Changing Medicare Supplement Plans: What to Know Before You Switch
Medicare Supplement (Medigap) plans are a great choice for covering the portion of out-of-pocket costs that Original Medicare doesn’t. However, as health needs and financial situations change, beneficiaries might consider changing Medicare supplement plans. Whether it’s to reduce premiums or adjust coverage, making a change requires some thought and planning.
Here’s what to keep in mind when considering a change to Medicare Supplement coverage.
Why People Change Medigap Plans
There are several reasons why someone might decide to change their Medigap plan:
- Overpaying for coverage: The current plan might offer more coverage than needed, meaning the policyholder may not use as much coverage as much as expected.
- Needing additional benefits: Health needs can change, and a different plan may provide better or more suitable coverage.
- Shopping for a better rate: Even if the benefits remain the same, switching to a different insurance carrier offering the same plan at a lower premium makes sense.
- Company dissatisfaction: Some beneficiaries want to change to a new insurer due to customer service or other experiences.
When You Can Switch
Changing Medigap plans isn’t quite as simple as enrolling in Medicare for the first time. There are only a few scenarios when someone can switch plans without facing potential roadblocks:
- During their six-month Medigap Open Enrollment Period: This period starts the month they turn 65 and are enrolled in Medicare Part B. During this time, they can buy any Medigap plan offered in their state or switch plans. Insurance companies cannot deny coverage based on health.
- 30 day free look period: After purchasing a new Medigap policy, you have 30 days to decide if you want to keep it. This allows beneficiaries to compare other plans with their your current plan.
- With guaranteed issue rights: These are special protections that allow someone to buy certain Medigap plans without medical underwriting. Common situations that trigger guaranteed issue rights include losing employer coverage or moving out of a plan’s service area. However, there are currently 4 states that offer guaranteed issue rights regardless of the circumstance.
Please note: A new Medigap policy doesn’t automatically cancel the old one the way Medicare Advantage and PDP plans do. It is best not to cancel your old Medigap policy until you are sure you want to keep the new one.
Watch a YouTube video on Medicare Supplement underwriting.
Outside of the situations listed above, beneficiaries may need to go through medical underwriting to enroll in a new Medigap plan.
Understanding Medical Underwriting
Medical underwriting is a review process insurers use to assess an applicant’s health history and current conditions. Based on this review, a company can:
- Approve or deny the application.
- Charge a higher premium.
- Apply a waiting period for coverage of pre-existing conditions.
If a person applies for a Medigap plan outside their Open Enrollment Period and without guaranteed issue rights, their application could be declined based on health.
One common underwriting consideration is tobacco use. Smokers often face higher premiums, even if they are otherwise in good health.
No Waiting Period to Switch
There’s a common misconception that people have to keep their Medigap plan for a set amount of time before switching. The truth is, once someone has a Medigap policy, they can apply for a new one at any time. As long as they’re willing to go through underwriting if required.
Switching Medicare Supplement plans isn’t something to rush into, but with the right timing and a good understanding of the process, it can be a good idea for your health and finances. Whether it’s finding more appropriate coverage or simply lowering monthly costs, reviewing options regularly ensures your Medicare Supplement plan continues to meet your needs. It is best to speak with a licensed Medicare agent who can guide you through the options and find the best fit for your needs.A
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Agents helping clients navigate this process; be sure they understand the importance of timing and potential underwriting challenges. They must understand how their health status could impact their options.