Q and A About Medigap vs. Medicare Advantage

Medigap vs. Medicare AdvantageRecently a reader sent an email with what I thought was an excellent question.  Below is the question I was asked and the answer I sent.  If you have similar concerns, I hope this advice helps you understand better what you should look for as you plan for the future.


The way I understand it, a person who’s on Medicare/Medigap can later switch to an Advantage plan.  However, a person who’s got an Advantage plan (assuming he/her has held that plan at least 12 months) cannot switch to Medigap without going through underwriting – which means they could be refused.

This is important because, with the big government cuts to Advantage due in  2014/2015, the cost of Advantage plans may go up dramatically, forcing people to jump to Medigap plans.

However, what if they cannot get into those plans because the insurer refuses them?  For myself, who is shopping for insurance as I approach age 65, the crux of the matter is whether, after 2014/15, the ban on insurance refusal, or imposition of a waiting period, for pre-existing conditions will legally apply to Medigap policies. Some have told me that it doesn’t, that Medigap is treated differently under Obamacare.

If that’s the case, then I buy Medigap now to get into it, then wait and see what happens to Advantage, which I can get into later without underwriting. Since the reverse is not true, it would be a mistake to get into Advantage now, get caught in a dramatic Obamacare rate increase, then find out I could be refused entry into Medigap, leaving me only with basic  Medicare.

I’ve asked this question of Medicare, Social Security, my state’s volunteer agency, and two different providers, but have not receive a clear answer.  Will Obamacare force insurers to provide Medigap policies to people who want to move into them from Advantage, or from another Medigap policy? Or will they be forced to sell it to people with pre-existing conditions?



Sorry about the length of this email but you ask an excellent question and deserve the most thorough answer I can give.

I’ll try to give you a straight answer. You have not been told about enrollment periods.  There are 2 that you need to be aware of if you think you have a pre-existing condition.

In addition  you apparently have not been told that it is not possible to have a Medigap and Medicare Advantage plan at the same time. Although both programs are managed by private insurance companies, they are overseen by the Center for Medicare & Medicaid Services (CMS).  It is illegal for someone like me to try to even sell you both types at the same time. If you try to have both of them at the same time, you will be caught and forced to choose which one you want. The idea of getting a Medigap early to insure your insurability while you have a Medicare Advantage, while it makes sense, it is not practical.

 Open Enrollment Period (OEP)

Every person has a 7 month Open Enrollment Period for Medicare Advantage around the time they first enroll for Medicare.  That period may be different for some people who are still covered on a group policy and do not retire at age 65 but for most people it will start 3 months before you turn 65, the month of you turn age 65 and ends at the end of the 3rd month after you turn 65.

During this Open Enrollment Period (OEP) you are guaranteed approval for any Medigap plan for which you apply, regardless of your health. There are no pre-existing conditions that are considered during this time.

If you elect a Medigap plan, your Initial Enrollment Period starts on the first of the month in which you both are age 65 and have enrolled in Medicare B.  It ends 6 months later.  During that time you can get Medigap regardless of your health.  If you wait until your Initial Enrollment Period ends to get Medigap, you must medically qualify.

Special Enrollment Period (SEP)

There are a handful of opportunities to move from Medicare Advantage back to Medigap even with a pre-existing condition.

It is true. A person may switch to a Medicare Advantage (MA) plan from a Medigap with no underwriting but there is medical underwriting to go from M.A. to Medigap. The good thing is, that is not always the case.

If a MA company discontinues offering your plan in your area you have a few weeks after you receive their letter announcing they are dropping the plan to obtain a Medigap with the company you want. During that special enrollment period you are guaranteed approval regardless of any pre-existing conditions. 

If you elected MA when you were first eligible for Medicare and within the first 12 months decided to switch back to traditional Medicare you would be guaranteed approval with no pre-existing condition clauses applicable.

These are just 2 of the 10 situations where you are able to leave Medicare Advantage and are guaranteed a Medigap plan. You will find all 10 Special Enrollment Periods described on pages 24-25 of the CMS publication “Choosing a Medigap Policy.” There is a link to that publication on my blog or you can link to it here http://www.bcbstx.com/producer/pdf/medigap_policy.pdf.

Pre-Existing Condition Thought

First things first, the ban on pre-existing condition clauses for adults to go into effect in 2014 is only for Major Medical health insurance.  It does not apply to Medigap. 

If it helps, Medigap by definition is a supplement program only.  The primary portion of your health insurance will be Medicare.  Medigap only pays what Medicare does not, depending on which plan you elect.  Major Medical is to people under age 65 what Medicare is to people over age 65.  It is the primary plan. 

In 2014 there can be no medical underwriting or pre-existing condition clauses for Major Medical health insurance but supplemental insurance is exempt from the PPACA rules.

I get the feeling that you are concerned about pre-existing conditions. That is a valid concern.  Be aware that Medigap medical underwriting is typically more lenient than medical underwriting for people not on Medicare. Just because a person has a condition that would be declined, ridered or waivered, on a Major Medical policy; does not mean there will be any adverse issues with Medigap.

For example, people who are insulin dependent diabetics are generally declined for medically underwritten Major Medical individual policies. That is not necessarily the case with Medigap. One of the companies I work with ignores insulin dependency unless the person requires 50 units or more a day.

Also, the definition of “pre-existing” is different. With Major Medical an insurance company defines a pre-existing condition as something that a reasonably prudent person would have sought treatment for in the past 2 years. They can use that defense for up to 12 months.

Medigap is different. Instead of looking back a full two years, Medigap companies typically only look back 3-6 months. Also, they can only use the Pre-existing Condition clause as a defense for 6 months. After that time, they have to pay any claims.

A great deal has been said about the pre-existing condition clause. What has not been said is that CMS wrote the policies for Medigap and not the individual insurance companies. The pre-existing condition clauses in Medigap are what the federal government deems fair. They are there to make certain that insurance companies are not defrauded by people who elect not to contribute to the pool of insurance money, lie on their applications in order to get insured and then take the money from the honest people who participate in the Medigap program.


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