COLUMN: Understanding Medigap’s “birthday rule”

This isn’t the sort of holiday present that one can tie up with a red ribbon, but nevertheless it’s a gift. The couple had Plan G Medicare supplement (Medigap) insurance policies, and said they needed to save money. They made an appointment with a Senior Health Insurance Benefits Assistance (SHIBA) counselor to learn if that was possible.

The couple, well into their 70s, shared the premiums they were paying. In checking Medigap premiums, the SHIBA counselor found several insurance companies that offered lower costs for the same coverage. By switching companies to obtain lower premiums, the couple could save $684 a year.

The counselor also showed them that by switching from Medigap Plan G to Plan N they could save more than $1,100. But whether all those savings materialized would depend on how often they saw a doctor or visited a hospital emergency room.

It turned out, though, that the savings would not be a holiday gift but a birthday present — this because the couple would need to wait until their birthdays next spring to use Oregon’s Medigap birthday rule. It permits one to change Medigap insurance companies or policy type (or both) with no premium increase resulting from a medical condition.

If you would like to make a SHIBA appointment, or to ask a question to be answered here, please see the end of this column. 

My Medicare starts in March. I’m considering trying Medicare Advantage insurance first. Am I restricted to enrolling in Medigap insurance only when I have guaranteed issue? Or to changing Medigap insurance only using the birthday rule?

No, but first let’s define the term: Guaranteed issue for a Medicare supplement (Medigap) policy means the company must sell you a policy and it cannot charge you a higher premium because of a pre-existing medical condition. This is in force for the first six months that you have Medicare Part B.

However, you could try to enroll in a Medigap policy even when you don’t have guaranteed issue. The insurance company might ask you a battery of health-related questions, whose answers would guide the company in setting your premium or in deciding whether to sell you a policy.

For changing type of Medigap policy or for changing insurance companies, most Oregonians with Medigap insurance use the Oregon birthday rule. It says that you can change policy type or insurance company using steps described in its two-page fact sheet with no increased premium because of a medical condition. However, here again you could seek to change Medigap insurance without the birthday rule’s protection if you wished.

Just curious – do people who have Medicare enroll more in Medigap or Medicare Advantage insurance?

In a recent report, the Kaiser Family Foundation reported that 48% of Medicare’s 58.6 million beneficiaries were enrolled in Medicare Advantage insurance. KFF projected that Medicare Advantage would insure 50% of Medicare beneficiaries by 2023. (KFF is a nonprofit not affiliated with Kaiser Permanente insurance).

KFF reported that 69% of Medicare beneficiaries who enrolled in Medicare Advantage plans that cover both medical and drugs pay no monthly premium, which may also help explain the plans’ popularity. By contrast, most Medicare supplement (Medigap) insurance policies cost in excess of $100 a month and cover only medical.

The KFF analysis showed that Oregon was among states in which 50% to 60% of Medicare beneficiaries are enrolled in Medicare Advantage plans, and that Medicare Advantage enrollments exceeded 65 percent in Marion and Polk counties. 

Jim Sellers of Salem is a certified Medicare counselor with the Senior Health Insurance Benefits Assistance (SHIBA) program. To ask a question to be answered in this column, e-mail [email protected] To schedule a free SHIBA phone appointment with a volunteer Medicare counselor, call 800-722-4134.

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