Medicare, Do You Really Not Allow Seniors to Change Plans Without Penalty?

The other day I was at lunch with a family who I had worked with in the past. At the table was the mother of a client who was on Medicare. She told me the story of going to a Medicare introductory meeting. At the session, the group was told that they would be allowed to change plans once without penalty within the same insurance. The speaker continued to say that if they changed insurers, there would be a penalty.

At first, I was surprised by this regulation, because in the past my clients could change without any problem. No penalties. I even said to the mother, I thought she had heard incorrectly. I said I would check it out. So I did and was I surprised.

I discovered I was wrong and this regulation had been in effect since the onset. Essentially, the regulations state that a senior at the initial supplemental insurance enrollment may pick any plan with no underwriting or worry of denial for pre existing condition. There is then a six month window to make a change without penalty.

However, the regulation continues to say, that if the plan is changed after the six month period in an open enrollment period, it is subject to underwriting. This regulation applies to only changes from one medigap plan to another. It does not apply if the change is from a medigap plan to a Medicare advantage plan. The senior may be subjected to a six month waiting period for any pre existing conditions. Prescription plans are not subject to this regulation.

Oh my goodness! I even went to the Medicare.gov site for verification. I cannot tell you how shocked I am that this regulation exists. I am also surprised that there isn’t a louder uproar as to the discriminatory nature of this regulation. How can we impose such stringent regulations on the largest chronically ill population? This translates into people with chronic problems like hypertension, high cholesterol or diabetes are at risk for having no disease specific coverage for six months. It also marginalizes seniors in their ability to have any control in their insurance needs. What if their financial situation changes and they have to get a plan with a lower premium? The choice is continue to pay or have a lower premium with limited coverage for six months.

I researched extensively if this same regulation was applicable to people under 65. I was unable to find any reference to this in the Affordable Care Act or regulations in regards to changing plans. The only information listed was in regards to a “special event” like job loss, divorce or termination of insurance for reasons other than missing a payment.

It is another travesty of our healthcare system that does not address the needs of the aging population. This issue needs to become a priority for change.