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11.8 Medicare Supplement Minimum Benefit Standards

Policy Requirements​

  • A Medicare Supplement (Medigap) policy must include a 30-day free-look provision, prominently displayed on the first page in bold print.
  • The policy must also provide an Outline of Coverage, presented in bold print, which summarizes key information such as benefits, deductibles, exclusions, and premiums.
  • Insurers are required to clearly explain the relationship between the Medigap policy and Medicare benefits.
  • In addition, insurance regulations require that the application include a replacement question, and the agent must retain a copy of any replacement form for a specified period.
  • At the time of application, the insurer must provide both a Buyer’s Guide and an Outline of Coverage. The applicant must sign an acknowledgment confirming receipt of these documents.

Note: Refer to the applicable state law chapter for any additional requirements or provisions.

Guaranteed Issue, Renewability and Cancelation​

A Medicare Supplement (Medigap) policy must be issued on a guaranteed issue basis when applied for during the open enrollment period, which lasts 6 months from the time an individual becomes eligible for Medicare.

A pre-existing condition waiting period (probationary period) of up to 6 months may apply under certain circumstances, such as when there has been a gap in prior coverage exceeding 63 days.

Medigap policies must be at least guaranteed renewable, meaning they cannot be canceled or nonrenewed based on the insured’s health status. A policy may only be terminated for reasons such as nonpayment of premium or material misrepresentation.

Pre-existing Conditions​

The policy may not exclude coverage for any pre-existing condition that existed more than 6 months prior to the policy’s effective date.

Duplication​

An agent is prohibited from selling a policy that duplicates benefits already provided by Medicare or from selling multiple Medigap policies to the same insured.

Permitted Compensation​

An agent selling Medicare Supplement insurance is limited to the commission paid on the policy. The first-year commission may not exceed 200% of the renewal commission paid in the second year.

Notice of Medicare Benefit Changes​

A policy that pays benefits based on Medicare’s cost-sharing percentages must be automatically updated to reflect any changes in Medicare laws. The insurer is required to notify the insured of any changes to Medicare deductibles, copayments, and corresponding adjustments to the policy.

Premium Rates and Increases​

Any premium rate changes or increases must be communicated to the insured in writing at least 30 days prior to the effective date of the adjustment.

Continuation and Conversion​

If a group policy is terminated by the policyholder, the insurer must offer each certificate holder one of the following options:

  • An individual policy providing benefits equivalent to those of the group policy
  • An individual policy that meets only the minimum required benefit standards

If the group policy is replaced by another group policy, the replacing insurer must provide comparable coverage to all individuals previously insured, without imposing any new waiting periods or exclusions.

Additionally, if a group policy is purchased during the open enrollment period, it must be issued regardless of the group’s health status.