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By Elizabeth B. Lippincott

 

Medicare Supplement (Med Supp, a/k/a Medigap) guaranteed issue rights have become a hot topic. Even late-night comedians are talking about the challenge faced by people in Medicare Advantage (MA) for more than a year who would like to return to Original Medicare and purchase a Med Supp policy.

Most states provide limited rights for people to enroll in Med Supp, after more than a year in MA, without medical underwriting. Medical underwriting means that insurers can deny or charge more for coverage due to health conditions. Although this might sound harsh, the reality is that there is a delicate policy balance between flexibility and affordability. Expanding the ability for people to purchase Med Supp without medical underwriting at any time leads to higher premiums for all policyholders, as Med Supp is private insurance, not a government-subsidized program. In other words, restricting access to Med Supp insurance for people who have been in MA for more than a year protects the risk pool and helps keep premiums affordable for those who buy policies at or around age 65.

In 2015, the bipartisan Medicare Access and CHIP Reauthorization Act (MACRA) expanded the circumstances in which MA enrollees can purchase Med Supp without medical underwriting. Specifically, MACRA provides that any MA enrollee who is entitled to a special election period (SEP) under section 1851(e)(4) of the Social Security Act has a guaranteed issue right to enroll in Med Supp.[1] Section 1851(e)(4) contains various SEPs for MA enrollees, including SEPs for individuals whose plan has been terminated or whose are no longer eligible for the plan, as well as a catch-all SEP for individuals who meet “other exceptional conditions as the Secretary may provide.”[2] This catch-all SEP encompasses other SEPs established by CMS in regulations and guidance.

This expansion of Med Supp guaranteed issue rights by MACRA was a significant policy change. There are a lot of SEPs for Medicare Advantage, ranging from moving out of your MA plan’s service area, to being misled in the sales process by the MA organization about the coverage you selected, to having your provider leave your plan’s network in a network change deemed “significant” by CMS.[3]

Med Supp is a unique federal-state hybrid category of health insurance. It’s a standardized type of private insurance regulated and overseen by state insurance commissioners, but the minimum policy standards, including guaranteed issue rights, are set by federal law (though states can modify them to make them more protective of consumers than the federal requirements). Normally, when Congress updates Med Supp requirements, the National Association of Insurance Commissioners (NAIC) updates its model rule for Med Supp,[4] which is then adopted by individual states, with or without modifications.

Inexplicably, the NAIC Model Rule was not updated to reflect MACRA’s guaranteed issue enhancements. The current version of the NAIC Model Rule reflects other changes from MACRA, including limiting new sales of Plan F after January 1, 2020, but the expanded guaranteed issue rights from MACRA are conspicuously absent from Section 12 regarding Guaranteed Issue.

That is the mystery.

In 2024, CMS, which doesn’t directly regulate Med Supp carriers, clarified its interpretation of MACRA’s guaranteed issue right expansion. In guidance published online by CMS on November 22, 2024, CMS explains the guaranteed issue rights in the context of significant network changes as follows:

9. If CMS does determine a “significant” event has occurred, where the consumer would qualify for a special enrollment period with Medigap GI rights, how are the Medigap GI rights communicated to the insurer and the consumer?

When CMS notifies an MA plan that the change to their network has been determined to be “significant”, the plan must notify its enrollees of their eligibility for this SEP, including Medigap GI rights, and how to use the SEP. CMS provides model language regarding the SEP and Medigap GI rights for the MA organization to use in its notice to affected enrollees. . . .

17. What is the difference between a plan terminating, which provides a special enrollment period and GI rights vs. a change in the network that doesn’t provide a special enrollment period and GI rights?

If an individual is enrolled in an MA plan and the plan is leaving Medicare or the service area (or the beneficiary moves out of the plan’s service area), the beneficiary will have an SEP and will also have Medigap GI rights.

When CMS determines a change in an MA plan’s provider network to be “significant”, affected enrollees are eligible for an SEP and can switch to traditional Medicare and enroll in Medigap on a GI basis. . . .[5]

The CMS guidance is unequivocal. MA enrollees with an SEP to change MA plans, including SEPs for moving out of the plan’s service area, a significant network change, or the MA plan’s discontinuance, also have a right to guaranteed issue of Med Supp. This is especially significant for Medicare beneficiaries with the trend toward MA plan discontinuations and service area reductions.

All of this begs the questions:

• Why is the guaranteed issue language enacted at the federal level in 2015 missing from the NAIC Model Rule?
• Why haven’t we heard more about this significant expansion of guaranteed issue rights, other than in the November 2024 CMS Q&A?
• Will the industry need to rely on a CMS Q&A document to implement this statutory guaranteed issue requirement long term?
• Are all Med Supp carriers honoring these guaranteed issue rights?

If you have any insights, please share in the comments.

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[1] Social Security Act § 1882(s)(3)(B)(ii).

[2] Social Security Act § 1851(e)(4)(D).

[3] 42 CFR § 422.62(b).

[4] Model #651 – Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act, last updated Fall 2024) (NAIC Model Rule).

[5] CMS, NAIC Q&A AND FOLLOW-UPS, pp. 4, 7-4 (November 2024).