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Medicare Supplement (Medigap) insurance is one of many great products for Medicare agents to offer their clients. They continue to provide a good source of income to agents with their stable commission structure and renewal income. The Medicare Supplement commissions 2025 remain the same as they have been in prior years. We will explain what to expect regarding payment of these commissions below.

How Medicare Supplement Commissions Work

Medigap commissions are structured differently than Medicare Advantage (MA) or Part D plans. Instead of receiving a one-time upfront payment, Medigap agents typically earn level commissions over multiple years. Here’s an overview of the commission structure:

1. Initial Year Commission – Agents earn a commission based on a percentage of the first-year premium, typically between 20 and 22%.
2. Renewal Commissions – In most cases, Medigap policies pay renewal commissions for a period of 6 years.
3. Varying Payouts by State – Some states and carriers impose limits on commission percentages, affecting how much agents can earn.

How Agents Receive Medicare Supplement Commissions

Agents typically receive their commissions through one of the following methods:

Direct Deposit – Most carriers pay commissions electronically on a monthly or biweekly basis.

Advanced Commissions – Some insurers offer advance payments of commissions (e.g., 9 or 12 months upfront) based on projected renewals.

As-Earned Commissions – Commissions are paid out as the policyholder pays their premium.

General Payment Structure

A typical Medigap commission structure follows this breakdown:

First-Year Commission: about 21% – 22% of the annual premium

Renewal Commission (Years 2-6): percentage rates vary by area and carrier.

Payment Frequency: Monthly, biweekly, or advanced lump sums based on carrier agreements

Learn more about commission payment structures

Factors That Influence Commission Rates

Several factors determine how much an agent earns from selling a Medigap policy. These factors include; carrier-specific rates; each carrier sets its own commission structure (unlike PDP & MA/MAPD plans). Each state has its own regulations; some have specific commission caps (CA & FL). In other instances, commission rates are based on age of enrollee and plan type.

Medicare Supplement vs. Medicare Advantage Commissions

Medicare Supplement commissions are generally lower in the first year compared to Medicare Advantage, but the long-term renewal structure and coverage type make them more sustainable. Medigap policies also tend to have lower attrition rates, meaning agents can build a long-term residual income.

Click here to watch a YouTube video on MA & PDP commissions 2025

Example using 22% commission and 12-month advance:

For agents selling Medicare Supplement plans, commissions remain a steady and reliable income source. While initial-year payouts may be lower than Medicare Advantage, the ongoing renewal structure provides financial stability.

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Please note: These payment amounts vary by carrier and product. Not all carriers pay 22% for enrollments. This amount varies quite a bit. Be sure you check each carrier’s rate in the specific area you plan to market the plans in.

To answer the question; what is the Medicare GEP; The Medicare GEP is an opportunity for individuals who missed their initial chance to sign up for Medicare Part A and/or Part B to enroll. It runs from January 1 to March 31 each year. This allows eligible individuals to enroll in Medicare coverage, though late penalties may apply.

Who needs the GEP

The GEP is for individuals who did not sign up for Medicare during their IEP (Initial Enrollment Period) and do not qualify for an SEP (Special Enrollment Period).

When does coverage begin

As of 2023, individuals who enroll in Medicare during the GEP will have their coverage begin the month after they enroll. Prior to 2023, coverage did not begin until July 1, which led to significant delays in accessing benefits.

Late enrollment penalties

Individuals who sign up during the GEP may have to pay an LEP (late enrollment penalty). This can increase monthly Medicare costs:

Part A penalty

For those who must pay a premium for Part A, the monthly premium could increase by 10%. This will be in place for twice the number of years they were eligible but didn’t sign up.

Part B Penalty

The monthly Part B premium will increase by 10% for each full 12-month period the beneficiary was eligible but didn’t enroll. This penalty is permanent and remains in place for as long as they have Part B.

Medicare Advantage, Part D and Supplement enrollment

If an individual enrolls in Medicare during the GEP, they can sign up for a Medicare Advantage (Part C) or a Medicare Part D prescription drug plan at this time. Coverage for these plans begins on the month following the enrollment. Although late enrollment in Part D or Medicare Advantage plans that include prescription drug coverage may include a lifelong penalty.

Medicare supplements can be a little more difficult to get after the individual’s Medigap open enrollment has passed. When this is the case, some states require enrollees to undergo underwriting which can lead to denial or higher premiums.

Avoiding the need for the GEP

Beneficiaries can avoid using the GEP (General Enrollment Period) and getting potential LEPs:

Sign up for Medicare during the Initial Enrollment Period, which starts three months before the 65th birthday and ends three months after.

Those who have employer-sponsored coverage should confirm whether they qualify for a Special Enrollment Period (SEP) when that coverage ends. If they do, be sure to enroll before the SEP ends.

The Medicare GEP is an important opportunity for those who miss their initial chance to enroll in Medicare. However, because of potential late penalties and delays in coverage, it’s best to sign up during the Initial Enrollment Period or a Special Enrollment Period when possible. Understanding enrollment deadlines helps ensure that beneficiaries get the healthcare coverage they need and avoid unnecessary costs.

If you’re a Medicare agent, you may receive calls from clients asking if Medicare covers their annual checkup. Most likely, your answer will confuse them. Many do not understand the difference between Medicare wellness visits vs checkups. Some people use these terms interchangeably. However, these are actually two different types of appointments. Understanding the distinction can help beneficiaries make the most of their Medicare benefits.

What is an annual wellness visit

An annual wellness visit is a preventive service that Medicare Part B covers. This visit helps beneficiaries and their providers create or update a personalized prevention plan based on current health and risk factors.

During this visit, the doctor reviews the beneficiary’s medical history, medications, height, weight, and blood pressure. They also assess cognitive function and risk factors for conditions like dementia. The beneficiary receives personalized health advice and screenings. The doctor and beneficiary may use this visit to discuss advance care planning and develop or update a prevention plan.

Medicare covers 100% of the cost for an annual wellness visit. In other words, there is no copay or deductible if your provider accepts Medicare assignment.

What is an annual checkup

An Annual Checkup (Routine Physical Exam) is a comprehensive medical evaluation that goes beyond the preventive focus of an annual wellness visit. Unlike the annual wellness visit, Medicare does not cover routine physicals. Those who request an annual checkup, may pay out of pocket unless they have insurance that covers it. During an annual checkup, the doctor may perform a physical exam, listen to the heart and lungs as well as order lab tests such as blood work. The provider assess overall organ function and diagnose medical issues.

Because an annual checkup involves diagnostic and treatment-related services, Medicare does not cover this visit unless it is used to address health concerns under medical necessity.

Why this matters for Medicare beneficiaries

Many Medicare beneficiaries schedule an “annual physical” expecting it to be fully covered, only to find out later that Medicare does not pay for it.

In order to avoid unexpected costs; beneficiaries who want a preventive visit covered by Medicare should ask for an “annual wellness visit.”

Click here to learn more about Medicare annual wellness visits

Anyone who needs a full physical exam including diagnostic tests, or lab work should check on the potential costs.

Understanding the difference between these visits ensures beneficiaries receive needed care and helps them avoid unexpected medical bills.

Before an agent can contact a potential client, they must be aware of the Medicare permission to contact rules. CMS puts these rules in place to protect Medicare beneficiaries.

Permission to Contact

Before we go over the permission to contact rules, we will explain what PTC (permission to contact) is. The PYTC guidelines were put in place to protect Medicare beneficiaries from receiving unsolicited communications and high pressure sales tactics. Any agent who wants to contact a potential client must follow all CMS marketing and communications guidelines.

For an agent to receive permission to contact in a complaint way, the potential client must initiate contact. In other words, the potential client must grant permission for the agent to contact them before the agent can do so.

Please note; agents do not need a PTC to contact their current Medicare clients.

Watch a YouTube video on Medicare marketing rules

Click here for a quick updated one-to-one consent rule video

When you need PTC

When an agent wants to speak with a potential Medicare client, they must have PTC. This is important especially if you plan to discuss either Medicare Advantage or PDP plans. Keep in mind; if you discuss Medicare Supplement plans, you will probably discuss PDP plans as well.  Even though CMS rules do not apply to Medicare Supplements, the TCPA guidelines do apply. That is why, it is important to get PTC whenever you plan to contact a potential client for any sales meeting.

Please note; you do not need a PTC to send out unsolicited emails to potential clients. All emails must contain an option to opt-out and the email must not contain information that would classify it as marketing material. That is anything with specific benefits or plan information that could sway a potential client towards a specific plan choice. All email communications must follow the CAN SPAM Act laws.

How to collect a Medicare Permission to contact

What you can do:

1. Always keep business cards with your contact information available for events you attend or just in case a potential client needs one. That makes it easy for people to contact you. Additionally; current clients may want a couple cards to give friends or family if they need an agent.
2. If you have a website, make sure there is a contact form on it so clients can request that you contact them.
3. When you send out emails, be sure to include your contact information as well as a contact form if they want more information or assistance.
4. Business reply cards are also a way to obtain PTC. If the prospect wants more information, they just fill out the card and send it back to you.

What you can’t do:

1. Agents are not permitted to go door-to-door looking for clients. If you do not have a scheduled appointment, you cannot go to someone’s home.
2. Do not send a direct message to a prospect through any social media platform.
3. Never cold call prospects to sell either a Medicare Advantage or PDP plan.
4. Do not contact a friend or relative of a current client without their consent. Each person must provide PTC.

After you have the PTC, it is good for up to 12 months. If you have not contacted the prospect within that time frame, you will need another PTC before attempting to contact them.

Permission to Contact and Scope of Appointment differences

Although both the SOA and the PTC serve a similar purposes, there are some important differences. Each protects Medicare beneficiaries from unfair sales practices. You need to have PTC before you contact the prospect and then you can collect a SOA.

The SOA is a form that specifies which healthcare products the beneficiary wants to discuss during their appointment with the agent. Learn more about SOAs.

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Medicare Supplements, also called Medigap plans, are insurance policies private insurance companies offer to fill the “gaps” after Original Medicare pays it’s portion of approved medical expenses. Understanding what Medicare Supplements cover is essential for Medicare agents and anyone considering enrollment in a Medigap plan to reduce healthcare costs and enhance Medicare benefits.

Medicare Supplement plan overview

Medicare Supplement plans are standardized by the federal government, meaning the coverage provided by each plan of the same name (Ex. all Plan Ns) is the same across all insurance carriers. However, premiums vary based on provider and service area. There are 10 standard Medigap plans available in many states, labeled A, B, C, D, F, G, K, L, M, and N. Each plan letter provides a different level of coverage to meet varying healthcare needs and budgets.

Learn about Medicare premiums & deductibles

What Medicare Supplements cover

Medicare Supplement plans provide coverage once Original Medicare pays its portion of the cost for approved healthcare costs. See below for what Medicare supplements cover:

Medicare Part A coinsurance for hospital costs

All Medigap plans cover the coinsurance for hospital costs under Medicare Part A for up to an additional 365 days after Medicare benefits are exhausted.

Medicare Part B Coinsurance or Copays

Many Medigap plans cover the 20% coinsurance for outpatient services under Medicare Part B. Plan K and Plan L provide partial coverage, while Plan N may require a small copay.

Blood (First 3 Pints)

Original Medicare does not cover the first three pints of blood needed for some medical procedures. Medigap plans cover this expense.

Part A Hospice Care Coinsurance

Hospice care is covered by Medicare, but beneficiaries may have to pay coinsurance for certain medications and respite care. Medigap plans cover these costs.

Skilled Nursing Facility (SNF) Coinsurance

After 20 days in a skilled nursing facility, Medicare requires a daily coinsurance payment. Most Medigap plans cover this expense.

Medicare Part A Deductible

The Part A deductible for hospital stays can be substantial. Many Medigap plans, including Plans B, C, D, F, G, and N, cover this deductible.

Medicare Part B Deductible (Only for Plans C and F)

Plans C and F cover the Medicare Part B deductible; however, these plans are only available to beneficiaries who were eligible for Medicare before January 1, 2020.

Medicare Part B Excess Charges

If a healthcare provider does not accept Medicare’s approved amount as full payment, they may charge an additional amount of up to 15%. Plans F and G cover these excess charges.

Foreign Travel Emergency Care

Some Medigap plans (C, D, F, G, M, and N) provide coverage for emergency medical care during international travel, up to plan limits.

What Medicare Supplements don’t cover

Although Medigap plans cover many out-of-pocket expenses, there are some services they do not cover:

Prescription Drugs

Medigap plans do not include drug coverage. Beneficiaries must enroll in a Medicare Part D plan for prescription drugs.

Long-Term Care

Supplements do not cover services like custodial care in a nursing home or assisted living facility.

Dental, Vision, and Hearing

Routine dental, vision, and hearing services are not included in Medigap coverage.

Private-Duty Nursing

Typically, these services are not covered.

Watch a YouTube video on Medicare enrollment periods

What to consider when choosing a supplement

It is important to evaluate current healthcare needs and potential medical expenses to help determine the level of coverage needed. Budget is another big consideration before choosing a plan. One more important factor before enrollment is eligibility. Some plans require underwriting for anyone who is outside a guaranteed issue period. There are plans (C & F) that are no longer available to anyone who turned 65 after Jan 1, 2020.

Medicare Supplements provide invaluable financial protection by covering the out-of-pocket expenses left by Original Medicare. By understanding what these plans cover and how they work, you can make an informed decision that ensures peace of mind and comprehensive healthcare coverage. For those considering enrollment in a Medigap plan, a licensed Medicare agent can help provide guidance and compare options to find the plan that best meets coverage needs.

For millions of beneficiaries, Medicaid provides a much needed lifeline. This ensures they receive access to essential healthcare services. However, one common question Medicaid beneficiaries have is does Medicaid coverage renew automatically. Although the answer depends on the state and specific circumstances of each enrollee, understanding the Medicaid renewal process helps avoid a lapse in coverage.

Medicaid renewal, also known as redetermination, is the process each state uses to determine if a beneficiary is still eligible for Medicaid benefits. Periodically, each state must verify the beneficiary’s income, household size, and other factors to ensure they still qualify for the program.

Click here to apply for Medicaid in each state

Does Medicaid coverage renew automatically

The short answer is: In some cases, Medicaid renewals are automatic, while others require the beneficiary to provide information to their resident state for renewal.

Automatic (passive) renewal

In many states, if the Medicaid office can verify eligibility through their databases (e.g., tax records, Social Security information, or unemployment benefits), coverage may renew automatically. If this happens, beneficiaries receive a notice in the mail informing them that coverage has been renewed without further action required.

Active Renewals

If eligibility cannot be verified automatically, beneficiaries must complete a renewal form and provide the requested documentation. States may typically send a renewal notice by mail or email depending on the beneficiary’s preferences. The notice includes instructions as well as a deadline to submit the required information.

What Triggers the Need for Renewal

Medicaid renewal usually occurs annually, though the exact timing varies according to when each beneficiary first receives Medicaid. Some reasons for renewal are a change in household size or a change in income. State policies differ and may change and require information for a renewal.

How to prepare for Medicaid renewal

Whether renewal is automatic(passive) or requires action, the following tips can help ensure a smooth process:

Beneficiaries must notify their state Medicaid office immediately if their address, phone number, or email changes. This ensures they receive renewal notices and other important information. They should also watch their mail for important notices and respond quickly. It is also important to keep recent pay stubs, or tax returns as proof of income.

Be aware of the deadline for renewal to respond in a timely manor and avoid a lapse in coverage.

Click here to learn the difference between Medicare and Medicaid

What If the renewal deadline passes

Failing to complete the renewal on time can result in a termination of benefits. However, most states offer a grace period that allows beneficiaries to submit renewal documents and have coverage reinstated retroactively.

Whether renewal is automatic or requires action, keeping your information updated and responding promptly to notices are imperative to maintain benefits.

Additional information

Most states have expanded Medicaid programs that cover anyone with a household income below a specific level.

In each individual state, the Medicaid qualification is based on several factors including income, size of the household, disability or other factors. The specific qualifications vary by state. Some states have expanded Medicaid coverage. When that is the case, Medicaid qualification is based solely on income. Most states accept those with household income less than 133% of the federal poverty level.

It is important to know: every state has a different renewal process for Medicaid beneficiaries. To locate a department of Social services in your area; click here for the department of Social Services.

All Medicare agents and potential clients need to understand the Medicare Advantage OEP 2025 Rules to make the most of this opportunity. The Medicare Advantage (MA) Open Enrollment Period (OEP) is an important time when beneficiaries can reassess their healthcare coverage and make changes that better align with their needs. The MA OEP provides one last opportunity for beneficiaries to make an annual plan change and get the coverage they need. It is essential to understand these rules to make informed decisions.

Medicare Advantage OEP

The Medicare Advantage OEP takes place annually from January 1 through March 31. This is an additional opportunity for individuals currently enrolled in a Medicare Advantage plan to:

1. Switch to another Medicare Advantage plan (with or without prescription drug coverage).
2. Return to Original Medicare and, if they want, enroll in a stand-alone Medicare Part D prescription drug plan.

Important: the OEP is available only to the following individuals:

Rules for the MA OEP

1. One-Time Change Rule: Beneficiaries can make only one change during the OEP. Once a beneficiary makes a change, they cannot revise it during the same period. This underscores the importance of careful consideration before making a decision.
2. No New Enrollments: Unlike the Annual Enrollment Period (AEP), the OEP doesn’t allow individuals to enroll in a Medicare Advantage plan for the first time. It is strictly for those already in an MA plan or transitioning back to Original Medicare.
3. Coverage Start Date: Changes a beneficiary makes during the OEP take effect on the first day of the following month. For example, if the beneficiary changes their plan in March, their coverage begins on April 1.
4. Plan Comparison and Guidance: Beneficiaries should compare plans carefully. Factors such as premiums, provider networks, out-of-pocket costs, and prescription drug coverage can vary significantly among plans.
5. Special Enrollment Periods (SEPs): The OEP is separate from Special Enrollment Periods, which allow beneficiaries to make changes due to specific circumstances, such as moving out of a plan’s service area or losing other health coverage.

Why the OEP is so important

The Medicare Advantage OEP is a critical time for beneficiaries to evaluate weather their current plan meets their healthcare needs and financial situation. In some instances, they may not have been aware of changes in their current health plan and this provides an opportunity to make necessary changes. Other factors such as changes in health, prescription drug coverage, or provider preferences may contribute to the need to switch plans.

Watch a quick YouTube video on MA OEP best practices

Additionally, each plan updates their benefits and costs annually. Those who did not review their plan details during the AEP have one last opportunity during OEP to make a change. This helps ensure that beneficiaries are not caught off guard by changes that impact their access to care or expenses.

Navigating the 2025 OEP

1. Review the annual notice of change (ANOC): Each fall, MA plans send out an ANOC outlining coverage, costs, and provider networks for the upcoming year. Reviewing this document is a great place to start.
2. Consult a licensed Medicare agent: Navigating the complexities of Medicare can be overwhelming. A licensed Medicare agent provides personalized advice and can help identify plans that align with each beneficiaries needs.
3. Don’t Wait Until the Last Minute: Although the MA OEP runs from January 1 through March 31, making changes early will ensure the beneficiary does not make a hasty decision and provides time to address any issues. Additionally, starting a plan early in the year helps avoid paying multiple plan coverage deductibles.

MA OEP Rules for agents

It is important to remember: agents are prohibited from sending marketing materials targeted to the MA OEP.  This is to ensure that agents don’t use the OEP as a specific opportunity to make more sales. 

Agents cannot:

• Send unsolicited marketing materials related to the OEP. 
• Attempt to convince individuals to use the OEP to make changes. This request must be initiated by the beneficiary who is inquiring about alternative coverage options.
• Agents cannot solicit beneficiaries who enrolled in a plan in the most recent AEP . Again, the beneficiary initiates this not the agent.

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Understanding the rules and opportunities of the Medicare Advantage OEP for 2025 allows agents to help beneficiaries make informed decisions about their healthcare coverage.

In some cases, Medicare beneficiaries miss an enrollment period due to a FEMA emergency. When this happens, beneficiaries may be eligible for a DST SEP. It is imperative that agents are aware of the New Medicare FEMA SEP rules to assist clients. The DST SEP is available to qualified individuals who miss an opportunity to enroll in a Medicare plan.

Medicare FEMA SEP  

The DST SEP is an enrollment opportunity CMS offers to Medicare beneficiaries affected by either weather-related emergencies or major disasters. The FEMA SEP lets those who miss a valid election period to either enroll in or disenroll from a Medicare plan. The enrollment takes effect the first day of the month after application is submitted.

This is only available in areas where FEMA, state or other local government officials declare an emergency or disaster. FEMA emergencies start when the incident occurs and lasts for two months up to one year after the start or the extension period begins.   

Important changes the the FEMA SEP

On December 3, 2024, CMS released a memo that announced changes to the DST election. These changes go into effect as of April 1, 2025.

If a beneficiary needs to submit an application using the DST election period either on or after April 1, 2025, the application must be submitted directly through CMS. Beneficiaries can call 1-800-MEDICARE or TTY 1-877-486-2048 to submit an application.

In other words, CMS will not accept applications that use the DST election even if they are broker assisted.

Any enrollment application that uses this election will be labeled as using an invalid election period. The plan will then attempt to contact the enrollee and obtain a valid election period. If the plan cannot verify a valid election period, the application will be denied.

Important: missing or invalid elections do not trigger the (RFI) Request for Information process. Therefore, beneficiaries do not have additional time to respond to the inquiry or correct their election.

Please note; applications and disenrollment forms will be updated to remove the DST election.

Reasons to use this SEP

There are varied opportunities to use the SEP. This ensures individuals have the coverage they need.

If the beneficiary resides where a natural disaster (earthquake, flood, wildfire, hurricane, tornado or other specific incident) resulting in a missed valid enrollment period. Sometimes disasters cause beneficiaries to have to leave their home. This may result in them missing their enrollment period and enable the use the FEMA SEP.

The SEP is sometimes available when a beneficiary relies on a family member or other caregiver who is impacted by a disaster and they are unable to assist them during their enrollment period. 

Other instances that allow for SEP use include; inability to access Medicare plan information or submit a timely enrollment due to a FEMA declared disaster. Enrollees may also use the SEP when the beneficiary’s healthcare provider of facilities are impacted by the disaster. This can result in the inability to receive necessary information to make an informed decision.

Rules for Eligibility for Medicare Disaster SEP  

In order to use the SEP, the beneficiary must live in the are where the disaster occurred. They must have missed a valid enrollment period (AEP, IEP, OEP) during the time of the incident as long as they did not already make a change during the enrollment period. It is also acceptable for those who need assistance from another person to complete the enrollment or make healthcare decisions.

Who cannot use this SEP

Anyone who has already changed their plan during a valid election period can’t use the FEMA election to change it again. Beneficiaries must call 1-800-MEDICARE or TTY 1-877-486-2048 to submit an application in a timely manner to avoid missing their window to enroll. 

CMS will begin their Medicare drug price negotiations 2026 with 10 popular high cost prescription medications. CMS has announced the first 10 drugs that will be subject to price negotiations.  The negotiations are part of the Inflation Reduction Act.  Until recently, Medicare was able to negotiate prices for the medical care beneficiaries receive; this did not include the costs of medications.

If the current plan does not change;  on January 1, 2026, the negotiated drug prices for the first 10 drugs will go into effect.

Watch a YouTube video on how to handle non-commissionable PDP plans 

Medicare is set to negotiate the cost for some of the more expensive prescription medications with the drug manufacturers.

It is important to note; the negotiations do not apply to drugs that offer a generic equivalent.

The first 10 medications CMS will negotiate are:

1. Eliquis (a blood thinner)
2. Enbrel (for rheumatoid arthritis)
3. Entresto (for heart failure)
4. Farxiga (for diabetes, heart failure & chronic kidney disease)
5. Fiasp & Novalog (for diabetes)
6. Imbruvica (for blood cancers)
7. Januvia (for diabetes)
8. Jardiance (for diabetes)
9. Stelara (for psoriasis & Chron’s disease)
10. Xarelto (a blood thinner)

The 10 drugs listed above were chosen because they made up almost 20% of the Medicare Part D spending from June 2022 through the end of May 2023.  Medicare Part D covers prescriptions beneficiaries take at home.  Part D does not cover medications medical providers administer in medical facilities. When this is the case, Medicare Part B covers the drugs.

Take a look at the drug price negotiation fact sheet 

Just the start

The first 10 drugs are just the start of the proposed price negotiations.  In 2027, the plan is to add 15 more and the hope is to add more in the years to follow.  This plan could change if the drug manufacturers can successfully stop the price negotiations.

Learn about the Medicare prescription payment program.

Drug manufacturers

As it stands, if the drug companies do not agree to the negotiations, they face possible tax penalties.  Although drug manufacturers can avoid the tax penalty if they remove their drug from the Medicare market.  Unfortunately, if they do that, they take away lifesaving drugs from Medicare beneficiaries and lose a large part of their market share.

Some large drug companies have hired legal counsel to stop the price negotiations.  They argue the loss in income will affect their ability to fund important research and development and that in turn, hinders their ability to produce new medicines.

The Negotiation Process

1. Drug Selection: Medicare will identify eligible drugs based on spending and clinical impact.
2. Price Negotiations: CMS will negotiate directly with manufacturers to establish a “maximum fair price.”
3. Implementation: The agreed-upon prices for drugs covered under Medicare Part D will take effect in 2026 with additional drugs phased in over the following years.

Potential benefits

Lower out-of-pocket costs: Beneficiaries could noticeable reductions in their high cost medication expenses.

Federal savings: By reducing the prices for some of the most expensive drugs, the policy could generate substantial savings for Medicare, potentially freeing up funds for other healthcare initiatives.

Health care equity: Lower drug costs may improve access to essential medications for underserved populations.

Concerns

While the policy is praised by some, it is not without controversy.

Impact on innovation: Pharmaceutical companies warn that reduced revenues could lead to decreased availability of funds for research and development. This could potentially slow the pace of medical innovation.

Legal and logistical hurdles: Industry groups have initiated legal challenges, questioning the constitutionality of the negotiation framework. Additionally, the administrative complexities of implementing the program are significant.

Click here to find out about the $2,000 drug cap for 2025

Looking Ahead

As the potential implementation approaches, many groups are watching closely to see what the impact of this policy will be. While challenges remain, the policy’s success could pave the way for broader reforms that could have an effect on the entire healthcare system.

Monitoring both long term and short term effects of this program are essential to determine if Medicare’s negotiating power achieves its intended goals or brings unintended consequences.

If you are looking for an FMO, find out what we have to offer!

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Because navigating Medicare enrollment period options can feel overwhelming, we will explain one specific enrollment opportunity. For beneficiaries seeking flexibility in healthcare coverage, Medicare supplements provide a good option. Because of this, the Medicare Supplement birthday rule is an important policy to understand. This rule, available in certain states, offers a window of opportunity to change Medicare Supplement (Medigap) plans without medical underwriting.

What Is the Medicare Supplement Birthday Rule

The Medicare Supplement birthday rule allows beneficiaries to switch Medigap plans annually around their birthday without undergoing medical underwriting. This means insurers cannot deny coverage or charge higher premiums based on health status during the designated timeframe.

Medicare supplement plans help cover out-of-pocket costs not paid by Original Medicare, such as copays, coinsurance, and deductibles. However, outside of the initial enrollment period, switching plans typically requires medical underwriting, which can be a barrier for those with pre-existing conditions. The birthday rule removes this obstacle during its specific enrollment window.

States That Have the Birthday Rule

As of now, the Medicare Supplement birthday rule is not a federal policy; it is enacted at the state level. Currently, 8 states including California, Idaho, Illinois, Kentucky, Louisiana, Maryland, Nevada and Oregon have implemented variations of this rule. Each state’s version differs slightly in terms of timing and eligible plans:

California

Beneficiaries have 60 days from the first day of their birth month to switch Medicare supplement plans to enroll in one with the same or a less benefits. They also have the option to switch insurance carriers during this period.

Idaho

Those who reside in ID have 63 days from their birthday to switch Medicare supplement plans with the either the same or less benefits. They can also switch to another insurance carrier if they like.

Illinois

Beneficiaries in IL have 45 days from their birthday to change Medicare supplement plans with either the same or less benefits. This rule only applies to plans with the existing insurance carrier or an affiliate of the current carrier. The affiliate carrier was added in 2024. In order to To qualify for the birthday rule in IL, beneficiaries must be between 65 and 75.

Kentucky

As of 1-1-24, KY allows Medicare supplement enrollees to switch to another supplement carrier that offers a plan with the same benefits as their current plan. They must switch within 60 days of their birthday.

Louisiana

In the state of LA, beneficiaries are given 63 days from their birthday to switch to another Medicare supplement plan with equal or lesser benefits. Enrollees are only permitted to enroll in a plan offered by either their current carrier or an affiliate of their current insurer.

Maryland 

As of July 1. 2023, beneficiaries have 30 days from their birthday to change Medicare supplement plans with either equal or less benefits than their current plan.

Nevada

In the sate of NV, the birthday rule allows beneficiaries 60 days form the first day of their birthday month to change supplement plans to one with the same or less benefits. It is also permitted to switch insurance carriers.

Oregon

Beneficiaries have 30 days from the first day of their birth month to switch Medicare supplement plans to another with the same or fewer benefits. They can also change insurance carriers.

Please note; beneficiaries and their agents must verify the state specific rules and timelines.

Watch a quick YouTube video on Medicare enrollment periods

How the Birthday Rule works

Each year plan enrollees should evaluate their current supplement coverage and decide if it still meets their needs. A licensed Medicare agent can help compare available plan options to find one that best suits the needs of the enrollee. They will also be able to advise of the applicable enrollment window using the appropriate birthday rule for each eligible state.

Beneficiaries must submit all applications before the enrollment period ends. Insurers cannot deny applications submitted during the birthday rule period. They are also prohibited from increasing premiums based on health conditions.

Benefits of the Birthday Rule

The birthday rule provides several advantages for beneficiaries. This includes the ability to adjust their coverage to better align with their healthcare needs and budget. It also allows enrollees an opportunity to change plans without fear of rejection.

Considerations for Beneficiaries

Although the birthday rule provides some significant benefits, there are a few important considerations:

State-Specific Rules: The availability and details of the birthday rule depend on where each beneficiary resides. It is not available in every state.

Plan Restrictions: In general, the rule applies only to plans that offer equal or lesser benefits, so beneficiaries cannot use it to upgrade coverage.

Timing: Those who miss the enrollment window must wait until next year’s birthday period to change plans.

Learn about Medigap guarantee issue rules; click here

The Medicare Supplement birthday rule is valuable for eligible beneficiaries. It provides an annual opportunity to change coverage without medical underwriting.