What Is Guaranteed Issue Right?
In simplest terms, a guaranteed issue right can protect individuals from medical underwriting, that is, when pre-existing health issues would otherwise have an impact on one’s ability to get a policy or on the premiums to be paid.
In the Medicare world, guaranteed issue right protects a beneficiary’s ability to get a Medicare supplement plan, also known as a Medigap policy. When one has a guaranteed issue right, the insurance company must sell the applicant a Medigap policy, must cover all pre-existing conditions, and cannot charge a higher premium because of past or present health problems.
There are several situations in which an individual can have a guaranteed issue right to get a Medicare supplement. Here are five of the most common.
- Enrolling in Part B initially at age 65,
- Enrolling in Part B for the first time when retiring after age 65 and giving up an employer group health plan (related to current employment of the individual or spouse),
- During the Medicare Advantage trial period, the first 12 months of coverage for those who enroll in the plan at age 65,
- During the 12-month period when dropping a Medicare supplement plan after age 65 and enrolling in an Advantage plan for the first time, and
- Moving out of a Medicare Advantage plan’s service area.
Each of these situations involves different timing. For example, enrolling in Part B for the first time at age 65 provides a six-month window. When moving out of a plan’s service area, one can apply for the Medigap policy beginning 60 days before up to 63 days after the coverage ends.
More important points:
- A beneficiary, with no guaranteed issue right, who chooses to disenroll from a Medicare Advantage plan (for instance, during the Medicare Advantage Open Enrollment Period, January 31-March 31), could face the repercussions of medical underwriting when applying for a Medigap policy.
- The same holds true for changing to a different plan, such as from Plan K to Plan G, or a different insurance company’s plan.
- There are four states—New York, Connecticut, Massachusetts, and Maine—that offer more generous guaranteed issue rights. Each has different rules. For example, New York law requires an insurer to issue Medigap coverage at any time, without premium rate distinctions.
- A handful of other states allow those who have a Medigap policy to make changes at certain times during the year, like the birthday month for those in California.
- Guaranteed issue right is not a concern when applying for a Medicare Advantage plan. A company cannot deny coverage to an eligible applicant. The one exception: A person with End-stage Renal Disease (ESRD) cannot enroll initially in an Advantage plan.