insurance

How to Find a Cheaper Medigap Plan

The new health care law doesn’t apply to Medicare supplemental insurance, so insurers can reject you or charge higher rates because of your health.

My medigap policy is expensive, but I haven’t been able to switch to a new policy because of my health. Will the new health care law prohibit medigap insurers from denying coverage or raising rates because of health?

No. Even though most health insurers starting in 2014 will no longer be able to reject people for coverage or charge them more because of their health, the new law doesn’t apply to Medicare supplemental policies (often called medigap). You can buy any medigap policy regardless of your health within six months of signing up for Medicare Part B. But after that initial enrollment period, insurers can reject you or charge higher rates because of a medical condition.

There are a few other situations in which you can get certain medigap policies without medical underwriting, such as if you are in a Medicare Advantage plan that leaves the business, or if you move out of that plan’s service area. See the guaranteed issue rights factsheet at Medicare.gov.

In some states, you may have more options to switch policies (see www.naic.org for links to your state insurance department). A few companies will let you switch from one medigap policy to another version without new medical underwriting, especially if you’re switching to a plan with more cost-sharing, such as the high-deductible Plan F or Plan N. See How to Compare Medigap Policies for details about what each medigap plan covers. There are ten standardized medigap plans, and every plan with the same letter designation must have the same coverage, regardless of which company offers it.

If your medigap premiums have increased significantly, try applying for a new medigap policy, even if you have minor health issues. It generally takes about 60 days for a medigap policy to go through medical underwriting, but some companies speed up the process and process the policy in 15 to 30 days, says Eric Maddux, senior Medicare adviser for eHealthMedicare, which provides price quotes and sells policies from many companies. Insurers are more likely to deny people coverage entirely than to charge them more because of their health, he says.

If you can’t qualify for a new policy, another option is to switch from medigap to an all-in-one Medicare Advantage policy during open-enrollment season, which runs from October 15 to December 7. Any Medicare beneficiary can buy a Medicare Advantage plan during that time, regardless of his or her health. These policies provide both medical and prescription-drug coverage from a private insurer (see Medicare Advantage Plans Can Cut Costs and Hassle for more information).

But keep in mind that Medicare Advantage policies tend to have restrictive provider networks – make sure your doctors, hospitals and pharmacies are included -- and that you could have a tough time finding in-network providers if you travel a lot. They also tend to have more cost-sharing than medigap plans, so your monthly premiums may be lower but you may have more out-of-pocket costs throughout the year. And if you change your mind later and decide to switch back from Medicare Advantage to a medigap plan, you could be rejected because of your health.

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