By Cheryl Clark
MedPage Today, December 3, 2019
Like many of the 22 million seniors now enrolled in Medicare Advantage (MA) plans, Tom Mills belatedly discovered its dirty little secret.
Also called Part C, these plans can cover a broad array of health services at low cost — that is, until one gets sick, at which point out-of-pocket costs can soar. But once in an MA plan, getting out can be even less affordable.
After Mills underwent a mitral valve repair and suffered a mild stroke with no lasting effects, the San Diego resident’s plan now charges him hundreds of dollars in monthly copays for drugs and other medical services. He had to pay $295 a night for his hospital stay.
But there was a much bigger shock. Mills, 71, learned that switching out of his MA plan will incur exorbitantly higher costs the next time he needs a serious medical intervention. If he moves to traditional Medicare and a prescription plan, he still needs a supplemental Medigap plan to pick up his 20% copays and deductibles.
Though the retired environmental geologist is training for his 57th half marathon, he now has a pre-existing condition. Medigap plans in all but four states (CT, MA, ME, NY) can and do reject people like him or require prohibitively higher premiums. Diabetes, heart disease, or even a knee replacement can be criteria for exclusion.
A health insurance broker told him no supplemental plan would cover him, and he’d be wasting his time if he applied.
No one told him about this side of MA when he enrolled at age 65. “You hear the pros, but nobody lists the cons.”
Medicare.gov websites aren’t always clear about the process of transferring out of MA to traditional Medicare with a Medigap plan, but the general bottom line is that getting accepted by a Medigap plan is guaranteed only within the first 12 months after enrolling in Medicare at age 65.
MA plans, which are managed by private insurers, can be very complex, with the potential for substantial out-of-pocket costs when beneficiaries get sick played down. Medigap policies, which pay for many expenses not covered in basic Medicare, may cost more in monthly premiums up front, but once one is enrolled, premiums are set solely through “community rating” and beneficiaries’ age. New-onset health issues do not lead to premium increases.
The catch is that if one initially enrolls in an MA plan and then decides to switch out more than a year later, Medigap insurers will take into account the individual’s pre-existing conditions, and may decline coverage or demand high premiums.
The newly revised Medicare Plan Finder tool does not explain this possibility. Nor does another CMS website, “Join, switch, or drop a Medicare Advantage plan.”
A third Medicare.gov website, “When can I buy Medigap?” is more specific, explaining in the third section that “there’s no guarantee that an insurance company will sell you a Medigap policy if you don’t meet the medical underwriting requirements,” meaning the Medigap issuer’s stance on pre-existing conditions.
Yet another Medicare publication does explain that if beneficiaries enroll in a Medicare Advantage plan at age 65 and want to get out, they must do so within 1 year, and then they have another 63 days from the disenrollment date to buy a Medigap plan without risk of coverage denial or being subject to underwriting.
But many of these documents are full of terms unfamiliar to ordinary laypeople, (Consultant Bonnie) Burns pointed out. “Networks and copayments and formularies and uncovered costs and appeals and who knows about that stuff? That doesn’t happen until you get sick. No one understands their insurance coverage until they have to use it.”
Besides MA’s lack of transparency on costs, critics also cite problems with insurers’ provider networks.
AMA spokesman Robert Mills referenced a Kaiser Family Foundation report that found 35% of plans studied were served by a “narrow” physician network, meaning that fewer than 30% of the physicians in that county were contracted.
“Plans may purposefully understaff specialties to avoid attracting enrollees with expensive pre-existing conditions like cancer and mental illness,” he said.
David Lipschutz, an attorney with the Center for Medicare Advocacy in Washington, D.C., also hears about limitations. “It’s a common scenario,” he said. “Often you have to jump through certain hoops or over certain barriers to access care, or it’s subject to prior authorization.”
AARP spokesman Gregory Phillips responded: “AARP supports increasing access through guaranteed issue to Medigap coverage, in addition to eliminating medical underwriting and age rating, to ensure that older Americans will get the coverage they need when they need it most.”
And he agreed that many beneficiaries may not be aware that plans “may terminate their relationship with Medicare in any given year; change the premiums, cost-sharing charges, or benefits from year to year (including drug coverage); and drop physicians from their networks during the year.”
“Beneficiaries may also not be aware that if they want to voluntarily leave an MA plan and return to traditional fee-for-service Medicare, they may be subject to medical underwriting for a Medicare supplement (Medigap) policy. This underwriting may result in their being refused a policy or being required to pay higher rates.”
When can I buy Medigap?
Buy a policy when you’re first eligible
The best time to buy a Medigap policy is during your 6-month Medigap open enrollment period. During that time you can buy any Medigap policy sold in your state, even if you have health problems. This period automatically starts the month you’re 65 and enrolled in Medicare Part B (Medical Insurance). After this enrollment period, you may not be able to buy a Medigap policy. If you’re able to buy one, it may cost more.
During open enrollment
Medigap insurance companies are generally allowed to use medical underwriting to decide whether to accept your application and how much to charge you for the Medigap policy. However, even if you have health problems, during your Medigap open enrollment period you can buy any policy the company sells for the same price as people with good health.
Outside open enrollment
If you apply for Medigap coverage after your open enrollment period, there’s no guarantee that an insurance company will sell you a Medigap policy if you don’t meet the medical underwriting requirements, unless you’re eligible due to one of the situations below (use link).
2019 Choosing a Medigap Policy
Centers for Medicare and Medicaid Services
What if I decide to drop my entire Medigap policy (not just the Medigap prescription drug coverage) and join a Medicare Advantage Plan that offers prescription drug coverage?
In general, you can only join a Medicare Prescription Drug Plan or Medicare Advantage Plan (like an HMO or PPO) during the Medicare Open Enrollment Period between October 15 –December 7. If you join during Medicare Open Enrollment Period, your coverage will begin on January 1. In most cases, if you drop your Medigap policy to join a Medicare Advantage Plan, you won’t be able to get it back so pay careful attention to the timing.
This 52 page booklet has much more information about Medigap plans:
Medicare and You, 2020
Section 5 discusses Medigap:
By Don McCanne, M.D.
The traditional Medicare program – Part A for hospital inpatient and Part B for physician and outpatient services – has significant cost sharing and gaps in benefits, and, most importantly, there is no limit on beneficiaries’ out-of-pocket spending for services. Four-fifths of Medicare beneficiaries in the traditional program have some sort of supplemental coverage to avoid these potentially catastrophic losses. Supplemental coverage includes employer-sponsored insurance, Medigap plans and Medicaid. Others may leave the traditional program and enroll in private Medicare Advantage plans instead.
Those who still have employer-sponsored coverage when becoming eligible for Medicare may well have satisfactory coverage, but the rules that apply when leaving an employer-sponsored plan are quite detailed and if not followed carefully, can leave the individual exposed to potentially catastrophic losses. This will not be discussed further here, but the references at the links can be helpful.
Those who end up having to spend down their assets may be eligible for supplemental coverage through Medicaid, but it may be difficult to find physicians who are willing to accept patients on Medicaid.
For most individuals who do not have an employer-sponsored plan at the time of enrolling in Medicare, either a private Medigap plan or enrolling in private Medicare Advantage are options to establish a limit on out-of-pocket costs. Medigap plans are private insurance plans that cover much of the out-of-pocket expenses under traditional Medicare, and they do place a limit on catastrophic losses. Medicare Advantage plans are completely separate private insurance plans that replace traditional Medicare coverage, but also include limits on catastrophic losses within the network, though out-of-network exposure can be a problem.
People who want to choose their own physicians and hospitals and don’t want to be burdened with managed care intrusions such as prior authorization will likely want to enroll in traditional Medicare with a Medigap supplement plus a Part D supplement for drugs. If that is the preference then that decision must be made within the initial enrollment period or risk never being able to enroll in a Medigap plan, especially if there are pre-existing conditions.
The marketing of private Medicare Advantage plans has made them attractive and thus they have grown in popularity. However, it is common that when individuals develop serious conditions they find that the plans fall far short of the care they expected and thus they want to return to the traditional Medicare program with a Medigap supplement. In such circumstances, individuals will likely find that they are unable to enroll in a Medigap plan and thus they will be subject to potentially catastrophic losses. It can be humiliating when they find that they must spend down their assets in order to enroll in Medicaid – a welfare program.
Since Medicare benefits are inadequate, rather than adding the administrative burden and extra expenses through Medigap plans and Medicare Advantage plans, it would be much better to roll the additional benefits into the traditional Medicare program. It would be less expensive while allowing patients to retain their choices of health care professionals and institutions. Besides establishing an improved Medicare we should expand it to include everyone; it would be cheaper and better for all of us. Of course that’s the single payer model of an improved Medicare for All. That’s so much better than establishing a Medigap plan and then telling people they can’t enroll in it because they didn’t follow the rules that they didn’t know about.
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