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Health Insurance Guys: California’s special Medigap benefits
Health Insurance Guys

Health Insurance Guys: California’s special Medigap benefits

  • Updated

Dear Tom, Alan and Kyle:

My husband has been on Medicare Supplement for a few years now (Plan F). I’m 66 and will soon be retiring. I’ll be signing up for Medicare Part B and will look at delaying paying for Part B in order to investigate COBRA.

Two questions: what is the “birthday rule” and should I take COBRA?


Alan: Very timely, Debra. We’ve been looking at a column by Bonnie Burns in this month’s California Broker Magazine: “… California’s Unique Medigap Rules and Extra Consumer Rights."

Since 1997, we’ve had the ability to move laterally or down in our Medicare supplement plans.

For example, if your husband’s birthday is in September, he can start shopping for any other insurance company’s Plan F. That would be a guaranteed lateral move, but he could also pick anybody’s Plan G, N, or whatever because they’re all considered a downgrade from Plan F.

The one caution is, don’t ask for a 9/1 start date. I’ve had one denied until we changed the requested date to the first of the month following the birth month. So, if he wants to change, he can start any time in August and request a 10/1 effective date for his new plan.

Alan: OK, I’m going to take the COBRA one also, because whenever a customer comes in the office and talks about delaying signing up for Medicare Part B, it makes me very nervous. Here’s why.

According to the Center for Medicare Advocacy:

“Because COBRA coverage is not considered coverage due to current employment, an individual is not entitled to a Special Enrollment Period (SEP) for Part B when COBRA coverage ends and is not permitted to enroll in Medicare Part B until the next General Enrollment Period (GEP), which runs January through March of the year, with coverage beginning July 1. Moreover, the individual will pay a lifetime late enrollment penalty of 10% for every 12 months of delayed enrollment.”

Now, Debra, did you read that part about lifetime penalty? I don’t ever want to stick anyone with that!

Tom: A new wrinkle on the federal American Rescue Plan is that people who leave employment and go on COBRA are eligible to have their premiums paid at 100 percent for up to six months.

However, if they are eligible for Medicare, they are not eligible for free COBRA. And yes, you guessed it, there are federal penalties if you don’t tell your employer about your Medicare eligibility.

Kyle: Since we do a lot of both Blue Cross and Blue Shield Medigap plans, I was surprised to learn that they are regulated by the California Department of Managed Health Care (DMC), while all the others, United Health Care’s AARP plan, Mutual of Omaha, et. al., are regulated by the California Department of Insurance (CDI).

All the Medicare Advantage plans, Kaiser, SCAN, etc. are answerable to the federal Centers for Medicare and Medicaid Services (CMS).

Good luck, Debra! Keep in touch.

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