Many of our clients love that Medicare Supplements are standardized.
A standardized Medicare Supplement means a plan purchased from one insurance company offers the same benefits as that same plan purchased from any other insurance company. While Medicare Supplements are standardized, some states have their own specific rules that dictate changes you can make to your plan.
Not every state has rules like this.
Today we will talk about these state-specific rules as they pertain to Medicare Supplement plans.
This article only applies if you live in these specific states:
- New York
If you do not live in any of the states above, this article would not apply to you.
A Bit About Medicare Supplements
They help minimize your out-of-pocket expenses on Medicare.
We talked about Medicare Supplements in more detail in another post, which you can read here.
When you are new to Medicare, you can purchase any Supplement plan you would like.
The insurance company you apply with must accept you.
If you apply for a Supplement plan more than six months after your Medicare Part B start date, you’ll be subject to medical underwriting.
Being subject to medical underwriting means you must answer health questions on the application.
The insurance company may look into your health records and prescription medication history to determine if you can qualify.
Your application can either be approved or declined based on what the insurance company finds during the underwriting process.
In some instances, an insurance company might approve an application at a higher rate for specific medical conditions.
The state-specific rules we will talk about today describe situations in which one might be able to make a switch without being subject to medical underwriting.
Continue reading to learn more.
California & Oregon
In California and Oregon, Medicare Supplement policyholders can take advantage of the ‘Birthday Rule’ each year.
If you already have a Medicare Supplement in place, you can make changes to your plan within 60 days of your birthday.
This means you can apply for a different Supplement as early as 60 days before your birthday with no health questions.
Your new coverage cannot begin any earlier than the first day of the month following your birthday.
Also, under the Birthday Rule, you can only apply for a plan of equal or lesser value without being subject to medical underwriting.
You can get the same coverage or go down in benefits. You cannot use the Birthday Rule to increase your benefits.
Some plans provide slightly more coverage than others and are therefore of greater value, California makes sure that if you are sick, you do not manipulate the system by increasing benefits only when you need it.
Let’s look at an example:
Val lives in California.
For the past two years, she has had Medicare Supplement Plan F which began when she first started Medicare.
Her monthly premium for Plan F has increased so much these past two years and would like to switch to Plan G.
Plan G is very similar to Plan F but has lower monthly premiums and a much lower yearly rate increase. You can read about the differences between the plans here.
Today is November 6th, and her birthday is on November 18th.
Val contacts her agent to let him know that she would like to switch from Plan F to Plan G.
Her agent gives her the great news that she can use the California Birthday Rule to switch from Plan F to Plan G without medical underwriting.
Val’s agent helps her apply for Plan G, her application is approved, and her coverage begins December 1st.
She can make the switch so easily because Plan G has slightly fewer benefits than Plan F.
Making a switch from Plan G to Plan F (an increase in benefits) would require medical underwriting even during Val’s Birthday Rule window.
Washington & Connecticut
If you live in Connecticut or Washington and already have a Supplement in place and want to change plans – you can do so at anytime
This is called the Guaranteed Issue right.
It means you can change from one plan to another at any time throughout the year.
No medical underwriting.
As long as you already have a Supplement in place already you can use this rule to switch plans.
If you do not have a Supplement or if you have an Advantage plan, you’ll need to go through medical underwriting to qualify for a Supplement first.
The exception to the rule in Washington state only, and not in Connecticut, is Medicare Supplement Plan A.
- If you have Supplement Plan A (which is different from Part A of Medicare), you can use the Washington state Guarantee Issue right to switch only to another Plan A.
If you are in Washington state and have any Supplement plan other than Plan A, you can switch to any other Supplement plan as long as it is not Plan A.
Let’s look at an example:
Martha lives in Washington and has Supplement Plan G.
She decides she wants to switch to Plan N because it has lower monthly premiums than Plan G.
Martha is perfectly healthy and never goes to the doctor, so she decided she wanted to save money by going to Plan N.
She calls her agent, and he helps her switch from Plan G to Plan N.
Martha is not subject to medical underwriting and her coverage is approved immediately.
Her new Plan N coverage begins on the first of the coming month.
She can change back to Plan G any time she wants, and just like above, no underwriting.
New York & Vermont
New York state and Vermont have what is called year-round Open Enrollment.
This means that anyone can get a Supplement plan at any time without being subject to medical underwriting.
This is very similar to the guarantee issue right in Connecticut and Washington state, except that you do not have to have a Supplement in place already.
The only requirement is that you have Medicare Part A and Part B.
Let’s look at an example:
Lenny is 69 and has been on Medicare Part A and Part B for several years.
He never purchased any additional coverage because he has been perfectly healthy.
Recently Lenny finds he is going to more doctors and specialists.
He decides he would like to purchase a Medicare Supplement plan.
Because Lenny lives in New York state, he can get any Supplement plan he wants and is not subject to medical underwriting.
If you live in Missouri, you can take advantage of the Policy Anniversary Rule as long as you already have a Supplement Plan in place.
The Policy Anniversary Rule allows you to change from your plan to the same exact plan (different company) within 30 days of your policy anniversary. No health underwriting.
Remember, all Supplements are standardized so there is no difference from one company to the next when it comes to coverage. Read about that here.
So if your premiums are going up, you can switch to a different company if they have a better rate available.
If your Medicare Supplement coverage began on June 1st, 2019, your policy anniversary would be June 1st of each year.
Let’s look at an example:
Greg lives in Missouri and has Supplement Plan G, which began on April 1st, 2018.
In mid-April 2020, Greg’s agent calls him to let him know another company has the same Plan G for $25 less per month than what he is currently paying.
Greg is within 30 days of his policy anniversary
He can switch to the other plan without being subject to medical underwriting.
It is important to note that he switched from his plan to the same plan with a different company in this example.
If Greg were switching to another plan, he would be subject to medical underwriting.
Purchasing a Medicare Supplement plan in addition to Part A and Part B can be a great way to reduce your out-of-pocket costs.
For most people in most states, making a change to their Supplement means they will be subject to medical underwriting.
If you live in any of the states we talked about today, you may have a bit more freedom and flexibility if you decide to make changes to your plan later on.
It is essential to understand these rules if you live in or are thinking about retiring in one of these states.
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