How Does Obamacare Affect Medicare Supplement Insurance?


Medigap

Click the photo to visit our Medigap page.

I know that there are still some people who are both confused and hopeful that the Patient’s Protection and Affordable Care Act (PPACA) will offer them some relief from the current underwriting rules that health insurance companies use.

Last weekend someone stumbled across this blog by asking, “Will Obamacare offer relief for those with serious pre-existing conditions who sign up for Medigap after the initial enrollment?”

I work mainly with Baby Boomers.  Since many of them are retiring and must enroll in Medicare, I find that question very pertinent.

Although the PPACA does effect people over 65 to a degree, the law will have its biggest effect on people under 65.  The restrictions on medical underwriting target Major Medical health insurance and not Medigap.  There is talk in D.C. of making changes to Medicare and Medigap in the future. For now, however, things will remain the same.

MEDIGAP

During the first 6 months of eligibility for Medicare, each person is guaranteed approval of a Medigap policy regardless of their health.  That is called your Initial Enrollment Period.  If you enroll in Medigap during this period, not only is your acceptance guaranteed, the insurance company is required to waive any pre-existing condition clauses.

Those people who do not enroll in Medigap during their Initial Enrollment Period, are subject to medical underwriting if they elect to get a Medigap plan later.  Also, they are subject to any pre-existing condition clauses their insurance company may have.  Even if they are able to get a Medigap plan, it will not pay for anything that is considered a “pre-existing” condition for at least 6 months.

Ideally, if you want help from an insurance company to pay for things that Medicare does not, you will obtain a Medigap plan when you first are eligible for Medicare.  (If you are not certain if Medigap is right for you, read my book, “Understanding Medigap Insurance.”)

If you did not take advantage of your Initial Enrollment Period and later decide that a Medigap plan is right for you, do not be discouraged.  If you are in average health for your age, you may still be able to medically qualify.

Surprisingly, insurance companies will cover many people who are being treated for a medical condition.   Insurance companies who issue Medigap plans have a different underwriting standard.  What was considered a “pre-existing” condition and automatic decline when you were 64 may not be when you are 65.

If you wait until you are too sick to medically qualify for Medigap, you are out of luck with Medigap unless you can qualify for a Guaranteed Issue exception.  You will find a list of those exceptions on pages 22 – 23 of CMS’s publication, “Choosing A Medigap Policy.”

Please notice that all the exceptions have to do with changes to your insurance portfolio.  None of the exceptions are based on your health.  You are not able to go without Medigap until you are diagnosed with a serious medical issue and then enroll.  If you want Medigap protection, you have to get it either during your Initial Enrollment Period or before your health deteriorates too much.

MEDICARE ADVANTAGE

If you are not eligible for Medigap because of a “pre-existing condition” but are not happy with Medicare’s partial pay policy, you may want to consider a Medicare Advantage plan.  They are more limiting than Medigap but if you do not travel and your doctors and hospitals are within the plan’s “network,”  Medicare Advantage may be an acceptable option for you.

There are many things that you will have to relearn about your health insurance if you elect to enroll in Medicare Advantage.  One of the many adjustments that you will have to make is the limited enrollment time that is available.

You will have a 7 month window around the time you turn 65 in which you may enroll in Medicare Advantage.  If you miss that Initial Enrollment, you will have to wait until the next Annual Enrollment Period to join unless you are able to qualify for one of the Special Enrollment Periods (don’t count on it) that Medicare allows.

The Annual Enrollment Period is usually only 6 weeks in the last quarter of the year.  During that time, you may enroll in a Medicare Advantage plan for the following year.  Just don’t be caught unawares.

If you are diagnosed with an expensive medical problem, like cancer, in July, you are not able to get a Medicare Advantage plan to cover you in August.  You will have to wait until the following October to enroll in Medicare Advantage.  You will then have to wait until January before any of your medical bills are covered.

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