Medigap, also known as Medicare supplemental insurance, is a set of standardized insurance policies that help cover out-of-pocket costs in the Original fee-for-service Medicare program. There are currently 12 standardized Medigap plans lettered A through L, plus 2 high deductible riders that can be added to 2 of the plans. These are the only insurance policies that insurance companies can sell to supplement Medicare. In June 2010, these 12 standardized plans will undergo several major changes due to federal legislation passed in 2005. Four of the current plans will be dropped and 2 new plans will be added resulting in a total of 10 standardized plans, the original number mandated by Congress in 1990. The 2005 legislation required states to incorporate all of the required federal changes. Our Governor signed AB 1543 earlier this summer to make those changes. That bill included a few additional consumer protections for California beneficiaries.
Below are 12 frequently asked questions (FAQs) about these new changes to Medigap insurance policies. For a summary of the changes and protections specific to Californians, see Summary of Medigap Changes: AB 1543 and Snapshot of Changes to Medigap Policies.
Frequently Asked Questions
- What is the history of Medigap plans and what are the current standardized plans?
- What changes did Congress make to the standardized Medigap packages?
- When will these changes take place?
- What happens to the standardized Medigap plans people already have, or buy before 6/1/10?
- Will the premiums be lower for these new Medigap plans?
- Do I need to buy one of the new Medigap policies?
- Do companies have to sell me one of the new standardized Medigap plans that are replacing the old plans?
- What is the “Birthday rule” and how does it apply to the new Medigap policies?
- What are the benefit differences in the new Medigap policies?
- Will insurance agents know about these changes and be able to explain them to me?
- Were there any other changes in addition to the new benefit packages?
- Where can I get help?
1. What is the history of Medigap plans and what are the current standardized plans?
Originally, Medigap policies were not standardized and comparing the various plans and their benefits were virtually impossible. In the early 1990s, however, Congress directed the National Association of Insurance Commissioners (NAIC) to design 10 standard benefit packages, and prohibited insurance companies from selling anything else to supplement Medicare after July 1992. States were required to adopt new laws to implement the requirements for these 10 newly standardized benefit packages, originally labeled Medigap Plans A through J. Subsequent federal legislation added 2 high deductible riders to 2 of the Medigap plans, F and J, and later added 2 additional benefit packages: Medigap plans K and L, increasing the total number of Medigap plans to 12 benefit packages plus 2 riders. Except for K and L, these are the plans that have been sold for the last 16 years. See our section on Medigap policies and a chart of these 12 plans for more information.
2. What changes did Congress make to the standardized Medigap packages?
The changes are as follows:
- Dropped Medigap Plans E, H, I, and J, including high deductible J
- Removed the Home Recovery and Preventive Care benefits from all plans
- Increased the benefit for Excess Charges in Plan G to 100%
- Added 2 new Medigap benefit packages (plans M and N)
- Added a Hospice benefit to the basic benefits of plans A through G
3. When will these changes take place?
These changes will only be made to new policies that are sold on or after June 1, 2010. They will not affect Medigap policies that people already have or ones that they buy before 6/1/10. No one needs to replace their existing coverage unless it no longer meets their needs.
4. What happens to the standardized Medigap plans people already have, or buy before 6/1/10?
Nothing happens to these plans. Medigap policies are guaranteed renewable as long as the premium is paid.
If you have one of these plans you can keep it as long as you continue to pay the premium. The benefit package will remain the same even if it includes one of the benefits removed from the new plans, or you have a Medigap plan that was dropped from the new constellation of standardized plans.
5. Will the premiums be lower for these new Medigap plans?
Some companies may price these new plans lower to encourage people to buy them, but it is too early to know how much each insurance company will charge for these new products. These new policies, like all Medigap policies, will be priced in the same way these policies are priced today. See our Medigap Premiums section for more information on attained age, issue age, and community rated premium pricing.
6. Do I need to buy one of the new Medigap policies?
No. If you are satisfied with your current coverage you can keep it for as long as you continue to pay the premium. You should only replace your Medigap policy if the premiums are too high or the benefits no longer meet your needs. You should not buy a Medigap policy if you are in a Medicare Advantage plan, or planning to enroll in one. If you are covered by Medi-Cal you do not need a Medigap policy and in most cases it is illegal to sell you one.
7. Do companies have to sell me one of the new standardized Medigap plans that are replacing the old plans?
No, you have no new right to buy one of these plans. However, if you are just signing up for Medicare Part B, or you lost other coverage that would ordinarily entitle you to a Medigap policy without health screening and a new waiting period, then you will be able to choose one of the new policies if the time limit in which you can apply under existing law is close to, or after 6/1/10. See our section Your Rights to Buy a Medigap Policy for more information on when you can buy a policy without a health screening and waiting period.
8. What is the “Birthday rule” and how does it apply to the new Medigap policies?
If you already have a Medigap policy, you have the right to replace it without a health screening or a new waiting period for 60 days each year following your birthday. However, you are only entitled to a Medigap that has the same or less benefits than the Medigap plan you have now. For instance, if you have a Medigap Plan B you can replace it with another Plan B or Plan A, but you can’t move up to a Plan C or Plan F. Because the new standardized plans are different than those people have today, the old standardized plans can be replaced as follows during the 60 days following your birthday beginning June 1, 2010:
- Plans A, B, C, D, or F can all be replaced with the same lettered plan
- Plans E and H can be replaced with Plan D
- Plan I can be replaced with Plan G
- Plan J can be replaced with Plan F
- High deductible plans F and J can only be replaced with high deductible Plan F
9. What are the benefit differences in the new Medigap policies?
The benefit differences are as follows:
- None of the new policies will include a benefit for preventive care because Medicare now covers many of the preventive services that were covered under this benefit.
- None of the new policies include a benefit for home recovery. This was a complicated benefit that few people ever used.
- The basic benefits of Medigap plans A through G include an additional benefit for the out-of-pocket costs imposed by the Medicare Hospice benefit. (Medigap plans K and L already had this benefit included, and the 2 new Medigap plans, M and N, also include this benefit.)
- Plans M and N each impose some unique cost sharing as part of the plan benefits as follows:
- Plan M only pays 50% of the Part A deductible
- Plan N requires a $20 copayment for Part B office visits and up to a $50 fee for emergency room care when a person was not admitted to the hospital
10. Will insurance agents know about these changes and be able to explain them to me?
Once an agent is issued a license to sell insurance in California, he or she is not required to take any further training on Medigap insurance. However, most insurance companies will provide information to their agents about the new policies they have available under the new rules so that agents will sell their products. There is, however, no reason for you to replace your policy unless it no longer meets your needs or the premium becomes too expensive.
11. Were there any other changes in addition to the new benefit packages?
Yes. Medicare beneficiaries have a few additional rights to buy a Medigap policy without health screening and a new waiting period, generally known as “guaranteed issue” rights.
For a summary of these changes, see our documents:
12. Where can I get help?
You can contact your free, local Health Insurance Counseling & Advocacy Program (HICAP) by calling toll-free 1-800-434-0222 for individual counseling and assistance with Medigap, the coming plan changes, and /or other Medicare and health insurance related questions.