One Medicare Open Enrollment Decision That Can Be Hard to Undo

Medicare Open Enrollment gives beneficiaries several opportunities to change their coverage each fall.

But one change people should consider carefully before making it is leaving Medicare Advantage for Original Medicare, expecting a Medicare supplement policy to be available automatically.

It may not be.

Medicare Advantage and Medicare supplement insurance, commonly called Medigap, operate under different enrollment rules.

During Medicare Open Enrollment, which runs from Oct. 15 through Dec. 7, beneficiaries can switch Medicare Advantage plans, move between Medicare Advantage and Original Medicare, and change Medicare Part D prescription drug coverage.

Those changes generally take effect Jan. 1.

Open Enrollment does not necessarily guarantee an opportunity to buy Medigap.

That distinction can become expensive for someone who discovers it only after dropping a Medicare Advantage plan.

Medigap Has Different Rules

Original Medicare and Medicare Advantage handle healthcare costs differently.

Someone who leaves Medicare Advantage and returns to Original Medicare may want a Medigap policy to help cover costs Original Medicare doesn’t pay.

But Medigap isn’t governed by the same annual Open Enrollment window.

Private insurance companies sell Medigap policies, which are subject to state insurance rules and federal requirements.

In most states, outside certain protected enrollment periods or circumstances, an insurer may use medical underwriting. That means the company can ask questions about an applicant’s health when deciding whether to issue a policy.

Depending on the circumstances, an insurer can decline an application.

The annual Medicare Open Enrollment period doesn’t automatically remove those underwriting requirements.

That creates a potential trap.

A beneficiary could decide in November to leave a Medicare Advantage plan, believing that he or she can simply purchase a Medigap policy to go with Original Medicare.

The Medicare Advantage coverage ends, and Original Medicare begins Jan. 1.

But if the beneficiary doesn’t have a guaranteed right to purchase Medigap and an insurer declines the application, the expected supplement may not be there.

Original Medicare generally pays 80% of the Medicare-approved amount for covered Part B services after the deductible, leaving the beneficiary responsible for the remaining share unless another form of coverage applies.

That can be a very different financial situation than the beneficiary expected when making the change.

An Important Trial Right

In some circumstances, people have protections that let them buy certain Medigap policies without medical underwriting.

One important example involves people trying Medicare Advantage for the first time.

A beneficiary who joined a Medicare Advantage plan when first eligible for Medicare and decides within the first 12 months that it isn’t the right choice may have what Medicare calls a “trial right.”

That right can let the person return to Original Medicare and buy certain Medigap coverage without being denied because of their health history.

A similar trial-right protection may apply if someone dropped a Medigap policy to join Medicare Advantage for the first time and then decides within 12 months to switch back, although the specific Medigap rights vary by situation.

These protections have detailed requirements, so beneficiaries should confirm that they qualify before relying on them.

Other guaranteed-issue rights can also arise in certain circumstances, and state protections can be broader than federal rules.

Check Before Dropping Coverage

The practical lesson isn’t that beneficiaries should never leave Medicare Advantage.

For some people, Original Medicare combined with Medigap and prescription drug coverage may be the better choice.

The caution is about the order in which beneficiaries make the decision.

Before leaving Medicare Advantage and planning to buy a supplement, beneficiaries should determine whether they have a guaranteed right to buy the Medigap coverage they want. If they don’t, they should find out whether an insurer will accept them and what the policy will cost.

That is best done before existing coverage is dropped.

Medicare’s fall Open Enrollment period provides considerable freedom to change Medicare Advantage and prescription drug coverage.

It does not reset Medigap eligibility for everyone.

For someone planning to move from Medicare Advantage back to Original Medicare, understanding that difference before Dec. 7 can prevent an unwelcome surprise on Jan. 1.