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A recent Bloomberg News article highlighted an important issue for Medicare beneficiaries: limited access to Medigap plans. The Center for Medicare Advocacy has long advocated for improved access to Medigap plans for all Medicare beneficiaries.

Medigap plans are private plans that provide supplemental health insurance for beneficiaries in Traditional Medicare to assist with out-of-pocket medical expenses, like co-insurance.

The article, Sticker Shock as Sicker Patients Dump Medicare Advantage Plans (April 24, 2019), discussed that sicker beneficiaries are more likely to want to disenroll from Medicare Advantage, but often face concerning realities when disenrolling from private Medicare Advantage plans to enroll in traditional Medicare.  Key among them: most people will not have access to supplemental plans (Medigap) that assist with out-of-pocket costs, leading to potentially huge health care costs. The article outlined this issue:

"Patients leaving Medicare Advantage for better access to preferred doctors and higher cost medications are learning they may have missed their window to purchase supplemental Medigap insurance that covers out-of-pocket expenses in traditional fee-for-service Medicare. . . .because federal law and 46 states allow Medigap insurers to deny coverage, charge more depending on health status, or impose a six-month waiting period to cover pre-existing conditions if Medicare enrollees buy the coverage outside their six-month enrollment period window. Similar restrictions apply if a beneficiary’s ‘guaranteed issue’ rights—which require Medigap insurers to provide coverage—aren’t in effect."

Again, this limitation on Medigap plan access is particularly concerning given the well documented fact that sicker enrollees tend to disenroll from MA plans at a higher rate, likely because Traditional Medicare may serve their health care needs better than their MA plan. One reason may be that an MA plan, like all private health insurance, has a set network of providers, as opposed to traditional Medicare, which provides access to all providers who accept Medicare (according to a Kaiser Family Foundation report in October 2015, more than 9 out of 10 primary care physicians accept Medicare).

This trend of sicker enrollees disenrolling from MA at higher rates, coupled with the fact that CMS has been increasingly steering beneficiaries toward enrolling in MA over traditional Medicare, can result in a rude awakening for beneficiaries when they try to disenroll from their MA plan and enroll in traditional Medicare and are stuck with higher out-of-pocket costs without access to a Medigap plan.

This limitation on Medigap access is a central piece of the decision-making process when beneficiaries make Medicare enrollment decisions. It is crucial that beneficiaries understand this reality when weighing whether to enroll in MA or traditional Medicare.

April 25, 2019 – K. Kertesz

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