Medicare in California

California protects access to Medigap plans for people under 65, but not if they have end-stage renal disease

At a glance: Medicare health insurance in California

Medicare enrollment in California

Nationwide, 62 million people are covered by Medicare — and more than 10 percent of them are in California. As of mid-2020, 6,407,499 California residents had Medicare coverage. But that’s less than 16 percent of the state’s nearly 40 million people, versus nearly 19 percent of the United States population that is enrolled in Medicare.

For most Americans, Medicare coverage enrollment goes along with turning 65. But Medicare eligibility is also triggered when a person has been receiving disability benefits for 24 months (people with ALS or end-stage renal disease do not have to wait 24 months for their Medicare enrollment). Nationwide, 15 percent of all Medicare beneficiaries are eligible due to disability. It’s a little lower in California, though, with just 12 percent of Medicare beneficiaries enrolled due to a disability.

Medicare Advantage in California

Although Medicare is funded and run by the federal government, enrollees can choose whether they want to receive their benefits directly from the federal government via Original Medicare or enroll in a Medicare Advantage plan offered by a private insurer, if such plans are available in their area. There are pros and cons to Medicare Advantage and Original Medicare, and no single solution that works for everyone.

Although most counties in the United States do have Medicare Advantage plans available for purchase, there are 15 counties in northern and central California where Original Medicare is the only option. Of the 58 counties in California, Medicare Advantage plans are available in 43 of them as of 2020. Across those 43 counties, plan availability varies from just one plan option in part of Los Angeles County and two plans in several other counties, to 90 plans in the rest of Los Angeles County.

But 40 percent of Medicare beneficiaries in California were enrolled in Medicare Advantage plans as of 2018, compared with an average of 34 percent nationwide. More than 2.9 million people with Medicare in California, nearly 46 percent of California’s Medicare beneficiaries, had private Medicare Advantage plans as of July 2020 (as opposed to Original Medicare; that figure does not include people who had private Part D or Medigap coverage to supplement Original Medicare). So Medicare Advantage enrollment is growing in California, just as it is nationwide.

Medicare’s annual election period (October 15 to December 7 each year) allows Medicare beneficiaries the opportunity to switch between Medicare Advantage and Original Medicare and/or add or drop a Medicare Part D prescription plan. Medicare Advantage enrollees also have the option to switch to a different Advantage plan or to Original Medicare during the Medicare Advantage open enrollment period, which runs from January 1 to March 31.

Medigap in California

Original Medicare does not limit out-of-pocket costs, so most enrollees maintain some form of supplemental coverage. More than half of Original Medicare beneficiaries receive their supplemental coverage through an employer-sponsored plan or Medicaid. But for those who don’t, Medigap plans (also known as Medicare supplement plans) are designed to pay some or all of the out-of-pocket costs (deductibles and coinsurance) that Medicare beneficiaries would otherwise have to pay themselves.

There are 27 insurers in California that offer Medigap plans. And as of 2018, there were 591,240 California residents with Medigap coverage. Although California has by far the nation’s largest Medicare population, there were four states (Florida, Illinois, Pennsylvania, and Texas) where more people were enrolled in Medigap plans as of 2018. California’s larger-than-average Medicare Advantage enrollment means that fewer people have Original Medicare, and Medigap plans can only be used with Original Medicare.

Medigap plans are sold by private insurers, but the plans are standardized under federal rules, with ten different plan designs (differentiated by letters, A through N). The benefits offered by a particular plan (Plan C, Plan K, etc.) are the same regardless of which insurer is selling the plan. So plan comparisons are much easier for Medigap policies than for other types of health insurance; consumers can base their decision on premiums (and how premiums change over time) and less tangible factors like customer service, since the benefits themselves are uniform. All Medigap insurers must offer at least Plan A. And if they offer any other plans, they must offer at least Plan C or Plan F to enrollees who were already eligible for Medicare prior to 2020, and at least Plan D or Plan G to enrollees who become eligible for Medicare in 2020 or beyond.

California does not dictate how Medigap insurers can adjust premiums based on age, so most Medigap insurers in the state use attained-age rating, which means that premiums increase as a person gets older. There are a few insurers in California that use issue-age rating instead, with premiums based on the age the person was when they enrolled. Community rating (also known as “no age” rating) means that rates do not vary with age at all, but there are no Medigap insurers in California that use community rating (several states require community rating or issue-age rating, but California is not among them).

Unlike other private Medicare coverage (Medicare Advantage plans and Medicare Part D plans), federal rules do not provide an annual open enrollment window for Medigap plans. Instead, federal rules provide a one-time six-month window when Medigap coverage is guaranteed-issue. This window starts when a person is at least 65 and enrolled in Medicare Part B (you must be enrolled in both Part A and Part B to buy a Medigap plan). But California law gives Medigap enrollees a 30-day window each year, following their birthday, when they can switch to any other Medigap plan with equal or lesser benefits, without medical underwriting.

People who aren’t yet 65 can enroll in Medicare if they’re disabled and have been receiving disability benefits for at least two years, and more than 700,000 Medicare beneficiaries in California are under 65. Federal rules do not guarantee access to Medigap plans for people who are under 65, but the majority of the states, including California, have stepped in to ensure at least some access to private Medigap plans for disabled enrollees under the age of 65 (federal legislation, including 2018’s H.R.6431, has been considered to expand access to Medigap plans to all Medicare beneficiaries, regardless of age, but the rules have thus far not changed).

For Medicare beneficiaries in California who are under age 65, Article 6 (Section 10192.11) of California’s insurance statute requires Medigap insurers in the state to offer at least plans A, B, D, and G (if offered by the company to any applicants; note that this used to be plans A, B, C, and F, but S.B.784 was enacted in 2019 to swap Plans C and F for Plans D and G, since Plans C and F are no longer available — nationwide — to newly-eligible Medicare beneficiaries as of 2020; the requirement to make plans C and F — if offered by the insurer — available is still applicable for disabled Medicare beneficiaries who became eligible for Medicare prior to 2020). The insurers must also offer either plan K or Plan L, if offered by the company, or Plan M or Plan N, if offered by the company. But none of these provisions apply to Medicare beneficiaries under age 65 who are eligible for Medicare due to having end-stage renal disease (kidney failure).

This is important, because federal rules also allow Medicare Advantage plans to reject new applicants with end-stage renal disease. [This will change as of 2021, under the 21st Century Cures Act; starting in 2021, Medicare Advantage plans will be guaranteed-issue for all Medicare beneficiaries, including those with ESRD.] People in Los Angeles, Orange, San Bernadino, and Riverside Counties can enroll in Village Health, which is a Medicare Advantage Special Needs Plan for people with end-stage renal disease. Anthem’s CareMore ESRD Medicare Advantage plan is available in Los Angeles, and Anthem’s ESRD Medicare Advantage plan is available in Madera, Monterey, and San Luis Obispo. There may be other similar options for Medicare Advantage plans tailored to people with ESRD, but they are not widespread. So in much of California, people with ESRD do not have an option that provides a cap on out-of-pocket Medicare expenses.

California’s statute allows Medigap insurers to charge higher premiums for people under age 65. But coverage must be guaranteed-issue during the six months after a person enrolls in Medicare Part B (regardless of age) or the six months after a person is determined to be retroactively eligible for Medicare Part B. And insurers cannot pay differing broker commissions based on the age of the Medigap enrollee (ie, insurers are not allowed to use lower commissions to dissuade brokers from selling Medigap plans to people under age 65).

Although the Affordable Care Act eliminated pre-existing condition exclusions in most of the private health insurance market, those regulations don’t apply to Medigap plans. Medigap insurers can impose a pre-existing condition waiting period of up to six months, if you didn’t have at least six months of continuous coverage prior to your enrollment. And if you apply for a Medigap plan after your initial enrollment window closes (assuming you aren’t eligible for one of the limited guaranteed-issue rights), the insurer can look back at your medical history in determining whether to accept your application, and at what premium.

Medicare Part D in California

Original Medicare does not cover outpatient prescription drugs. More than half of Original Medicare beneficiaries have supplemental coverage via an employer-sponsored plan or Medicaid, and these plans often include prescription coverage. But Medicare enrollees without creditable drug coverage need to obtain Medicare Part D prescription coverage. Part D coverage can be purchased as a stand-alone plan, or as part of a Medicare Advantage plan that includes integrated Part D prescription drug coverage.

Insurers in California are offering 32 stand-alone Part D plans for sale in 2020, with premiums that range from about $13 to $118/month.

As of mid-2020, there were more than 5.1 million Medicare beneficiaries in California with Part D prescription coverage. About 2.3 million had stand-alone Medicare Part D plans, while 2.8 million had Medicare Advantage plans with built-in Part D coverage.

Medicare Part D enrollment is available when a beneficiary is first eligible for Medicare, and also during the annual open enrollment period each fall, from October 15 to December 7.

Medicare spending in California

In 2018, Original Medicare’s average per-beneficiary spending in California was $9,868, based on data standardized to eliminate regional differences in payment rates (the data did not include costs for Medicare Advantage).

Nationwide, average per beneficiary Original Medicare spending was $10,096 per enrollee, so Medicare spending in California was about 2 percent below the national average. Per-beneficiary Original Medicare spending was highest in Louisiana, at $11,932, and lowest in Hawaii, at just $6,971.

Medicare in California: Resources for Medicare beneficiaries and their caregivers

Need help with Medicare enrollment in California, or have questions about Medicare eligibility in California? You can contact HICAP, California’s Health Insurance Counseling and Advocacy Program.

California’s Department of Insurance, which oversees Medigap plans in California, has a helpful summary of state rules and regulations related to Medigap plans, and a general guide to Medigap plans in California.

HICAP and the California Department of Aging also have a helpful toolkit for avoiding Medicare fraud and abuse.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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