Senior Products, Medicare and Federal Health Insurance Regulations
Senior Products: Medigap, Medicare Advantage, and Long-Term Care
Medicare supplement (Medigap)
Medigap policies are standardized by letter (A, B, D, G, K, L, M, N, and others), so plans with the same letter offer the same core benefits regardless of insurer. Plans C and F are no longer available to anyone newly eligible for Medicare on or after January 1, 2020. The Medigap open enrollment period lasts six months beginning the month you are 65 and enrolled in Part B; during it, insurers must sell without medical underwriting. Outside that window, insurers may underwrite in most states. Medigap cannot be used with a Medicare Advantage plan and does not include prescription drug coverage (newer standardized plans cannot cover drugs).
Medicare Advantage and Part D
Medicare Advantage (Part C) replaces Original Medicare's delivery system, often with networks and extra benefits, and usually includes Part D. Part D prescription drug plans have their own enrollment periods and late penalties.
Long-term care insurance
LTC insurance pays for custodial care when the insured cannot perform a set number of activities of daily living (typically 2 of 6: bathing, dressing, eating, toileting, transferring, continence) or has a cognitive impairment. Key features: elimination period, daily or monthly benefit limit, benefit period, inflation protection, and nonforfeiture options. Tax-qualified policies receive favorable tax treatment and use the 2-of-6 ADL or cognitive impairment trigger. Partnership programs allow Medicaid asset protection when qualified coverage is purchased.
Suitability and ethics
Senior sales demand documented suitability for annuities, careful avoidance of duplicative coverage, and reporting of suspected elder financial abuse.
Trap and rule of thumb
You cannot sell a Medigap policy to someone enrolled in Medicare Advantage unless they are disenrolling. Rule of thumb: six months at 65 with Part B = guaranteed issue for Medigap.
Medicare and Federal Health Insurance Regulations
The four parts
Part A covers inpatient hospital, skilled nursing (after a qualifying stay), hospice, and some home health; it is premium free with 40 quarters of Medicare-covered work. Part B covers physician services, outpatient care, and durable medical equipment, and charges a monthly premium with income-related adjustments (IRMAA). Part C is Medicare Advantage. Part D is prescription drug coverage. Medicaid is a separate joint federal-state program for low-income individuals, and CHIP covers children in families above Medicaid limits.
Enrollment periods and penalties
The Initial Enrollment Period is the seven-month window around the 65th birthday (or the 25th month of disability). The General Enrollment Period runs January 1 through March 31 with coverage beginning July 1. Special Enrollment Periods apply when someone has creditable employer coverage. Annual election runs October 15 to December 7. Late Part B enrollment generally adds a 10% premium penalty for each full 12-month period of delay. The Part D late penalty is 1% of the national base beneficiary premium per month of delay.
Other federal rules
Medicare Secondary Payer rules decide whether Medicare or another plan pays first (employer group health plans for active workers generally pay first). The ACA created marketplaces, guaranteed issue, essential health benefits, metal tiers, premium subsidies, and dependent coverage to age 26. HIPAA governs privacy and portability, and ERISA governs employer benefit plans. Appeal rights exist at every level, including the Part D exceptions and redetermination process.
Trap and rule of thumb
Questions confuse the General Enrollment Period (January–March) with the Annual Election Period (October–December). Rule of thumb: Part B penalty = 10% per 12 months late, for as long as the person has Part B.