Expanding Medigap access

What is Medigap?

Medigap plans are also known as Medicare supplemental insurance plans. Traditional Medicare (Part A and Part B) includes substantial cost-sharing responsibilities (deductibles, copays, and coinsurance) for beneficiaries and does not limit out-of-pocket costs. Medigap plans are standardized, private insurance plans designed to help beneficiaries pay their Medicare out-of-pocket costs. Some Medigap plans also limit annual out-of-pocket costs.

Individuals on Medicare Advantage plans (Part C) or who have other supplemental insurance, such as employer-based coverage, are not eligible to purchase Medigap plans.

Why is Medigap access a problem?

The Affordable Care Act (ACA) prohibits ‘medical underwriting,’ which is the practice of basing policy premiums or denying coverage altogether because of pre-existing conditions. However, Medigap plans are not covered by ACA. Outside of certain very specific windows set by federal minimum guidelines, Medigap plans can use a beneficiary’s age, health, gender, marital status, smoking history, and zipcode to set premiums or deny coverage. For many people, the only time they can enroll in a Medigap plan without being subject to medical underwriting is within the first six months of their initial enrollment in Medicare Part B after turning 65.

Because Medigap plans are regulated by states, some states have prohibited medical underwriting in additional situations. For example, Massachusetts mandates an open enrollment period without medical underwriting for all Medigap plans every year.

However, many individuals are effectively boxed out of Medigap coverage if their states have not enacted additional medical underwriting protections. This includes beneficiaries who:

• Are under 65 years of age but do not qualify for Medicaid.
• Are 65+ and miss the one-time, 6-month open enrollment period after enrolling in Medicare Part B.
• Switch from a Medicare Advantage plan to traditional Medicare after their first year of Medicare eligibility.
• Want to switch from one Medigap plan to another.

While medical underwriting in Medigap plans is an issue for many, beneficiaries who are under 65 years of age are hit particularly hard. These beneficiaries receive Medicare because they meet the requirements to receive Social Security disability benefits. By definition, they have significant pre-existing medical conditions. Because of medical underwriting, there are no Medigap plans available to beneficiaries under 65 in many states, while in others, Medigap plans for this population are very expensive. Furthermore, federal rules prohibit Medicare beneficiaries from receiving copay assistance to offset medication costs.

What is IDF doing?

The Immune Deficiency Foundation supports the Close the Medigap Act of 2023 (H.R. 35), which would prohibit medical underwriting at all times in Medigap plans, bringing them into line with ACA-regulated health insurance plans.

The foundation also supports state legislation that prohibits Medigap medical underwriting in additional situations, particularly for those on Medicare under age 65.