The Centers for Medicare and Medicaid Services (CMS) has proposed new regulations requiring insurance agents and brokers to provide more detailed information to beneficiaries about Medicare Advantage plans. This initiative, referred to as “Informed Enrollment,” seeks to ensure that Medicare beneficiaries fully understand the practical limitations of switching plans before making enrollment decisions.
Current Rules vs. Practical Realities
Under existing Medicare rules, beneficiaries have several opportunities to switch plans. Each year during the open enrollment period, from October 15 to December 7, beneficiaries can change their Medicare Advantage plans or move between Medicare Advantage and original Medicare. However, while these options are legally permitted, practical challenges often make these transitions more difficult than they appear.
One major issue lies in the guaranteed-issue protections for Medigap policies—private insurance plans that cover out-of-pocket expenses not included in original Medicare. During a beneficiary’s initial enrollment period, insurers are required to offer Medigap policies to all applicants without considering their medical history or pre-existing conditions. However, after this initial period, these protections are largely unavailable in most states.
Medigap Access After Initial Enrollment
After the initial enrollment period, insurers in many states can deny Medigap coverage or charge higher premiums based on an applicant’s health history. Only four states—Connecticut, Massachusetts, New York, and Maine—offer continuous or recurring guaranteed-issue protections. Other states provide limited protections under specific circumstances, such as changes in employer-provided retiree health benefits or during a trial period for Medicare Advantage plans.
This lack of guaranteed access to Medigap policies creates financial risks for beneficiaries considering a switch from Medicare Advantage to original Medicare. Without a Medigap policy, beneficiaries may face significant out-of-pocket expenses, including the 20% coinsurance required for most Part B services.
The CMS Proposal: Emphasizing Transparency
The proposed CMS regulations would require agents and brokers to clearly explain these limitations to beneficiaries enrolling in Medicare Advantage plans for the first time. This includes informing beneficiaries about their one-time guaranteed-issue rights under federal law when enrolling in original Medicare. By highlighting these practical challenges upfront, CMS aims to ensure beneficiaries make more informed decisions about their healthcare coverage.
Implications for Beneficiaries
The proposal underscores the importance of understanding not only the legal rights surrounding Medicare enrollment but also the practical implications. While Medicare Advantage plans may appeal to beneficiaries for their lower initial costs and additional benefits, the inability to secure a Medigap policy later could result in significant financial burdens for those who wish to switch to original Medicare.
What Comes Next?
As CMS considers public feedback on the proposed regulations, beneficiaries and advocates alike are watching closely. If implemented, these changes could reshape how insurance agents approach Medicare Advantage plan enrollment and help beneficiaries better navigate their healthcare options.
This initiative reflects CMS’s ongoing efforts to enhance consumer protections and ensure that Medicare beneficiaries have the information they need to make decisions that align with their long-term health and financial well-being.