Over half of current Medicare Beneficiaries receive benefits through Medicare Part C, an alternative to the Original Medicare program. Under Medicare Part C, Beneficiaries enroll in health and drug plans offered by private insurance companies contracted with the federal government to provide Medicare benefits on a year-to-year basis. Part C plans (known as Medicare Advantage) are governed by enrollment period rules that dictate when initial sign-up, plan changes, and disenrollments can be made.
Medicare Advantage plans sometimes are confused with Medicare
Supplement policies widely available to Medicare Beneficiaries. Medicare Supplement also is known as Medigap,
as it serves to fill in gaps in medical benefits under the Original Medicare
program design. Beneficiaries on
Original Medicare (with or without Medigap) optionally can obtain drug coverage
via a Standalone Medicare Part D Prescription Drug Plan. Federal rules govern enrollment timeframes
for Medicare Part D, like Medicare Advantage.
A major difference between Medicare Advantage and Medigap is
that in most locations, Medicare Advantage plans with rich benefits often come
with a $0 plan premium (i.e., no additional premium beyond the Medicare Part B
monthly premium), unlike Medicare Supplement policies that always have a
monthly premium (and for those choosing to add a Standalone Medicare Part D plan, that premium is
in addition).
With Medicare Advantage including Part D benefits and
many extras not covered by Medicare such as dental, vision, hearing, fitness
benefits, transportation to the doctor, over-the-counter allowances, and
sometimes an allowance for food and utilities, it can be surprising to learn that
so many plans have a $0 premium. Some Medicare
Advantage plans even refund a portion of the Medicare Part B premium to the
Beneficiary. Finally, there is no
medical underwriting and pre-existing medical conditions are covered. This has led some people to conclude that
“Medicare Advantage must be too good to be true.”
For those who are skeptical (often people who already have
Medigap or plan to buy it at Age 65), there is some good news, namely, Medicare
Beneficiaries are provided special protection to try out Medicare Advantage on
a trial basis. There are two Federal Trial
Periods, both of which provide Guaranteed Issue Rights to buy a Medigap policy if
dissatisfied with Medicare Advantage during the first year.
These trial rights are meaningful, as Medigap applicants generally face medical underwriting once the open enrollment period (six months following sign-up for Medicare Part B) has ended. Medigap underwriting assesses medical history and can impose higher premiums or deny coverage completely.
State laws, such as in Maine and Wisconsin, provide additional
protection for Medicare Beneficiaries wishing to try Medicare Advantage for the first time. These rights
are described below following the Federal Trial Periods.
Medicare Advantage Trial Periods: Returning to
Original Medicare
Medicare Advantage trial periods are types of Special Enrollment Periods (SEPs) that allow Medicare Beneficiaries to disenroll from a Medicare Advantage plan outside of the Annual Election Period (AEP) that runs each year from October 15th to December 7th (disenrollments during AEP normally take effect the first day of the following year). If disenrolling from a Medicare Advantage plan
that includes prescription drug coverage, a SEP is granted to enroll in a Standalone Medicare Part D drug plan.
Along with allowing disenrollment from Medicare Advantage outside of standard election periods, the Federal Trial Periods grant Guaranteed Issue Rights for the Beneficiary to purchase a Medigap policy. The government currently specifies two distinct SEPs for this purpose.
I. Medicare Advantage Special Enrollment Period at Age 65 – “SEP 65” (Federal Trial Period)
The “SEP 65” is for Beneficiaries who enrolled in a Medicare Advantage plan for the first time at Age 65 during their Medicare Initial Enrollment Period (IEP). Those who qualify can disenroll from Medicare Advantage and return to Original Medicare within the first 12 months of coverage. If the Medicare Advantage plan included Part D coverage, a Part D SEP may be used to enroll in a Standalone Part D plan. Medicare Advantage disenrollment takes effect on the 1st of the month following receipt of the request by the plan. Beneficiaries using this SEP 65 have a Guaranteed Issue Right to purchase any Medigap plan available to them, regardless of their current health status or any adverse medical history. This means insurers cannot deny coverage or increase premiums based upon medical history. Medigap coverage must be purchased within 63 days after leaving Medicare Advantage (Beneficiaries also can purchase the Medigap plan starting 60 days before Medicare Advantage coverage ends).
II. Medicare Advantage Special Enrollment Period – “Trial Period SEP” (Federal Trial Period)
The “Trial Period SEP” allows Beneficiaries of any age enrolling in a Medicare Advantage plan for the first time when dropping a Medigap policy, the right to disenroll from Medicare Advantage and return to Original Medicare within the first 12 months of coverage. If the Medicare Advantage plan included drug coverage, a Part D SEP may be used to enroll in a Standalone Part D plan. Medicare Advantage disenrollment takes effect on the 1st of the month following receipt of the request by the plan. Beneficiaries using this Trial Period SEP have a Guaranteed Issue Right to purchase their prior Medigap plan, regardless of current health status or medical history. If the prior plan is no longer available for sale, any available Medigap Plan A, B, C, D, F, G, K, or L may be selected (except that Plans C and F are available only to Medicare Beneficiaries who turned age 65 or became first eligible for Medicare because of age, disability or end-stage renal sickness prior to January 1, 2020).
III. Maine “State Trial Period” (specific to Maine, extends period to three years)
Maine mandates that Beneficiaries who enroll in Medicare
Advantage starting at the same time as initial enrollment into Medicare Part B
and then switch back to Original Medicare within three years, are given a Guaranteed
Issue Right to buy any available Medicare Supplement plan during the 90-day
period after Medicare Advantage coverage ends. Without this Guaranteed Issue right,
Beneficiaries must health-qualify for Medigap coverage once their Medicare Part
B has been effective for more than six months.
While Maine’s Trial Period SEP provides additional rights to
buy Medigap without health underwriting, it does not change Federal rules that
allow a return to the Original Medicare program only at certain times.
Additionally, Maine mandates that Beneficiaries with an existing Medicare Supplement policy who terminate that plan to enroll in Medicare Advantage for the first time, and then return to the Original Medicare program within three years, use their Guaranteed Issue Right to buy an equivalent or less comprehensive Medicare Supplement policy available to them (Beneficiaries must apply within 90 days).
IV. Wisconsin “State Trial Period” (Guaranteed Issue Right – Dropping Employer Coverage)
Wisconsin offers yet another protection for Medicare Beneficiaries.
If a Beneficiary drops an
employer-sponsored group health plan to enroll in a Medicare Advantage plan for
the first time, the Beneficiary is given a Guaranteed Issue Right to
purchase a Medicare Supplement policy when the Beneficiary disenrolls from
Medicare Advantage during the first 12 months (this is the
Wisconsin Trial Period right). To
disenroll from Medicare Advantage, Beneficiaries must follow Federal enrollment
period rules to switch back to Original Medicare and optionally enroll in a
Standalone Part D plan.
Summary
The Federal government has two Trial Periods for Medicare Beneficiaries wishing to try a Medicare Advantage plan for the first time without losing eligibility for Guaranteed Issue Medigap coverage. Beneficiaries can use a Trial Period once, for up to one year, to determine if a Medicare Advantage plan is suitable. Maine has adopted rules extending the one-year trial period to three years, and Wisconsin grants Medicare Beneficiaries an additional Guaranteed Issue Right to buy a Medigap plan when terminating an employer-sponsored group health plan to enroll in Medicare Advantage for the first time.
Until next time,
President of AH Insurance Services, Inc.
