Learn the Lingo: What does “Guaranteed Issue” mean?
The insurance industry has a lot of lingo — lingo that makes it somewhat difficult to understand. But once you can get a few phrases and terms under your belt, it all starts to feel a little bit easier.
One step at a time.
Today’s lingo is “Guaranteed Issue,” also known as “GI.”
As an American, you have rights. Like freedom of speech and the right to bear arms.
And you also have the right to be accepted into a Medicare Supplement policy, regardless of how healthy or unhealthy you are.
This means that a Medicare Supplement carrier must sell you a policy, must cover you for any conditions you already have, and they can’t charge you more for your policy even if you’re not healthy.
There are two big disclaimers though:
- You can only exercise your Guaranteed Issue rights under certain circumstances.
- You only have the right to buy certain plans.
Let’s break it down.
Under which circumstances can I buy a GI policy?
If you lose or drop your current health care coverage, you have a window. That window is generally 60 days before and 60 days after the day your coverage is done.
This usually happens when you retire — you get off of your group plan and move on over to Medicare.
This is the most common reason someone would exercise their GI rights.
There are some other scenarios, though, but they’re less common. One would be if your Medicare Advantage plan changes and you no longer are in the plan’s service area. Another is if your current Medigap insurance company goes bankrupt, and you lose your coverage. You can read all 7 reasons on the Medicare.gov website.
Which plans are GI?
The Guaranteed Issue plans are Medigap Plan A, B, C, F, K, and L.
Plan F is the most common by far. Plan F has total coverage, so you never get a single medical bill as long as the charges are approved by Medicare.
It is worth noting that both Plan F and Plan C will be discontinued starting in 2020.
To make things easier to quickly understand, here’s a chart of all the Medigap Plans.
The plans that cover the most are naturally going to be the most expensive.
The Downside of GI
While being accepted into a Medigap policy regardless of your health is a pretty good gig, nothing is too good to be true.
There are some definite cons to this setup.
#1: Rate increases
The first is that the GI plans are more prone to rate increases. Since these plans accept a lot of potentially unhealthy applicants, there are naturally going to be more claims.
When the claims are higher than what the company receives in premiums… that’s when the dreaded rate increases happen.
#2: You can’t switch if you’re unhealthy
One of the awesome things about Medigap plans is that you can price shop each year. If another insurance company has a better price on the same plan, you can just switch and pay less for the same thing.
However, when you switch carriers, and it isn’t a GI situation anymore, you have to pass underwriting.
If you have a health condition that’s on the decline list, you’re stuck with the carrier you chose. This is a definite disadvantage, because your rates could end up being more expensive than the competition.
The plus side is that all Medigap plans are required to keep you. In short, they can’t kick you off the plan if your health makes a turn for the worst.
#3: Simply more expensive
Not always, but sometimes GI plans can be more expensive than non-GI plans. While coverage varies, you might see a Plan A that’s more expensive than a Plan G.
Plan A has far less coverage than a Plan G, but the fact that it has so many potential unhealthy applicants raises its cost.
It’s always important to weigh your options when it comes to GI or non-GI. An experienced agent can take a look at your situation and your current health status to determine which route is the right route for you.
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