Millions of Americans are enrolled in Medicare coverage, but you likely already know that Medicare does not pay for everything. Even when you receive a service that is covered by Medicare, you will still owe some money out of your pocket. These out-of-pocket expenses come in the form of deductibles, copays, and coinsurance payments. Many people choose to purchase a Medicare supplement plan to help offset these out-of-pocket costs. Enrolling in the right Medigap plan can save you money on your overall health care expenses, but when should you sign up? The best time to purchase a Medigap insurance plan is during your open enrollment period. Keep reading, and we will tell you when your open enrollment period starts, how long it lasts, and why you should sign up during that time.
When Is The Open Enrollment Period For Medicare Supplement Plans?
There are specific timeframes around the open enrollment period for Medicare supplement plans. Generally, each individual who qualifies for Medicare only has one open enrollment period. There are some narrow exceptions that we will discuss later in this article, but you typically only get one shot to sign up during this period.
Your Medigap open enrollment period begins on the first day of the month in which you first receive Medicare Part B coverage and you are age 65 or older. So, if you are already 65 when you sign up for Part B coverage, your open enrollment period will begin the month in which your Part B coverage starts. If you are under 65 and are already receiving Part B, your open enrollment will begin the month in which you turn 65. So, when does open enrollment end? It lasts for six months, so it will end on the last day of the sixth month after it begins.
Generally, Medigap policies are not sold to anyone under age 65. Some state laws still require insurance companies to sell supplement plans to individuals under 65, but your premium will likely be much higher than if you sign up during your open enrollment period. For example, you might qualify for Medicare Part A and Part B because you have end-stage renal disease (ESRD) at age 40. Even though you could purchase a Medigap plan once you enroll in Medicare, you are not guaranteed the lowest premiums. You likely will have limited plan options as well.
Outside this open enrollment period, you do not have a guaranteed issue right in most cases. This means that the private insurance companies who manage Medigap policies are not required to sell you a policy. They can deny your application for coverage. This also means that you will need to go through the full medical underwriting process before your policy is issued. You might be charged a higher monthly premium due to pre-existing conditions or other health issues. This is why it is critical to sign up for Medigap during your open enrollment if you wish to purchase it.
When To Sign Up For Medicare Supplement Insurance
As previously mentioned, you should always sign up for Medicare supplement insurance during your open enrollment period. The reason for this is simple. If you sign up during your open enrollment period, you are not required to go through full medical underwriting. In fact, you are not even required to answer any health questions. You can sign up for any Medigap policy available to you, and you will pay the lowest available premium. So, even if you have pre-existing health conditions, you will pay the same monthly premium as a person who is in excellent health.
If you miss your six-month open enrollment period, you can still sign up for Medigap coverage at any time during the year. However, you can expect to pay more for it, and you might even get denied coverage. This is similar to missing your Medicare Part B initial enrollment period. Although there are no late enrollment penalties with Medigap, you will be paying higher premiums. Those higher premiums can add up to a lot of extra money over your lifetime.
Since getting signed up for Medigap during the open enrollment period is crucial, you must quickly decide whether you will purchase a Medigap plan or a Medicare Advantage plan. You cannot be enrolled in both at the same time. If you choose to enroll in Original Medicare, then you might consider purchasing a Medigap plan with it. However, some people choose to enroll in a Medicare Advantage plan instead. If you choose an Advantage plan, you can switch to Medigap coverage later. However, you will still need to go through the underwriting process if you sign up outside your open enrollment period unless you decide to switch to Medigap within the first year of signing up for Medicare Advantage.
Getting More Than One Open Enrollment Period
Many people wonder whether it is possible to get more than one Medigap open enrollment period. The answer is yes! However, there are only a couple of situations that will get you more than one open enrollment period. The first situation arises for retirees who decide to return to work for some period of time. If you retire and enroll in Medicare Part B coverage at age 65, your first open enrollment period will start. You might choose to return to work where you have health coverage through your employer’s group health plan. It is likely that you would then drop your Medicare Part B coverage (even if you decided to keep your Medicare Part A coverage). When you retire the second time and re-enroll in Part B, you will get a second open enrollment period.
The other way to get a second open enrollment is for those individuals with disabilities who receive Social Security disability insurance (SSDI) benefits. Receiving disability benefits can qualify you for two open enrollment periods. The first would begin when your Part B benefits start while you are under age 65. The second open enrollment would start when you turn 65 (as long as you are still enrolled in Medicare Part B). Remember that you do not have to sign up for Medigap simply because you have an open enrollment period. Many people under 65 who meet these requirements and qualify for two open enrollment periods choose to decline Medigap while under age 65.
Many people on SSDI benefits under age 65 decline Medigap because there are very few plans available to those individuals. Only a few states require plans to be sold to anyone under 65, so there are not many choices available. Remember that you must live within the plan’s service area to be eligible to purchase a specific plan. Next, Federal law does not provide protections for anyone under 65 from the underwriting process. This means that you will likely pay extremely high premiums, especially if you have health problems. Since you are already receiving disability, most insurance companies will consider your health status to be risky. This means they will charge you high premiums for Medigap insurance coverage.
Guaranteed Issue Rights Explained
There are many situations in which you might have a Medicare guaranteed issue right. When you have guaranteed issue rights, this means that an insurance company that sells Medigap coverage must sell you a policy. It also means that they must cover all your pre-existing health conditions, and the company cannot charge you more for the policy because of your past or present conditions. You have a guaranteed issue right during your open enrollment period. There are also several other ways that you can get this right.
First, if you have a Medicare Advantage plan and that plan leaves the Medicare program, you can sign up for Medigap with a guaranteed issue right. Similarly, you have the right if your Medicare Advantage plan stops providing service in your area or you move out of your plan’s service area. Next, you are guaranteed Medigap coverage if you have both Original Medicare and an employer group health plan, and that group plan ends.
You will also receive a guaranteed issue right if you sign up for Medicare SELECT and you later move out of the SELECT plan’s service area. The next situation allows you to try Medicare Advantage, but you can come back to Medigap if it doesn’t work out. So, if you leave Medigap to try a Medicare Advantage plan but come back to Medigap within 12 months, you will have a guaranteed issue right.
Sometimes Medigap insurance companies go out of business. After all, they are private companies. You will not be penalized if your company goes out of business and you lose coverage. If that happens, you will have a guaranteed issue right to purchase another policy with another company. To take things a step further — if you lose Medigap coverage for any reason through no fault of your own, you will have a guaranteed issue right.
Lastly, if you leave your Medigap or Medicare Advantage plan because the insurance company is not following the Medicare rules, you will have a guaranteed issue right. If the company misled you, the same will apply. You should know that you have 63 calendar days from the day your coverage ends to sign up for a new policy in this case. As long as you sign up for your new policy during this timeframe, you have a guaranteed issue right to purchase a new policy.
Choosing The Right Medicare Supplement Plan
Many first-time Medicare beneficiaries wonder which Medicare supplement plan is right for them. You can find and compare plans easily using Medicare’s plan finder tool. You might also choose to seek the advice of a licensed insurance agent in your area who can help you find the best plan. However, here are the major factors that you need to consider. First, you should know that most Medigap plans are standardized across states. This means that Plan A in one state will provide the same coverage as Plan A in another state. This can help when comparing different plans from different companies.
Next, you should consider your overall health care expenses. The coverage details vary greatly between different supplemental coverage plans. Some cover most of your out-of-pocket expenses like copays and coinsurance payments at 100%, while others cover those expenses at a lower percentage. Some plans provide coverage for foreign medical care, while others do not.
You should look closely at the coverage details of each plan to determine which one fits your needs. Make sure you understand that plans with more benefits usually come with higher premiums. So, paying a higher premium for coverage that you do not need does not make financial sense. You should find the right balance of coverage and premium price. The average cost of a Medicare supplement plan ranges anywhere from $60 to $120 per month. Some plans are as little as $30 to $40 per month, while others can exceed $150 per month. Note that Plans C and F are no longer offered to new enrollees. Both Plan F and Plan C cover your Medicare Part B deductible, and the law no longer allows Medigap plans to cover this deductible for new enrollees. Because of this change, Plan G is now considered by most to offer the most extensive coverage available.
Remember that most people who are enrolled in Original Medicare that purchase a Medicare supplement health insurance plan also purchase a Medicare Part D prescription drug plan. While these plans are not mandatory, they provide many great prescription drug benefits. Your Medigap plan will generally not help cover any prescription drug costs, but most Part D prescription drug coverage plans use a cost-sharing model that can save you a lot of money on your medications.
Enrolling In Medigap Outside Open Enrollment
So, what happens if you decide to enroll in a Medigap plan outside of Medigap’s open enrollment period? If you do not have guaranteed issue rights, the insurance company will likely require that you go through full medical underwriting. This means that you must answer questions about current and previous health conditions. The outcome of the underwriting process could mean that you pay higher premiums or that your coverage is completely denied. Remember that you can get guaranteed issue rights by meeting any of the criteria mentioned previously in this article.
Unlike some Medicare plans, you can sign up for Medigap at any time during the year. There is no need to wait until the annual enrollment period to sign up for Medigap. Plus, if you live in New York or Connecticut, you can sign up at any time without going through underwriting. Those states essentially have an unlimited open enrollment period. This means that you can sign up for Medigap at any time and not be subject to medical underwriting or health questioning.
The Bottom Line
The open enrollment period for Medicare supplement insurance begins the first month in which you are enrolled in Medicare Part B and are age 65. During your open enrollment period, you have guaranteed issue rights. This means that you can purchase any Medigap policy that is available in your area, and the insurance company cannot charge you more because of any pre-existing health conditions. Failure to sign up during open enrollment means that you might have to go through full medical underwriting, which could cost you more in higher premiums. Under certain conditions, you might still have guaranteed issue rights or even qualify for two open enrollment periods.
Frequently Asked Questions
Can Medicare supplement plans be purchased any time of the year?
Yes, you can purchase Medicare supplement plans any time of the year. However, buying a plan outside of your open enrollment period might cost you more. Unless you qualify for guaranteed issue rights due to some special circumstance, you will be subject to full medical underwriting in most states when you purchase Medigap outside of open enrollment. This means that you might pay higher premiums due to pre-existing conditions, and your application for insurance could be denied altogether.
Can I change Medicare supplement plans anytime?
Yes, you can change your Medicare supplement plan at any time. In some situations, you might be able to change plans without going through the underwriting process. However, if you decide to change plans simply because you no longer like your plan, you will likely not have guaranteed issue rights. This means that your application will go through the underwriting process, and you will pay a higher premium.
Can I purchase a Medicare supplement plan with a Medicare Advantage plan?
No, you cannot purchase both a Medicare supplement plan and a Medicare Advantage plan. These two types of plans are exclusive from each other. Similarly, you cannot purchase a Medicare supplement plan if you are enrolled in both Medicare and Medicaid. You can, however, switch from a Medicare Advantage plan to a Medicare supplement plan or vice versa. Some situations allow you to change from one to the other with no penalty; however, you will generally not have guaranteed issue rights if you decide to switch from one plan to the other.
What is the penalty for not enrolling in a Medicare supplement plan?
There is technically no penalty for not enrolling in a Medicare supplement plan. However, if you decide later to enroll in a plan, you could end up paying substantially higher monthly premiums. If you enroll in a plan during your open enrollment period, you can purchase any plan available in your area for the lowest premium amount. However, waiting until later means that the insurance company can perform full medical underwriting on your application. Any current or previous health conditions can cause the insurance company to charge you more for coverage or even deny your coverage completely.