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Improving Access To Medigap When Beneficiaries Leave Medicare Advantage

Medicare beneficiaries have the option to switch between traditional Medicare (TM) and Medicare Advantage (MA) during the annual open enrollment period. However, challenges in obtaining supplemental insurance, particularly for those switching from MA to TM, pose significant barriers due to the lack of availability of affordable Medigap coverage. Click here for article.

  • Limited availability of supplemental insurance (Medigap) disproportionately affects sicker beneficiaries who want to switch from MA to TM during open enrollment.

  • While federal rules allow beneficiaries to switch between TM and MA, state regulations regarding Medigap coverage vary, making it difficult for some beneficiaries to obtain coverage.

  • MA enrollment has significantly increased, with 31.2 million beneficiaries enrolled in 2023, up from 6.6 million in 2006, while TM enrollment has decreased.

  • Many beneficiaries perceive selecting MA during open enrollment as a one-way switch due to challenges in re-obtaining Medigap coverage if they later want to switch back to TM.

  • TM involves out-of-pocket costs and deductibles, leading 90% of TM beneficiaries to purchase supplemental coverage, while MA plans offer more generous benefits with restricted networks.

  • Policy options to address the Medigap availability issue include expanding guaranteed issue requirements for Medigap plans, either at the federal or state level, and considering reforms to limit medical underwriting and differential premiums.

  • Balancing the trade-offs of potential reforms involves considering how to offset increased Medigap costs, such as through surcharges on beneficiaries switching from MA to TM or reducing MA overpayments and enhancing TM benefits with catastrophic protection.

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