Proposed Regulation Encourages Insurance Brokers to Provide Extended Information Regarding Medicare Advantage Offerings
Proposed Regulation Encourages Insurance Brokers to Provide Extended Information Regarding Medicare Advantage Offerings
The capacity for changing Medicare plans isn't as extensive as many individuals believe or have been led to think, and the Centers for Medicare and Medicaid Services aims to make beneficiaries more cognizant of the functional constraints.
In a portion of fresh proposed guidelines, the Centers for Medicare and Medicaid Services stipulates that intermediaries and brokers must discuss certain aspects with clients prior to enrolling them in Medicare Advantage plans, a proposal categorized as Informed Enrollment by CMS.
Most Medicare beneficiaries are aware that annually, during the open enrollment period (October 15 - December 7), they're allowed to revise their coverage. The new coverage commences the following January 1.
During the open enrollment period, a beneficiary can transition from one Medicare Advantage plan to another. Alternatively, someone in a Medicare Advantage plan can migrate to original Medicare. A shift from original Medicare to a Medicare Advantage plan is also feasible.
The law and regulations endorse these changes. Insurance agencies and firms declare these rights when presenting their plans. Some may even assure beneficiaries that there's no risk in trying an Advantage plan, as the beneficiary can switch later.
However, as the old adage goes, the real-world scenario often differs from what the law permits. Various practical factors can hinder individuals from making all the changes the law permits.
During the initial enrollment period, companies offering Medigap policies are obligated to issue a policy to every applicant and charge the same premium as every other applicant of the same age and locality. Medical underwriting is prohibited. The insurer cannot examine an applicant's medical history or mandate a physical exam before deciding whether to issue a policy. An application cannot be rejected due to pre-existing medical conditions, a policy called "guaranteed issue."
Once a person purchases a Medigap policy, it is guaranteed renewable. With few exceptions, the insurer must renew the policy each year, if the beneficiary chooses, without any medical underwriting. Premiums must be the same as for others in the beneficiary's class.
However, in most states, the guaranteed issue of Medigap policies ends with the initial enrollment period.
Medicare law allows each state to continue the guaranteed issue requirement or institute other protections after the initial enrollment period. However, most states avoid implementing such protections.
Guaranteed issue is continued only in four states. Connecticut, Massachusetts, and New York impose guaranteed issue continuously. Maine requires it for one month every year for Medicare Supplement Plan A policies and has other protections in other months.
In 28 states, insurers are required to issue Medigap policies to eligible applicants whose employers altered their retiree health benefits, according to the Kaiser Family Foundation.
In all other states, after the initial enrollment period, insurers can conduct medical underwriting and deny coverage or charge higher premiums to most applicants due to pre-existing medical conditions or health history.
There are usually exceptions, such as for beneficiaries who recently moved or who are in the Medicare Advantage trial period.
However, for the most part, beneficiaries cannot be certain that they'll be able to acquire a Medigap policy after their initial enrollment period.
A beneficiary can still move from an Advantage plan to original Medicare. However, without a Medigap policy to complement original Medicare, the beneficiary must pay for all the gaps in Medicare Part B.
The out-of-pocket cost can be substantial, as a significant gap is the 20% coinsurance amount on most covered care. If a beneficiary cannot obtain a Medigap policy to cover that and other gaps, switching from an Advantage plan to original Medicare can be financially unfeasible.
CMS proposes that insurance agents selling Medicare Advantage plans should explicitly communicate this information to customers enrolling in an Advantage plan for the first time. These beneficiaries should be informed about the guaranteed-issue rights federal law provides for first-time enrollees in original Medicare.
They should also be clearly told that after the initial enrollment period, insurers can engage in medical underwriting and use the results to deny coverage or charge higher premiums.
The proposed regulations also state that after presenting this information, the agent must "pause to address remaining questions the beneficiary may have..."
This section on "informed choice" is merely a segment of a 713-page proposed regulation that suggests, among other things, Medicare will cover the new obesity drugs. This is projected to increase future premiums.
The change in regulations was proposed recently. There's a public comment period. Then CMS has to review the comments and consider them before issuing final regulations.
When entering Medicare Advantage plans, intermediaries and brokers must inform clients about certain aspects as per the Centers for Medicare and Medicaid Services' proposed Informed Enrollment guidelines. During the Medicare open enrollment period, beneficiaries can switch between Medicare Advantage plans or shift from original Medicare to an Advantage plan, but this flexibility might be limited due to medical underwriting in some states after the initial enrollment period. After purchasing a Medigar policy, it is guaranteed renewable, but in most states, the guaranteed issue ends with the initial enrollment period.