MEDICARE – SUPPLEMENTAL HEALTH INSURANCE – CHANGING MEDIGAP POLICIES & LOSING MEDIGAP COVERAGE
Sometimes, elderly Americans who have Medigap insurance to supplement their Medicare coverage wish to switch to a different policy. Other times, they must select a new policy if they wish to continue coverage because their insurance company goes bankrupt or because they move out of the policy’s service area, for instance. This article discusses the typical circumstance in which an insured wishes to change policies to obtain additional covered services or to find lower premiums.
An insured need not change Medigap policies just because the one he or she has is old. In fact, the coverage on older policies is usually better than those issued more recently. However, the premiums for older policies may be higher, and if a person switches from a policy written before 1992, he or she may not be able to go back to that policy if unsatisfied with the newer policy.
There is no waiting period applicable to when a person can switch policies. However, some factors that are related to time may affect a decision regarding whether and when to switch if unsatisfied with current coverage. For instance, new policies can deny coverage under certain circumstances if a person did not have previous coverage lasting at least six months, either under another Medigap policy or other health care coverage. In short, an insurance company can deny all claims until any prior coverage, combined with coverage under the new policy, totals six months. Similarly, even if a person did have prior health care coverage for at least six months before switching to a new policy, if the new policy covers a condition that the old policy did not, coverage can be denied for that particular condition until six months pass.
Because of the potentially negative effect of a lapse in coverage, once a decision has been made to switch, it is important not to cancel the first policy until the second policy is in effect. In fact, insurance companies must offer a 30-day period for customers to review policies and determine if they wish to keep the coverage, so it is best to overlap the old and new policies until a final decision is made.
In most circumstances, insurance companies cannot cancel coverage for a particular policyholder. Exceptions to this general rule exist for nonpayment of premiums, for some policies purchased before 1990, and for the making of false statements under the policy. Additionally, if a company goes bankrupt, it can cancel policies. However, when a policy or its coverage is ending or is no longer available and an insured switches plans as a result, different provisions, called guaranteed issue rights, may apply. The requirements for these rights and the rights themselves are fairly detailed. They are discussed in a separate article.