Should I change my Medicare Supplement plan?

People often change their Medicare Supplement plan for 1 of 3 reasons: in order to save money, match the level of coverage the policy provides to what they currently need or because they have moved.  Since Medicare supplement plans are month to month contracts you are allowed to change your coverage throughout the year.  You are not tied down to only making changes during the Annual Enrollment Period. However, after your initial enrollment into Medicare any subsequent changes for a Medigap or Medicare Supplement plan would require you to answer health questions and possibly complete a phone interview to see if you qualify for acceptance with the new insurance carrier. Sometimes a person’s health conditions prevent them from being accepted and able to switch to a new Medicare supplement plan.  Should that occur you may have to continue with your current coverage.

The most common reason for switching a Medigap

The most common reason for switching a Medigap (also called a Medicare supplement plan) is to get the same coverage with a different health insurance carrier at a lower cost.  Since the plan types are standardized it is common for a person to replace their current coverage with the exact same coverage from a different insurance company in order to save on their monthly premium. Typically, the process you need to complete in order to change your Medigap coverage would be to first apply for coverage with the new carrier and see if you are approved. The application for coverage with the new insurance carrier usually includes health questions.  These questions may ask if you have recently had a critical illness or have been diagnosed or treated for a chronic condition.  If you answer yes to any of those health questions the new insurance carrier typically declines to insure you.  If you answer no to all of those questions you may need to also complete a health interview over the phone with an underwriter from the insurance carrier.  Once you are approved with the new carrier you are then required to complete one final step.  A federal regulation states that only the insured is allowed to cancel their current Medicare coverage to ensure that you do not lose your health insurance coverage without your knowledge.  You must call the company for your old Medicare Supplement policy and notify them that you would like to cancel your old policy on the same date that you’re new Medicare supplement policy becomes effective. This two step process insurers that you are first approved for coverage with the new insurance company and only after being accepted with the new insurance company should you then call the customer service number for your prior coverage to cancel with your former carrier.

Sometimes…

Sometimes people will change their Medicare supplement plans when their health condition changes. Ideally a person in good health would start with a Medigap plan that offers less coverage and has a lower premium in order to match what they need.  Once a person’s health begins to change they would increase their coverage to match their health care needs and also likely increase their monthly premium. In practice this is very difficult to time. Because you are required to answer health questions and possibly complete a health phone interview in order to obtain new coverage there is no guarantee that your health will be good enough in the future to change your Medicare supplement plan. A long standing joke that I have told clients who want to start with less coverage is to call me – 3 months before they get sick – so that we can make sure that they can pass the medical underwriting and qualify to switch their coverage.  In practice, people typically start with the best coverage they can obtain right when they start Medicare. This eliminates the need to be able to medically qualify for new coverage  down the road since you may or may not be able to get new coverage based upon your health at the time.

Oftentimes…

Oftentimes people move out of state and out of their coverage area for their Medicare Supplement Plan – and typically their Prescription Drug Plan. Medicare allows you to have a Special Enrollment Period to change your Medicare supplement coverage (and possibly your prescription drug plan coverage) to a carrier that offers coverage in the area you have just moved to. The steps to replace your coverage when you move are to first notify your current insurance carrier of the date you are moving.  The insurance company will send you a letter if you are moving out of their coverage area, notify you your current insurance will terminate and you have the right to elect new coverage in the area that you are moving to. The letter documents your right to a special enrollment period and serves as a receipt. Oftentimes the new insurance company you enroll with will require you provide them a copy of the letter so that they can document with Medicare your right to switch coverage.   

Although there are other circumstances when you should replace your current Medicare supplement plan these 3 items are the most popular reasons we encounter.

If you have questions or would like us to advise you, please contact us. Complete the contact information below and we will be glad to help.