While many people haven’t heard of Medicare Cost plans, those who have often see them as the “best of both worlds”. Cost plans are basically an HMO with the option to opt out of the plan’s limited network of providers and see any doctor using Original fee-for-service Medicare. They are like an HMO with an “escape clause”.
This has been a great coverage option for a fraction of our country’s beneficiaries, 612,054 to be exact in 2017, and only 1,157 of these beneficiaries are in California, according to Kaiser Family Foundation. Yet, due to statutory changes, the Centers for Medicare and Medicaid Services (CMS) is terminating these old plans this year by December 31, 2018. One exception is that they will allow cost plans to remain in areas with fewer than two Medicare Advantage plan options, so long as plans meet certain minimum enrollment criteria. While relatively few people are enrolled in cost plans, those who are need to be aware of the change and of their rights to additional coverage.
Affected beneficiaries should have received notice from their cost plans in early September about the upcoming termination. There has been some confusion with these notices, so below is a summary of people’s rights and options:
- Cost plan enrollees who are in a terminating plan that is affiliated with a Medicare Advantage (MA) plan will be migrated into the affiliated Medicare Advantage plan as of January 1, 2019, unless they make another choice before then.
- Enrollees in a terminating cost plan can go back to Original Medicare and have a guaranteed issue right to purchase a Medigap policy. Under California law, they have this right for 123 days after their coverage terminates, regardless of their age. (Note this is 60 days longer than the federal right of 63 days.) This means affected California beneficiaries have until May 3, 2019 to buy a Medigap policy under their guaranteed issue right. However, any person who is both younger than 65 and who has ESRD is NOT eligible for this guaranteed issue right.Note: Medigaps do not have Part D drug coverage. Therefore people returning to Original Medicare and a Medigap also require enrolling in a Part D prescription drug plan for their drug coverage.
- Enrollees in a terminating cost plan who have end stage renal disease (ESRD) can enroll into a Medicare Advantage plan with the same sponsor as long as there is no break in coverage.
- If a cost plan is converting from a cost plan to a Medicare Advantage plan, enrollees with ESRD can enroll into that converted MA plan as long as there is no break in coverage.
If no choice is made in #3 or #4, the enrollee will default back into Original fee-for-service Medicare, but they will NOT have a corresponding right to get a Medigap policy. They will need to enroll in a Part D plan for drug coverage. In both cases their enrollment request must be received by 12/31/18 for an effective enrollment date of no later than 1/1/19.
Note: Options for people with ESRD who are in terminating cost plans are different than CMS’ guidance for beneficiaries with ESRD enrolled in a non-renewing MA plan. In a non-renewing MA plan beneficiaries with ESRD can enroll into an MA plan from a different MA carrier.
If you have any questions or require assistance regarding cost plan terminations, please contact your local Health Insurance Counseling and Advocacy Program (HICAP). They provide free one-on-one counseling and assistance with Medicare and other health insurance related issues.
- For more information on cost plans, see the article: Medicare Advantage vs. Medicare Cost Plans: What’s the Difference?
- For more guidance on cost plan enrollment and disenrollment, see CMS’ Medicare Managed Care Manual, Chapter 17 (PDF).
- For more information on cost plan conversions to Medicare Advantage plans, and corresponding rights for people with ESRD, and a Special Enrollment Period (SEP) from Dec 8 to the last day in February in this situation, see a 2015 CMS memo regarding cost plan conversions.