It can be frustrating dealing with insurance, especially when your plan does not work the way you thought it would or your insurance provider does not understand your needs. These situations often lead people to make drastic decisions, including cancelling their plan altogether. Before you terminate your policy, you need to understand the gravity of your decision. You may have to wait a long time to get covered again or be left with no coverage at all, depending on your plan type.
For starters, Medicare Advantage plan (Part C) and Prescription Drug plan (Part D) enrollments are done on an annual basis. This means that once you enroll in this type of plan you are essentially “locked in” until the end of the calendar year. You may only switch your plan or make changes during the Annual Enrollment Period (AEP) which is October 15th-December 7th, unless you have a Special Election Period (SEP) that will allow you to change plans outside of this window. If you decide to terminate your plan or stop paying premiums without a valid SEP, you need to ask yourself if you are financially able to afford the retail costs of your prescriptions and the copays or coinsurances for medical services under Original Medicare (Part A and B).
Afterall, drug plans pay a portion of the cost of your prescriptions, so you may get quite the sticker shock when self-paying for them. Also, Original Medicare has deductibles and copays with no annual cap. For example, with Part A there is a $1,484 inpatient hospital deductible for each benefit period and copays that apply after 60 days of your hospital stay. Part B medical services have an annual deductible of $203 and a 20% coinsurance afterwards, again with no cap on how much you can be charged!
On the other hand, Medicare Supplements (Medigap) plans can be changed at any time. However, if you have had Part B for more that six months or you do not have a Guaranteed Issue Period, you will have to go through Medical Underwriting and carriers can deny coverage based on your health history. There are some state specific exceptions, but for most states this is how it will work. Also, if you had a lapse in coverage before you enroll, the supplement carrier may choose to exclude covering preexisting conditions even if they do grant you the policy.
If you decide to cancel your Medicare Supplement before you have other coverage in place, you must be prepared to pay for your medical services using Original Medicare. Unless you have a specified Guaranteed Issue, state specific exception or are within your first six months of having Part B, there is no guarantee that you will be granted the coverage. In some instances, you may never be able to get back into a supplement once you drop it, depending on your health history and circumstances.
When it comes to cancelling your coverage, make sure that you are aware of your options. Do your research and find out when you will be able to pick up coverage again and what your costs will be without insurance if it comes down to that. We hear all too often from folks who cancelled their coverage and want us to fix it by enrolling them into a plan. The hard truth is that sometimes we cannot fix the damage once it is done, and they must go without coverage.
Call 1-800-334-9330 and one of AMAC’s trusted, licensed Advisors will be happy to assist you with your needs