Idaho’s New Medigap Guaranteed Issue Rules

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Idaho is implementing new guaranteed issue rules for Medigap policies. The new rules will go into effect on February 28, 2022, and will prove beneficial to state residents. Residents will have the opportunity to save money on their Medigap plans by shopping for new plans and carriers each year around their birthdays.

But what is a Medigap plan, and what are guaranteed issue rules? First, let’s review the foundations of a Medigap plan and then talk about how Idaho’s new guaranteed issue rules could save you hundreds on your Medigap premiums.

What is a Medigap plan?

A Medigap plan is one way that seniors can supplement their coverage under Original Medicare. Medigap plans help pay for the expenses left by Medicare Parts A and B. They can pay for deductibles, copays, and coinsurance costs. Some of the more popular Medigap plans leave the beneficiary with nearly no out-of-pocket expenses.

Medigap plans do not cover any expenses not covered by Original Medicare. They do not offer additional benefits for routine dental, vision, and hearing services, nor do they include prescription drug coverage. Individuals who enroll in a Medigap plan often seek additional coverage with a Part D prescription drug plan and a Dental, Vision, Hearing (DVH) plan.

What does “guaranteed issue” mean?

Because they have such great coverage options, Medigap policies have a higher barrier to entry than Medicare Advantage plans. In some cases, you will have to fill out a medical history form and pass medical underwriting to be approved for a Medigap policy. However, there are certain times when medical underwriting does not apply. This is known as “guaranteed issue.”

When you first become eligible for Medicare at age 65, you have guaranteed issue rights for any Medigap policy. As a result, you will not have to pass medical underwriting, and your premiums cannot be increased due to pre-existing conditions. All states have this policy, but some have additional guaranteed issue periods. For example, Idaho recently announced its new guaranteed issue rules, which will benefit state residents.

Idaho’s New Medigap Guaranteed Issue Rules

On April 22, 2021, Idaho’s Governor Little signed Senate Bill 1143 that revised key provisions of the rating and eligibility methods used by Medigap policies. After Governor Little signed the Bill, the Idaho Department of Insurance implemented the changes to Rule 18.04.10 Medicare Supplement Insurance Standards. Changes include:

  • New guaranteed issue rights.
  • New rating methods.
  • Additional changes to unfair trade practices.

The changes go into effect on February 28, 2022. Let’s look at each in more detail.

Idaho man enjoying relaxing in his backyard as he thinks about Medigap guaranteed issue rules.
Idaho residents now have an annual guaranteed issue opportunity, known as the “birthday rule.”

Guaranteed Issue Right

Idaho residents now have an annual guaranteed issue opportunity, known as the “birthday rule.” Every year around your birthday, you will have 63 days when you can change your Medigap plan or your Medigap plan carrier. You will have guaranteed issue rights to the same plan or a Medigap plan with lesser benefits.

For instance, you could switch from Plan F to Plan G, which many beneficiaries are currently trying to do because of the high cost of Plan F. Until now, you had to pass medical underwriting to be able to do so. Now, you can make that change on your birthday. If you like your current plan, you may also shop for a different carrier. Remember, Medigap plans are standardized plans, so no matter who you purchase a particular plan from, that plan offers the same coverage. You may stay on Plan G but switch to another carrier that offers lower premiums.

Pricing Methods

Most Medigap policies across the country used the “attained-age rating” or “issue-age rating” methods for pricing. Insurance companies use the attained age pricing method to set your initial premium based on your age when you purchase the policy. After that, the premium continues to increase as you get older. Another popular pricing method is “issue age.” As the name implies, your premium is based on your age when the policy is issued. After that, your policy will not increase due to age but can increase due to inflation and rising healthcare costs.

Beginning on February 28, 2022, all Medigap policies sold to Idaho residents will be using the “community rating” method for pricing. The community pricing method gives everyone the same premium, regardless of age. For example, a 75-year-old who has a Medigap policy with Insurance Company X will pay the same as a 65-year-old who has the same policy with the same company. Premiums based on the community pricing method can still increase due to inflation and higher costs of healthcare but will never increase due to your age.

Additional Changes

Insurance carriers are no longer allowed to charge an application processing fee. Many insurance companies charge a fee – usually around $25 – to process new applications. This practice is now prohibited.

Insurances carriers are no longer allowed to charge higher premiums based on the method of payment. Some companies offer discounts if individuals pay by automatic bank withdrawal or annual payments. Premiums can no longer be increased or decreased based on payment method.

Are You an Idaho Resident?

If you are an Idaho resident, you should take advantage of this new rule in 2022. The process is simple. Call our office and speak to one of our licensed Medicare advisors. We can compare your current plan and rates to others on the market and see if you could save money by making a change. Saving money sounds like a pretty good birthday gift at any age!

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Justin Brock

President & CEO of Bobby Brock Insurance