Medicare Advantage’s Dirty Secret: The Medigap Underwriting Trap

Imagine you are a relatively healthy 65-year-old who chose a Medicare Advantage plan upon retirement, enticed by the plan’s affordable premiums and attractive benefits. Five years later, after injuring your knee during a bad fall on a patch of ice, you find that your Medicare Advantage plan will only cover a portion of your physical therapy, sticking you with a huge and unaffordable copay.

So you decide to switch from Medicare Advantage to Traditional Medicare during the next Open Enrollment Period, and you apply for a Medigap supplemental plan to ensure that you are fully-covered for all medical expenses. However, after making you fill out a questionnaire detailing your medical history, the Medigap insurers all decline to cover you – citing your recent knee injury as a preexisting condition.

This scenario is the unfortunate reality for millions of seniors across the country. The Affordable Care Act’s provisions on preexisting conditions do not apply to Medigap plans, allowing insurers to legally discriminate against those with the greatest healthcare needs. This loophole in US health policy could lead to financial disaster for elderly patients on fixed incomes who find themselves trapped in expensive Medicare Advantage plans.

In the 2025 legislative session, Virginia legislators will have an opportunity to fix this loophole. They can do this by creating an open enrollment period for Medicare supplement (Medigap) plans without medical underwriting.

Medicare vs Medicare Advantage

Honestly, it’s a little technical, but a very important issue for seniors’ health and financial wellbeing. Please read on for a full explanation.

Every year during Medicare’s open enrollment period (October 15 - December 7), those eligible for Medicare can choose their plan for the coming year. This is primarily a choice between traditional Medicare (Parts A or B - the highly popular public health insurance system created in 1965) and one of the many Medicare Advantage plans (Part C - the privatized version of Medicare that routinely denies prior authorization for necessary treatments and has been described by researchers as a “$600 billion swindle”).

Filling In The Gaps

Traditional Medicare isn’t perfect, of course. There are some gaps in coverage that can leave enrollees with high out-of-pocket costs for hospital stays, ambulance rides, and home health services.

Seniors can avoid these high out-of-pocket costs by enrolling in a Medicare supplement — or Medigap plan — when they first turn 65. These plans fill in the gaps of traditional Medicare for as little as $100 a month and help seniors avoid getting stuck with exorbitant medical bills. Medigap plans are not available to those enrolling in Medicare Advantage.

The Closing Window of Medigap Opportunity

Unfortunately, the window during which Medicare beneficiaries can apply for guaranteed Medigap coverage is pretty narrow— just the first six months after enrolling in Medicare Part B. That’s it.

After this initial enrollment window, it can be difficult or even impossible to obtain Medigap coverage. Insurance companies offering Medigap plans will subject late enrollees to a screening process known as “medical underwriting” to determine their preexisting conditions, and can charge those with serious health conditions exorbitant premiums for Medigap plans — or deny them coverage altogether.

What can Virginia's lawmakers do about it?

The Virginia legislature could end this discriminatory practice by passing a law that would create an annual Medigap guaranteed issue open enrollment period. This change would allow Medicare beneficiaries to apply for supplemental plans without medical underwriting, as well as allow current Medigap enrollees to change their plans or switch providers.

Currently four other states (CT, MA, ME, and NY) have similar laws providing guaranteed issue protections for Medigap either continuously or annually, for all Medicare beneficiaries ages 65 and older. Others have open enrollment periods in the spring or summer, and still others have brief birthday enrollment periods for 30-60 days after the recipient’s birthday.

We are calling on the Virginia legislature to create a guaranteed-issue Medigap open enrollment period during the same time period as Medicare open enrollment - October 15 to December 7. This will allow beneficiaries to seamlessly change their Medicare plan and Medigap supplemental at the same time, and will take advantage of the fall marketing push around Medicare open enrollment to encourage seniors to reevaluate their coverage needs.

This open enrollment period must also allow seniors to upgrade their Medigap coverage to meet their changing health needs. Proposed legislation that limits enrollment changes to Medigap plans of “equal or lesser coverage” will only serve the profit needs of the health insurance industry, not the growing healthcare needs of the retiring Boomer population.

Most importantly — during this open enrollment period, ALL Medicare recipients must have guaranteed issue enrollment in a Medigap plan, including those transitioning from Medicare Advantage to traditional Medicare.

We call on our legislators to make the health and financial well-being of their constituents their top priority this coming legislative session, and pass a strong bill that will end the discriminatory Medigap underwriting trap for Virginia’s seniors.