AB 151 Increases California Beneficiaries’ Rights to Purchase Medigap Policies

AB 151 Increases California Beneficiaries’ Rights to Purchase Medigap Policies

California Medicare beneficiaries will have an expanded right to buy a guaranteed issue Medicare supplement insurance policy (Medigap) without health screening after January 1, 2012, thanks to California Assembly Bill 151 by Assemblyman Monning.

Under current law, Medicare beneficiaries enrolled in Medicare Advantage (MA) plans have the right to a guaranteed issue Medigap policy (A, B, C, F, K or L) when that plan reduces its benefits, increases copayments, or terminates a treating provider for other than good cause ONLY if that plan sponsor or its affiliates also sell Medigap policies. Mostly, these changes can take place only once a year. Beneficiaries are notified of such changes right before the Annual Election Period (AEP), which is from October 15 through December 7 each year, and is when people can choose to stay in their current plan with the changes for the upcoming year, switch to a different plan or return to Original Medicare. People enrolled in MA plans whose premiums increased, or that do NOT sell a Medigap policy have been out of luck and unable to take advantage of this right to buy a guaranteed issue Medigap policy.

AB 151 added two additional rights: the right to a Medigap when an MA plan increases its premiums, and the right to a Medigap even when an MA plan does not sell one. However, there are also certain restrictions that apply. If an MA plan’s sponsoring company does NOT sell Medigap policies, the premium and/or copayments must have increased by at least 15% before a person has the right to a guaranteed issue Medigap from any company that sells one. People in those plans, however, are still entitled to a guaranteed issue Medigap if their MA plan reduces its benefits or terminates their treating provider for other than good cause.

Governor Brown signed AB 151 in September, but the bill does not take effect until January 1, 2012. The new law also updates old references to Medigap plans in the California Insurance Code, deleting the Medigap policies that can no longer be sold (plans H, I and J) and adding the new plans M and N to the guaranteed issue rights list. AB 151 will increase the options available to persons who purchase Medigap policies in California and increase the number of guaranteed issue Medigap plans (A, B, C, F, K, L, M and N as of January 1, 2012).

Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.