When you opt for Original Medicare, you’ll likely want to buy a private Medicare Supplement plan to help cover all your doctor and hospital bills. But the timing for signing up can be tricky—and the price of getting it wrong can be high.

In this week’s reader question, Phil Moeller, the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs and the co-author of the updated edition of The New York Times bestseller How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security, explains why more people may need to pay attention to the rules this year.

Can I shop for a cheaper Medicare Supplement plan?

Cindy P.: I know that you can never be turned down for a preexisting condition if you sign up for a Medigap Supplement plan when you are first able to get Medicare. I was wondering if you have to remain with that plan for the rest of the time so that you can’t be denied for preexisting conditions?

When I turned 65, I chose one insurer’s Medigap Plan G coverage. Now, two years later, I find that another insurer has Plan G coverage than costs less. Since it is still the same Plan G, am I able to be insured for a preexisting condition although it is not the original insurer?

Phil Moeller: Get a cup of your favorite wintertime beverage and pull up a chair, Cindy. You’ve asked a great question that will need to be answered by millions of Medigap policyholders this year.

Original Medicare, which includes Parts A and B, covers you for pre-existing conditions, and Medigap plans must help pay for the things that original Medicare covers. The extent of that coverage varies depending on the kind of “letter” plan you have.

But if Original Medicare covers a doctor’s procedure for a preexisting condition, and your Medigap plan helps pay the share of the doctor’s expenses not paid by original Medicare, then the plan must pay its share of that expense. People with any letter G plan will be covered for preexisting conditions.

So far, so good, right? However, the issue here is not whether the plan covers you but whether the insurer even needs to sell you a policy in the first place, and, if it does, whether your premiums will be jacked up to reflect any preexisting conditions you may have.

Such underwriting penalties generally are not permitted when you first become eligible for Medicare and buy a Medigap plan. You then receive what are called guaranteed issue rights.

In nearly all cases, any Medigap insurer who sells you a plan at that time cannot charge you more because of your age or any preexisting conditions.

After you’ve had Medicare for about six months, this protective window closes in nearly all states. The Kaiser Family Foundation has a useful white paper explaining the different state-specific rules that govern Medigap plans. 

In your case, you need to call the insurer with lower Plan G rates and find out the terms under which it will sell you a plan. Will its rates be higher than what are advertised for new Medicare enrollees? Will they rise even further due to your age and preexisting conditions?

However, to emphasize, if the insurer sells you its plan, it must cover you for preexisting conditions.

This issue is especially important this year. A few years back, Congress passed a law that will take effect in 2020 and disallow the sale of the two most popular Medigap plans—letter C and F plans (including high-deductible F plans)—to new Medicare enrollees. 

To emphasize, if the insurer sells you its plan, it must cover you for preexisting conditions.

These plans offer the most complete protection, including repaying policyholders for their Part B annual deductibles. Congress decided that it wanted to end so-called “first dollar” coverage of Medicare costs, and that requiring people to have “skin in the game” (a poorly chosen phrase in my view) would be good national policy.

To soften this blow, the law said that any existing C and F customers could renew their plans for as long as they wish.

However, there is concern that if these plans can no longer enroll new and younger Medicare beneficiaries, the health costs of the remaining plan holders will only rise as they get older and require more medical care. This could put upward pressure on C and F premiums, thus making the plans less attractive. 

If people decide they want to switch out of these plans, they would be at a disadvantage if they no longer have guaranteed issue rights and insurers can charge them more money due to their age and health status. This may seem like a non-event today, but it won’t be later this year when the reality of the impending 2020 changes hits home.

There is some talk that Congress might broaden guaranteed issue rights later this year. Don’t be surprised if you see a proposal floated out of the House Ways & Means Committee, now that Democrats have a majority in that chamber. We’d then see if the Republican Senate was willing to go along. 

Got a question of your own about Medicare or Social Security? Send it to askphil@considerable.com.

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