UCare snag forcing 2,500 to scramble for new Medicare coverage

About 2,500 people with Medicare Supplement policies from UCare must move quickly this month to avoid a significant gap in their health insurance coverage beginning Jan. 1.

The Minneapolis-based health insurer has been announcing to enrollees this week it will terminate at year’s end “Medigap” policies that seniors with original Medicare coverage use to avoid hefty out-of-pocket costs when they need health care services.

The original Medicare health insurance program typically pays about 80% of all costs, leaving seniors with an open-ended obligation to pay the remainder of all bills if they haven’t purchased a Medicare Supplement plan.

There should be time for seniors in these UCare plans to find alternate coverage, but they need to act now and “the short notice is shocking,” said Chad Levis, president of CAL Financial, Inc., an insurance agency in Edina.

Medigap coverage is different than Medicare Advantage health plans, which were a much larger business at UCare. In September, the nonprofit company said it would shut down its Advantage plans at the end of this year due to financial problems, forcing more than 150,000 people in Minnesota to find new coverage.

About 2,340 current Medigap policyholders are impacted, UCare says, plus about 200 who were planning to switch into the coverage next year.

Enrollees say they’ve been told repeatedly by UCare in recent weeks their coverage would seamlessly transition to a new insurance company for 2026.

“They assured me in November there was already a plan in place to switch us over automatically to Medica in the new year — so we didn’t have to do anything," said Jim Sebesta, 66, of Apple Valley. “I called them in the beginning of December to re-confirm this, and they re-confirmed there would be no change.”

Early on Dec. 17, Sebesta was shocked to see a notice on UCare’s website about the closure of the Medicare Supplement plans on Dec. 31. He spent all day making phone calls and scouring websites to find new coverage.

As of Dec. 18, Sebesta still was not certain his new policy will take effect on Jan 1., because he must submit required paperwork from UCare showing he has what’s called a “guaranteed issue right” to the new coverage.

Once the new health insurer receives this documentation — which is required so Sebesta doesn’t have to go through a more extensive application process — it will take seven to 15 days for processing.

“If people are waiting,” he said of other UCare customers, “they risk losing coverage.”

Four days later, when UCare announced the Medica deal, Schnobrich promptly called UCare to check on the Medigap coverage, which her mom needs Jan. 1.

“I was assured that nothing was changing for the Medicare Supplement plans,” said Schnobrich, 61, of Medina. She had faith in that message, because the customer service staff at UCare has been “just exceptional” for years.

Materials for her mom’s new coverage arrived in the mail in early December, but the family on Tuesday started receiving phone calls from UCare saying the Medigap policy would not be issued.

“I was really disappointed,” Schnobrich said. “I was continuing to put my faith in UCare — and the quality of their program, as it has been."

She went to work immediately to find new coverage for her mom, but remains uncertain about whether it will take effect Jan. 1.

UCare says it has been making targeted, direct outreach to seniors so they understand their options and next steps. Information was shared “as soon as decisions and regulatory timing were finalized,” the insurer said in a statement.

“There is time for members to select new Medicare Supplement coverage for 2026, and UCare is focused on preventing any gaps in coverage,” the insurer said. “We are actively reaching out through multiple channels, including mail, phone calls, emails and coordination with brokers.”

The Minnesota Department of Health, which filed a court petition earlier this month to take control of UCare operations, did not respond to an email seeking comment.

Another insurance regulator, the Minnesota Department of Commerce, said it recognized the decision to terminate UCare’s Medicare Supplement policies was a challenge “and that the timing of the decision is not ideal.”

“We will continue to work with UCare and other carriers to make sure that Minnesotans can enroll in a new Medicare Supplement plan by March 4, 2026,” Commerce said in a statement. “As always, if members have concerns we would encourage them to file a complaint with the department.”

It’s not unusual for Medicare Supplement insurers to pull out of the Minnesota market, particularly at a time of rising costs and uncertainty, but UCare’s exit is notable for “the extremely short notice given to beneficiaries,” he said.

“Communication is key here. Members need to know; once they do, they can get themselves a plan,” said Levis, who has a leadership position with NABIP Minnesota, a trade group for insurance agents. “Many brokers throughout Minnesota are still active in December and standing by to assist prospective clients.”

As long as impacted seniors keep a copy of UCare’s coverage termination letter, they can enroll in a new Medigap plan at a “Basic” level with riders, he said.

Sebesta, however, noted his Medigap plan from UCare had different benefits that he can’t obtain from other insurers now. He’s disappointed not only in UCare, but also state officials for letting the coverage termination happen at the last minute.

The annual election period for beneficiaries to select Medicare Advantage plans runs from Oct. 15 through Dec. 7.

UCare says customer service workers can help provide information other health insurers might need, and guide enrollees through the process. Enrollees can call (800) 221-6930 between 7:30 a.m. and 5 p.m., Monday through Friday.