California Medigap Plans
In California, Medicare supplement coverage is provided through private insurance companies and pays for out of pocket expenses such as coinsurance, co-payment, deductible, and medical expenses incurred when out of the country.
Medigap is not a stand-alone policy, it’s an add-on to your original Medicare. In California, you are automatically eligible for Medicare as soon as you turn 65. The best time to apply for Medigap insurance is as soon as you become eligible for Medicare. There is an open enrollment period of six months after you turn 65. During the Medigap open enrollment period, the rates are lower and insurance companies are prohibited from increasing plan costs.
The reason for the lower rates is that the beneficiaries are not subjected to medical underwriting. As such, they cannot be denied coverage or charged higher rates because they have a pre-existing medical condition or due to their health history. If you miss the open enrollment period, be prepared to pay higher rates than what you could have initially paid for if you had enrolled during the open enrollment. This is because medical underwriting rules will apply.
What Medigap Insurance Plan Options Are Available In California?
There are ten medicare supplement plans in California. They are denoted by letters A, B, C, D, F, G, K, L, M, and N. Plans are provided by different insurance companies and premium prices may vary, but the coverage in the same letter Medigap insurance remains the same. Plan F is the most popular Medigap option in California by far, followed by N. There are state and federal laws regarding medicare supplement insurance and each company must follow them. Also, an insurer is only supposed to provide standardized California Medigap plans.
Type of Medicare Supplement Insurance Plans
The 10 medicare supplement insurance plans described above can be categorized into 3 groups based on the how the premiums are determined. Insurance companies use any one of the following methods to calculate rates, which explains why there are differences in premium prices across providers. They are:
- Attainted-Age Rated Plans
With these plans, your premium depends on your age. This means that your premiums will continue to increase as you age.
- Issue-Age Rated
With this type of policy, your premiums will depend on your age at the time of purchasing the policy. The more you age doesn’t affect your premiums at all and the younger you are, the lower your rates. The costs may raise due to economic factors such as inflation.
- Community Rated Plans
With these types, the age at which you purchase the policy does not affect your rates. Your rates won’t also change as you age. The insurance company uses other factors to determine your premium. Changes to premium prices can only be caused by the rising health costs as well as economic factors.
Other factors that might affect your rates include medical underwriting for plans purchased outside the open enrollment period, high deductible plans such as plan F, and discounts offered by your provider. It makes more sense for people looking for California Medigap plans to shop around since coverage is standardized. There is no need to pay more for the same level of coverage.
Guide to Purchasing Medicare Supplement Insurance in California
California Medigap plans are standardized by the federal government and help beneficiaries as a means to offset rising healthcare costs. To be eligible for medicare, you will be required to have both Medicare part A and part B. In the state of California, medicare supplement plans are regulated by the California department of insurance (CDI), which is in charge of reviewing policies underwritten by the state’s licensed insurance providers.
The California department of insurance helps consumers to resolve disputes and complaints regarding agents or insurance companies such as claims handling and premium rates. Take a closer look at each option and make the necessary considerations before you purchase a medicare supplement insurance plan.
The ‘Birthday Rule’
In California, medicare beneficiaries are allowed to purchase new policies during their birthday month each year. During your birthday month, you are given 30 days during which you can buy a new Medigap policy without any form of medical underwriting, same as during the open enrollment period.
This is referred to as the ”birthday rule,” and is unique to the state of California. However, the plan must have the same or lesser coverage than the previous one. Depending on your situation and reason for changing plans, you might still have a guaranteed issue rights outside the open enrollment period or birthday month. More information on Medicare Supplement Plan G available here.