There is a little-known law unique to California regarding Medicare Advantage Plans and receiving a guaranteed issue into a Medicare Supplement plan. I don’t know if it has an official name, but I keep it bookmarked on my computer where it is on the State of California’s legislative website under California law. It is under Article 6 Medicare Supplement Policies. I call it the 15% rule. https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=INS&division=2.&title=&part=2.&chapter=1.&article=6.
I do know that I help at least one desperate person a year that needs to use it. The number of agents contacting me each year is about equal to the number who call from all over the country, each with a potential client residing in California. I have even got called by a vice president of one of the largest Medicare Supplement providers in the United States asking me for help to help another agent and their client. Like I said this is a little-known rule and why it can be so important to use professional agents that specialize in Medicare because Medicare has so many little rules and laws.
Guaranteed issue Medicare Supplement Rules
It states that if your Medicare Advantage plan has an increase in premium by 15 percent or more, an increase in physician, hospital, or drug copayments by 15 percent or more or reduces any benefits under the plan. This means if a Medicare beneficiary has a Medicare Advantage plan in California and any of these conditions take place, they have a guaranteed issue right into a Medicare Supplement policy. For the sake of clarity, Medicare defines a guaranteed issue on their website at https://www.medicare.gov/supplements-other-insurance/when-can-i-buy-medigap/guaranteed-issue-rights.
Guaranteed Issue Rights
It is also in the Guide to Buying a Medigap policy on page 49: Guaranteed issue rights—Rights you have in certain situations when insurance companies are required by law to sell or offer you a Medigap policy. In these situations, an insurance company can’t deny you a Medigap policy, or place conditions on a Medigap policy, such as exclusions for pre-existing conditions, and can’t charge you more for a Medigap policy because of a past or present health problem.
Why is this important? When a Medicare Advantage beneficiary has a certain medical condition or many different medical conditions, it is likely they will not qualify for a Medicare Supplement plan. A Medicare Supplement has the right to ask medical questions, underwrite, and potentially deny coverage to an applicant that has had their Medicare Part B in effect for 6 months or longer. There are certain instances that the Medicare insurance agent community and many Medicare beneficiaries commonly known grant a Medicare Advantage member a guaranteed issue into a Medicare Supplement plan.
Common Misconceptions about Annual Enrollment Period
It is a very common belief amongst those on Medicare and many insurance agents that sell Medicare products but don’t specialize in Medicare products that the Annual Enrollment occurs from October 15th to December 7th every year is the time for those that want to change their Medicare Supplement may do so without having to answer any health questions whatsoever and cannot be denied coverage and must cover pre-existing conditions. The fact is the Medicare Annual Enrollment has nothing to do with Medicare Supplement plans.
The Annual Enrollment is about electing or changing a Medicare Advantage (Part C) plan. Electing or changing a Prescription Drug Plan (Part D) or disenrolling from a Medicare Advantage (Part C) and enrolling back to Original Medicare. If a Medicare beneficiary would like to change their Medicare Supplement they may do so as many times as they like, whenever they like throughout the year, but in almost every circumstance the company they apply to for the Medicare Supplement has the right to underwrite them. They, in turn, may deny them coverage or accept and deny them coverage for pre-existing conditions for up to 6 months. Why is this important? Every year we are contacted by many Medicare beneficiaries calling during the Annual Enrollment saying they would like to leave their Medicare Advantage plan, return to Original Medicare and purchase a Medicare Supplement.
Usually, this isn’t a problem. I ask why, and usually, it is because they want to leave an HMO Medicare Advantage plan to return to Original Medicare to gain the freedom to see any provider in the United States that accepts Medicare assignments without referrals. But inevitably, at least once per year one person says something like, “I have contracted XYZ disease or chronic condition” and would like to return to Original Medicare and get a Medicare Supplement plan so I have access to more doctors. I say that is not a problem returning to Original Medicare and Original Medicare will cover all your pre-existing conditions, but the Medicare Supplement companies will likely deny you coverage. Without a Medicare Supplement, the Medicare beneficiary is responsible for all copays, coinsurance, deductibles Medicare doesn’t pay and what the Medicare beneficiary is responsible for has no out-of-pocket limit.
Client Examples
I had two clients come to me last year that wanted to return to Original Medicare and get a Medicare Supplement while having health conditions that the Medicare Supplement companies would have denied them coverage for. They obviously didn’t qualify for a guaranteed issue through the normal guaranteed issue rules most everyone knows about. One of the two was simple to find a 15% increase in one of the copays or premiums. I usually look at the drug costs first, because that can be as easy as a generic drug my client takes going up from $0 to $1.
This specific client had an increase in prescription drug costs on their plan. But the second case wasn’t as easy. Over the last few years, many Medicare Advantage companies have been increasing benefits and lowering copays. This is a good thing. This Medicare Advantage member was on a plan that increased almost every benefit and decreased almost all of its copays. I had to thoroughly go through the plan and found the only increase in copay was to the ambulance benefit.
The copay went from $200 to $250. I found the 15% increase I needed to help my client qualify for a Medicare Supplement guaranteed issue and have all pre-existing conditions covered. My nerves were getting the better of me, as I usually always have. I thought I was going to start looking at any decrease in dental, vision, hearing, or reduction in a gym membership benefit. I have always been able to find some type of qualifier.
Finding the 15% increase or reduction in other benefits is the easy part. I have done enough of these, I know when I send in this application asking for a guaranteed issue for the essentially unknown special 15% California law the application will be denied. I even send it in with a copy of the California law, this is why I bookmark this page, but I know the insurance company I choose will deny the application and I will have to fight them. The insurance companies hate accepting Medicare Supplement policies guaranteed issue. The reason being, the insurance company knows if a person is applying guaranteed issue they have certain medical problems that would normally deny them. In turn, the insurance company knows this person will likely incur many claims and the insurance company will likely pay out far more money than it brings in.
How to Get the Insurance Companies to Approve Application
When I send in the application for my client I prepare them that this will get denied and when it does we will have to do a three-way phone call between my client, myself, and the insurance company and the phone call will likely take at least two hours and we will be passed around many people. Also, I inform my clients that our goal is to find someone that is willing to take all the information we provide them back to a manager.
Usually, the manager will say to us there is no such law. What happens is the insurance company does business all over the nation and this 15% rule is only in California. I have searched everywhere I know. All over Medicare’s official website. Every Medicare document I know. Very few companies actually have the rule in their underwriting guide. The underwriting guide is the underwriting team’s bible at the insurance company. If it isn’t in the guide then it doesn’t exist to them.
What ends up happening is on our phone call we bounce around and get sent to a manager who kindly tells me I don’t know what I am talking about and there is no such law. Most of the time I am able to keep my cool, but sometimes it does get a little heated. Last, I finally, get to someone who has the ear of someone in upper management. I was told they are not available, but they will take all of the information to them. Usually, about 24 hours later my client gets a call, not from me, that their agent was correct about this law and they have never heard of it and they will be issued coverage as if they had no medical conditions whatsoever. This means no increase in premiums for having certain medical conditions and no pre-existing condition waiting periods as well.
Conclusion
I hope that I was able to clear up some misconceptions about these issues for my readers today! Leave me with one last question – did you enjoy reading this article? Let m r know below!
About The Author — Christopher Duncan
I’m Chris Duncan, owner of Trusted Benefits Direct. As your Medicare advisor, I want you to know that my business offers superior solutions for everyone. I do not work for insurance companies, which allows me to serve you at a high level without any hidden agendas or conflicts of interest. All resources are provided at no cost because people must find peace of mind when looking ahead years down the line.
As an insurance agent, it’s my goal to make your life easier. That includes the process of securing all types of coverage for you and your loved ones, including Medicare Supplements, Medicare Advantage, Medicare Part D, Final Expense life insurance services, and retirement security plans. You can reach me toll-free at 800-910-3382 or get a free quote on MedicareRateQuote.com with just a few clicks! Don’t forget that I also offer contact forms if you would like more information from trustedbenefitsdirect.com – click here now!
Important YouTube Channel Details
I appreciate you looking through my article. If it is interesting to you, make sure to subscribe to my YouTube channel. Don’t forget to share this on social media channels such as Facebook and Twitter so your friends can read it too! I appreciate it when people take the time to comment or post their opinion of my articles to continue writing content related to Medicare Basics, Medicaid Made Clear, Medicare Explained, Medicare 101, and others. It’s always nice to know that you’re reading my blog! Of course, I’m looking forward to seeing more of you soon on my next blog!
