“I thought pre-existing conditions didn’t play a role in health insurance any longer…”
Welcome to Medicare; things work a bit differently.
After years of having been enrolled in an employer sponsored health insurance plan or through purchasing ACA/Obamacare coverage, the general public has grown to believe that pre-existing conditions related to their health insurance are no longer a factor in gaining coverage.
So, if they start a new job and have a spouse with significant pre-existing conditions, they just enroll in the plan as soon as they qualify for enrollment according to the employer rules. Next, the payroll deduction takes care of their portion of premium. The consumer typically pays attention to a couple of things --- to the premium paid each month and to the levels of deductibles, max out of pocket figures and such. But, the couple really doesn't think much about pre-existing conditions and their coverage at this point.
When that same consumer decides to retire, and he and his wife need insurance coverage in the Medicare space, they will learn that the rules are different.
We often are helping people transition from the employer health insurance setting and into the Medicare system for the first time. There are a lot of steps involved and it’s best to know what to do at each stop along the way. There are certain forms that need to do certain things at certain times. It’s beneficial to have a guide throughout the process.
It’s equally beneficial to find a guide BEFORE you start Medicare. When we talk about starting Medicare, in this case, we are talking about when a person is first eligible for Medicare at age 65. Here’s why it’s so important.
Before you turn 65, you are inundated with material in your mailbox and pesky phone calls from agents all over the country. The goal is to sell you a product. Sometimes, it is regardless of whether or not you need that product.
So, when you have tens of thousands of people turning 65 years old and thinking that “they have to do this or that”, you can imagine that mistakes are often made.
So, let’s get to the mistakes that can be made surrounding Medicare and not understanding the correlation to pre-existing conditions.
First, there’s the camp of people that think that they are required to sign up at age 65 for Medicare. For both Part A and Part B. In hindsight, when we ask why they enrolled at that time, the answer is often “I was told that I had to sign up” and they do so.
So, let’s say that this person that "just signed up" is also still working and also has employer insurance and that they pay $150 per month for the coverage at work.
Often, there is no reason that this person needed to enroll into Medicare, but remember, they were told that they “had to”.
Let’s also assume that this is a rather healthy 65-year-old. Fast forward a few years and they are now 68 years old. And, they are now going to be retiring due to multiple heart health issues and it’s time to stop working.
There are two paths that this person can now take when they approach the Medicare system. Our role at Giardini Medicare is to help the person choose his path and enroll into the appropriate product(s). We spend a lot of time talking about the two options and how they operate, how they differ from one another, what a person needs to understand about what they are choosing.
This person learned about the two paths and decided that Medigap was the best path to take. However, in the application process, he learned about an open enrollment time period that he had but knew nothing about. What had he missed? In a nutshell, when someone is new to Medicare’s Part B and is over age 65, he/she can purchase any Medigap contract in the land without answering medical questions asked of their health history. This protection window lasts for six months. After that? Medical underwriting is required. (*Please note the some rules can vary to state. In general, we write as agents based in Michigan)
Remember that this person signed up for Medicare Parts A and B because he heard he had to. And his health was pretty darn good at the time. Three years had gone by and some things had changed. He had no idea that any type of window existed.
So, as agents, what we need to help this person do is to obtain a guarantee issue policy. What that means in reality is that he can get a Medigap contract, but he won’t have all options available to him at that point. Not all carriers need to offer all letter contracts using the guarantee issue process. So, what he did to himself is eliminated some of his "choice" at that point. And, it was for no good reason. Remember, he had employer coverage that was relatively low cost. All he did was add a Medicare cost to his plate (which wasn't necessary) and then, ultimately, limited his choices when it was truly time for a good Medicare decision.
(*Special note: We're in Michigan... one carrier that we work with here (it can be state specific) has what is called "guaranteed acceptance". That means that regardless of your health condition, you can obtain the Medigap product but it will come with a much higher price tag, of course)
Second. Here’s another situation where pre-existing conditions come into play and we see this fairly often.
Sally turns 65 and she enrolls into Medicare Parts A and B because Medicare truly is her next step for health insurance coverage. All is good.
Sally’s agent helped her to enroll into a Medicare Advantage plan because she was - what they determined at the time - to be a “light user” of health insurance so this plan would meet her current needs.
A few years later, Sally called us to determine if she could buy a Medigap policy during the Annual Election Period of time that occurs each fall. She certainly could obtain a Medigap contract if she were to pass medical underwriting.
Sally had been admitted to the hospital a few weeks before her phone call to us. She knew that she would be incurring a fair amount of testing upcoming and now wanted to change her insurance plan to match her most recent more “moderate” use of health insurance.
She was declined the Medigap coverage. If a person has a current medical issue occurring, carriers don’t want to assume those costs. Since she didn’t realize that she would be medically underwritten at the time that she wanted to change her plan, she couldn’t have the coverage.
This concept can be tough to swallow when each year you see on TV the barrage of Medicare advertisements. They typically suggest that you change plans annually, no worries. Further, “you can just change the following year if you don’t like the one that you sign up for this year”. Compare that to insurance that you may have had in the workplace. If you didn't like a plan one year, you truly could change to the other plan the following year. But, pre-existing conditions didn't play a part in the equation.
Unfortunately, the commercials don't include the disclaimers related to your health possibly changing and your health insurance requirements increasing. Too many people believe that they can just change to better coverage in the fall with the sign of a pen and it’s just not true.
Now, we don’t want to imply that the bar to obtain Medigap coverage is enormously high, but it is high enough for many to not qualify. COPD, heart issues, a stent put in 4 months ago – situations such as those that many think of as rather “normal health issues” can be cause for a decline with certain carriers. It’s not an exact science as carriers have their own rules and thresholds. If you’d like to get a feel for if you would or would not qualify to change coverage, feel free to call one of our agents and they’ll help you assess your situation.
What’s our point with all of this?
(1) understand that pre-existing conditions can certainly play a role in your ability to obtain insurance coverage at some point during your Medicare years.
(2) spend some time thinking about the “future you” if you will, regarding your health. If you’re healthy today and take no medications at age 65, that’s fantastic. Will you be that identical person in terms of your health at age 75?
(3) really understand just how your two choices of coverage work. Download our guidebook and use it. It was designed to take you through the Medicare learning process. What is Medicare? Do you need it? How do you get it? How much does it cost? What product should you buy?
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