Is My Parent Eligible for a Medigap Insurance Policy?

Quick summary

A medigap insurance policy covers many medical costs that your parent's Medicare insurance may not pay for. If your parent is nearing or already at age 65, she probably knows that Medicare ends up paying for only about half of all medical costs for seniors. Part of this slack is taken up by Medicare Part D prescription drug plans,which pay some of the high cost of medicines. And some people fill coverage gaps by leaving traditional Medicare and joining a Medicare Part C Medicare Advantage managed care plan. Your parent may be part of the majority, though, that stays in traditional Medicare Part A and Part B. If so, you may want to investigate her eligibility to buy a medigap supplemental insurance policy, with a dozen types of plans to choose from.

The problem is that not everyone is allowed to buy any medigap policy, any time. Whether your parent can buy a particular policy, and under what terms, depends on when she applies and what other coverage she's had. Understanding these restrictions can help your parent take full advantage of the medigap policies available to her.

What is medigap insurance?

Medigap insurance policies fill part of the gaps in medical costs that Medicare Part A and Medicare Part B don't pay. The types of medigap policies that can be sold are regulated by the federal government, but the policies themselves are sold by private insurance companies. If your parent is enrolled in Medicare Part A and Part B, she'll find that both have deductibles, copayments, and uncovered expenses that she's personally responsible for. A medigap policy pays some or all of these costs.

If your parent is enrolled in a Medicare Part C "Medicare Advantage" managed care plan and wants to keep that plan, she does not need a medigap insurance policy.

What medigap insurance policies is my parent eligible for at age 65?

Most people enroll in Medicare at age 65. Within six months of first signing up for Medicare Part B, your parent has "guaranteed enrollment" in a medigap policy. This means that she may buy any medigap policy offered in the state where she lives, in any of 12 plan categories. An insurance company must sell her the policy of her choice without any medical screening, regardless of her medical history. The company isn't permitted to place any extra limits on the coverage offered. And your parent must be offered the policy for the same monthly premium as everyone else buying the same policy when first eligible for Medicare.

Can my parent buy a medigap insurance policy if she joined a managed care plan?

If your parent joined a Medicare Part C "Medicare Advantage" managed care planwhen first eligible for Medicare at age 65 but leaves that plan within a year, she can buy any medigap policy offered in her state, without any medical screening, limits on coverage, or higher premiums. In other words, she returns to the same position she would have been in had she bought a policy within the first six months of turning 65.

Is my parent eligible for a medigap insurance policy if she's been dropped by a managed care plan?

With unfortunate frequency over the past few years, some Medicare Part C Medicare Advantage managed care plans have decided to quit doing business in certain geographic areas. When they do, they're allowed to simply drop all the people who were enrolled in the plan. If that happens to your parent, she has within 63 days of the end of her managed care plan to enroll in any medigap Plan A, B, C, or F policy sold in her state. She's guaranteed enrollment in any one of these policies she chooses, without any medical screening and regardless of her medical history. She's eligible for the same terms and conditions as anyone else buying the policy for the first time. And her monthly premium will be the same as that of anyone else of her age who already has the policy.

If your parent had a medigap policy and dropped it to join a managed care plan that has now dropped her, she has the right to buy that same medigap policy again, regardless of the plan type.

Can my parent buy a medigap insurance policy now if she didn't buy one or join managed care at age 65?

If your parent didn't buy a medigap policy within the first six months of enrolling in Medicare Part B and wasn't enrolled in a Medicare managed care plan that dropped her, she can still buy a medigap policy. But now the insurance companies have all the leverage -- Medicare regulations do very little to help her. An individual insurance company can decide whether it wants to sell your parent a particular policy (though it has to be one of the 12 standard plans) and under what terms.

For example, the insurance company can require your parent to undergo medical screening. Based on your parent's age or health history, the company might offer to sell her some policies but not others. It might also place limits on coverage, such as six months of exclusion before coverage begins for certain conditions. The company can also charge a higher premium for your parent than for other people with the same policy, and it may include policy provisions that increase premiums faster or more abruptly than for other policy holders.

If my parent moves, will her medigap insurance policy still cover her medical costs?

Medigap policies are sold state by state. Not all policies are available in every state, and the same policies may cost more or less in different places. If your parent buys a medigap policy in one state but then moves to another, the insurance company must continue to honor the policy. This is true even if the company doesn't sell that same policy in the state where your parent now lives. However, the company does have the right to raise premiums for the policy if the cost of medical care is higher in the state where your parent moved. The insurance company can't just charge whatever it wants, though. It must apply for a premium increase with the department of insurance in the state where your parent now lives. The department of insurance will likely grant a premium hike to the level of similar policies sold in the state.

If your parent is enrolled in a Medicare Part C managed care plan but moves outside that plan's service area, the plan doesn't have to continue covering her.She'll need to look for a new managed care plan that serves the area where she now lives. Or she can return to traditional Medicare Part A and Part B. If she does return to standard Part A and Part B, she's guaranteed the right to buy any Plan A, B, C, or F medigap policy offered in the state where she now lives. She can buy any one of these policies without any medical screening, regardless of her medical history, and for the same premium as anyone else her age who bought the same policy at age 65.

Can my parent switch to a different medigap policy?

Your parent might learn of a medigap insurance policy that seems better for her than the one she now has. Unless she is still within six months of when she enrolled in Medicare Part B, however, an insurance company isn't required to sell her that policy. The company may first require her to undergo a medical screening, which could include examination of her health history and a physical exam by an insurance company doctor; if the company doesn't like what it finds, it could reject your parent. Or it could place a preexisting illness exclusion on the new policy that wouldn't provide your parent with coverage for up to six months for any condition she's been treated for within the previous six months. The company can also charge a higher premium than it does for people buying the same policy when first enrolling in Medicare at age 65.