For the 300,000 Minnesotans who lost their Medicare Cost health plans this year, these are the final days to exercise a special option to buy a Medicare Supplement policy without answering health history questions that might otherwise deny them access to the coverage.
Called a "guaranteed issue" right, the one-time chance ends after Monday and is an important option for consumers who prefer the certainty of paying a higher monthly premium for coverage, rather than worrying about co-payments and out-of-pocket costs should they need care.
Also known as "Medigap" policies, Medicare Supplements give seniors access to all doctors who participate with Medicare, whereas the primary alternative — a Medicare Advantage health plan from a private insurer — steers people toward networks of physicians and hospitals.
"Without guaranteed issue rights, in order to get into a Medigap plan, beneficiaries would have to undergo that health screen," said Rose Leese, a quality analyst with the Senior LinkAge Line, the state's helpline for Medicare consumers. "The plan could then deny them coverage … [or] they could put a waiting period on any coverage."
Medigap policies are an option for people in the traditional Medicare program who want help with the government program's cost-sharing requirements. Those rules can leave patients needing to cover 20 percent of medical bills in some cases. Many who buy Medigap coverage also purchase a stand-alone Part D prescription drug plan to cover medication costs.
A federal law eliminated Cost plans for more than 300,000 Minnesotans this year, forcing a choice between original Medicare and a newer form of coverage called Medicare Advantage. The shift, in turn, set off a competitive frenzy among health insurers in Minnesota.
In 2017, insurers saw about $29.9 billion in premium revenue from Medicare Supplement plans, according to Mark Farrah Associates, a Pennsylvania-based market research firm. The company has data on roughly three-quarters of the Medicare Advantage market, and those insurers in 2017 saw about $171 billion in revenue, said Ryan Wolfe, general manager at the research firm.
Health insurers can generate more revenue per enrollee from selling a Medicare Advantage plan compared with a Medicare Supplement policy, Wolfe said, but limited data makes it difficult to say which line of business is more profitable.
Medigap plans typically come with higher premiums, whereas Medicare Advantage plans bring co-payments and other medical bills when people use care up to an annual limit. Medigap plans can be paired with Part D plans from any of more than two dozen companies that sell drug coverage, whereas Medicare Advantage enrollees are limited to benefits offered by their medical insurer.
The benefits with Medigap plans are standardized, whereas Advantage plan details can change from year to year. And Medigap plans don't use rules like "prior authorization" that control costs but can frustrate patients.
Some who left Cost plans and enrolled in Medicare Advantage for 2019 have since switched to original Medicare plus a supplement, insurance agents say, due to the high cost of chemotherapy and certain medication treatments that are infused in medical settings. Those medication costs can easily generate big out-of-pocket costs, agents say, that more than swallow premium savings with the Medicare Advantage plans.
"If a person needs cancer treatment and they're going to go through chemotherapy, they're probably going to hit the out-of-pocket maximum that year," said Shawnee Christenson, an insurance agent with Crosstown Insurance in New Hope. "Whereas on a Medicare Supplement plan, you're not going to incur those extra expenses."
People with complex health problems who are regular users of clinics and hospitals might be better off financially with Medigap, said Joshua Haberman, an insurance agent with Bloomington-based Alexander & Haberman. Medicare Advantage plans, by comparison, can make financial sense for people who wind up not using much health care for several years, and thereby accumulate premium savings that can cover future out-of-pocket costs.
"It should be a long-term bet on value" to go with Medicare Advantage, Haberman said via e-mail. "If you think your timeline is short or your primary interest is peace-of-mind, you may find a Medicare Supplement is more suitable."
Insurers say that it's difficult to generalize about the suitability of Medigap vs. Medicare Advantage, because the decision is based on personal needs and a household's budget. Proponents note that Medicare Advantage plans often include extra benefits such as hearing, dental and vision benefits. They also argue that patients in Medicare Advantage plans can benefit from care coordination provided by insurance companies.
To trigger the guaranteed issue right, consumers will be asked to provide documentation showing they were forced out of a Cost plan, insurers say.
Seniors who lost Cost plans and revert to original Medicare after Monday's deadline would still have the option of applying for a Medigap plan at a later date, said Tom Peterson, the owner of Twin Cities Underwriters, an insurance agency based in Roseville. However, the likelihood that seniors might be turned down at that point due to answers they provide about their health history is unclear.