A, B, and D, as well as a Medicare Supplement, commonly referred to as a Medigap policy. Most importantly, at this time, the Medicare Supplement, which is the Medigap policy, is guaranteed issue No medical questions or underwriting is necessary.
If, instead, a person signs up for Medicare Part C, which is Medicare Advantage, the rule is different. Currently, roughly one in three people—22,000,000 Medicare beneficiaries — choose Medicare Advantage. Sometimes, however, a beneficiary will decide that Original Medicare might better fit their needs.
When changing from Medicare Advantage to Original Medicare, Medigap is guaranteed issue only in some circumstances. That means a person could be denied coverage, have limited plan options, and/or a higher premium. A person has guaranteed issue protection if one of the following situations applies:
Otherwise, a person has to answer medical questions. While a Medigap policy may be offered, it may not be the policy of choice. And the policy may have a period of time that preexisting conditions are considered out-of-pocket expenses.
Some states may offer residents additional protections. As of 2018, four states offer some level of guaranteed issue protection for Medigap policies: Connecticut, Maine, Massachusetts, and New York. Thirty-one states expanded qualifying events; the remaining 15 states and Washington, D.C., only require that federal minimum standards be met.
Medicare coverage is an important benefit that helps qualified older adults manage the costs of healthcare in retirement. Understanding how initial choices might affect future options can allow clients to have better outcomes.
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