WHAT TO DO IF YOU LOSE MEDICARE SUPPLEMENT COVERAGE UNEXPECTEDLY?
When you apply for a Medigap plan, you likely expect to keep it forever. There are certain situations, however, in which you might have to choose a new plan.
You may have heard that Medicare Supplement Plan F and Plan C are no longer available to new enrollees, starting January 1, 2020. While it's uncommon for Plan options to be phased out like that, it does happen. Fortunately, if you were enrolled into one of these plans before 2020, you are grandfathered in and can keep your coverage.
There are other scenarios that result in loss of coverage though. While it’s rare for someone to lose coverage from any Medigap plan, it is possible. If you find yourself in that position, you’ll need to know your rights and responsibilities. Since you have a limited time frame during which to find alternative coverage, you’ll also need to act quickly.
WHEN CAN MEDICARE SUPPLEMENT INSURANCE GET CANCELED?
There’s a short list of situations in which you might lose your Medicare Supplement insurance coverage. If this happens, you have remedies available, so you don’t incur major healthcare expenses.
The following are the most common reasons for someone to lose their coverage.
PROVIDING FALSE INFORMATION
If, when applying for Medicare Supplement insurance, you provide false information to the insurance company, the insurance carrier can void your plan. For instance, if you’re not truthful about your tobacco usage or if you don’t disclose certain information about your health, the insurance company might decide to retroactively cancel your Medicare Supplement insurance policy. This is called rescission and places you in a position as if you never had coverage do begin with.
Fortunately, it’s easy to avoid this problem. When you fill out your application, make sure it’s completely accurate to the best of your knowledge. If your information changes, contact your insurance carrier to let them know so they can update your records.
Remember that omissions can get you in trouble, too. Being honest about your personal information will protect you in the long run so you can keep your insurance coverage.
BANKRUPTCY OR INSOLVENCY
An insurance company is a business just like any other. Occasionally, these companies go out of business because they declare bankruptcy or become insolvent. Should that happen, you’ll enjoy guaranteed-issue rights, which means that you can apply for another policy for 63 days after your coverage ends.
If you wait longer than 63 days, you could find yourself subject to underwriting. This means that the insurance company will take into account any pre-existing conditions or other health concerns. Research other Medicare Supplement insurance options as soon as you know your insurance company is going out of business.
FAILURE TO PAY
To keep your Medicare Supplement Plan F policy active, you must pay your monthly premium on time and in full. If you don’t, your insurance company can cancel your policy. Most insurance companies send delinquent notices to let you know that your coverage is in jeopardy.
Fortunately, many insurance companies will work with customers who encounter financial hardship. Instead of ignoring the problem, call your insurance carrier to discuss your options. Provide evidence of any hardship that might temporarily prevent you from paying your premium. You might be able to work out a special payment plan until you get your finances back under control.
NO GUARANTEED RENEWAL
When you purchase a Medigap policy you still have to pay the monthly Medicare Part B premium in addition to the premium you pay to the Medigap insurance company. As long as you pay your premiums, your Medigap policy is guaranteed renewable. This means it's automatically renewed each year. Your coverage continues year-after-year as long as you pay your premium.
In some states, insurance companies may refuse to renew a Medigap policy bought before 1992. This is because insurance companies can only sell you a “standardized” Medigap policy, and standardized policies weren't introduced until 1992.
In this situation, you have guaranteed issue rights. You can buy another Medigap plan without penalty. You’ll need to hurry, though, because you have 63 days to apply for a new insurance policy without underwriting or the risk of denial.
WHAT HAPPENS WHEN MEDIGAP PLAN F GOES AWAY?
The Medicare Access and CHIP Reauthorization Act of 2015 states that, after January 1, 2020, insurance companies can no longer offer any Medigap plan that covers the Original Medicare Part B deductible. On that date, insurance carriers cannot offer Medigap plans C and F to new enrollees.
If you already have Medicare Supplement Plan F, you can keep it. The act only affects new Original Medicare enrollees.
While the elimination of Medigap Plan F might seem like a bad thing, you can find a very close alternative in Medigap Plan G. The two plans are identical except that Plan G doesn’t cover the Part B deductible. It’s also less expensive.
DO YOU HAVE GUARANTEED-ISSUE RIGHTS?
If you lose Medicare Supplement coverage, you typically have guaranteed-issue rights as long as the loss wasn’t your fault. You can’t control whether an insurance company goes bankrupt or doesn’t have to abide by guaranteed renewal, so Medicare doesn’t punish beneficiaries in those situations.
However, if you lose your Medicare Supplement insurance because you didn’t pay your premium or because you provided false information, you probably won’t have guaranteed-issue rights. You can still apply for a new Medigap plan, but that insurance carrier can deny your coverage or charge you a greater premium.
While Medicare Supplement Plan F was discontinued in 2020, your plan should not get canceled except in rare circumstances. If it happens, you have alternatives to regain coverage and avoid out-of-pocket healthcare costs.
Are you about to turn 65? If so, it’s time to start shopping for the Medicare Supplement insurance that will best fit your needs. Conduct some comparison shopping via the Medigap Quoter to get insurance quotes in your area.