Switching your clients’ Medicare Supplement (Medigap) plans requires a little planning and consideration of their current health status. Here’s a general breakdown of what to know, and how changing existing policies works.
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Why Switch Med Supp Plans?
There are plenty of reasons to change Med Supp plans, depending on your client’s current coverage and changing needs. A few of the top reasons to switch are:
- Your client doesn’t need all the benefits they’re paying for.
- They need more or different benefits than before.
- Your client’s current Med Supp plan has the benefits they need, but they want to change insurance companies.
- Their plan has the benefits they need, but they want a new plan that costs less.
Your Clients Can Switch Plans If…
A. They have guaranteed issue rights or can pass underwriting.
B. They are within their six-month Med Supp open enrollment period.
The Med Supp open enrollment period begins the first day of the month when your client is at least 65 years old and enrolled in Medicare Part B. After your client buys their first Med Supp policy, there’s no certain amount of time they must wait before switching to a different one.
Don’t Underestimate Underwriting
Med Supp insurance companies can use medical underwriting to decide whether or not to accept your client’s application. If they buy a plan during their open enrollment period, however, they can buy any plan their desired company sells. Health conditions rarely factor into a policy’s premium, but clients can be charged a higher rate for being a smoker.
How to Switch Med Supp Plans
First, you should collect an application for enrollment in a new Med Supp plan from the new insurance company. On the application, remember to indicate that the requested plan would replace another one, or include a completed Replacement Form for that company. To avoid a gap in coverage, apply for a plan with an effective start date of the first of the following month. Then, once the application is accepted, cancel the current policy effective the first of the month.
The Free Look
If your client’s application for a new plan is accepted, they have 30 days to decide if they’d like to keep their coverage. It’s called a “free look period,” and can come in handy. The free look period starts when your client gets their new Med Supp plan.
Your client will still need to pay both premiums for that month. They should not cancel their original Med Supp plan until they’ve decided to keep the new one. As long as your client’s old policy has the same specific benefits as the policy they move to, the new insurance company can’t exclude your client’s pre-existing condition. Insurers can only enact a waiting period for conditions that were diagnosed or treated within six months before the Med Supp plan start date.
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