At a glance: Medicare health insurance in Minnesota
- Just over a million Minnesota residents are enrolled in Medicare.
- Nearly half of Minnesota Medicare beneficiaries have private Medicare coverage, including Medicare Advantage or Medicare Cost plans.
- More than 300,000 Minnesota residents had to enroll in new Medicare coverage for 2019, after their Medicare Cost plans ended on December 31, 2018.
- Medicare Advantage availability in Minnesota ranges from 15 to 48 plans, depending on the county.
- Minnesota has its own rules for Medigap standardization.
- Minnesota has 21 Medigap insurers, and the state requires Medigap insurers to offer coverage to people under age 65.
- Legislation under consideration in 2020 would grant year-round guaranteed-issue access to Medigap plans in MN.
- There are 29 stand-alone Part D prescription plans available in Minnesota in 2020.
- Per-enrollee Original Medicare spending in Minnesota is 10 percent lower than the national average.
How many Minnesotans have Medicare coverage?
As of late 2019, there were more than a million Minnesota residents with Medicare overage, which amounted to a little more than 18 percent of the state’s population.
Most Americans become eligible for Medicare when they turn 65. But younger Americans gain Medicare eligibility after they have been receiving disability benefits for 24 months, or have ALS or end-stage renal disease. Thirteen percent of Minnesota’s Medicare beneficiaries were under age 65 as of 2017, versus 16 percent nationwide. On the high and low ends of the spectrum, 23 percent of Medicare beneficiaries in Alabama, Kentucky, and Mississippi are under 65, while just 9 percent of Hawaii’s Medicare beneficiaries are eligible due to disability.
Private Medicare coverage is popular in Minnesota
Private Medicare Advantage plans are an alternative to Original Medicare. There are pros and cons to either option, and the right solution is different for each person. Plan availability varies by county, but Minnesota’s market is robust: Residents throughout the state can select from among at least 15 Advantage plans in 2020, and some counties have as many as 48 plans for sale.
Private managed care programs for Medicare beneficiaries are particularly popular in Minnesota. Nearly 46 percent of all Minnesota Medicare enrollees were enrolled in private Medicare plans as of late 2019, as opposed to a national average of nearly 38 percent (Hawaii also has 46 percent of its Medicare beneficiaries in private plans; note that these numbers refer to people who are enrolled in a private plan to replace Original Medicare, as opposed to a plan to supplement it — so stand-alone Part D plans and Medigap plans are not counted when we talk about nearly half of Minnesota and Hawaii Medicare beneficiaries being enrolled in private plans).
Minnesota’s private plan enrollment used to be even higher, accounting for well over half of the state’s Medicare beneficiaries, but as described below, many people had to switch away from private Medicare Cost plans at the end of 2018, and two-thirds of all Medicare cost plan enrollees were in Minnesota as of 2018. A significant number of them opted to switch to Original Medicare when their Cost plans went away, as evidenced by the declining proportion of Minnesota Medicare beneficiaries with private coverage.
Minnesota was the first to participate in a demonstration program to pilot Medicare Cost plans in the 1970s, and the plans have remained popular over the decades. They didn’t catch on in many other states, however, and Medicare + Choice came on the national scene in the 1990s, replaced by Medicare Advantage in 2003 (there are still Medicare Cost plans available in 2020 in Colorado, Iowa, Illinois, Maryland, Minnesota, Nebraska, North Dakota, South Dakota, Texas, Virginia, and Wisconsin).
Medicare Cost enrollees in Minnesota
The legislation that introduced Medicare Advantage also created a competition clause that banned Medicare Cost plans from operating in areas where they faced substantial competition from Medicare Advantage plans, but the implementation of the competition clause was delayed for many years. In 2015, legislation (MACRA) called for the competition clause to be implemented as of 2019.
As a result, an estimated 320,000 Medicare Cost enrollees in Minnesota needed new coverage for 2019. There are 21 counties where Medicare Cost plans continue to be available, but Medicare Cost enrollees in the rest of the state were not able to keep their Cost plans. Instead, they had the option to enroll in a Medicare Advantage plan (some were automatically enrolled in a comparable Medicare Advantage plan, although they had an option to pick something else instead), or select a Medigap plan to supplement their Original Medicare. Enrollees whose Medicare Cost plans ended had guaranteed issue rights to a Medigap plan, so they could purchase one even if they had pre-existing medical conditions, as long as they did so within 63 days of their Cost plan ending.
One of the reasons Medicare Cost has been so popular in Minnesota is that the state has a large population of “snowbirds” — retirees who live in Minnesota during the summer, but head south to warmer climes in the winter. With Medicare Cost plans, the enrollee still has Original Medicare — including the large nationwide network of providers who work with Medicare — in addition to the Medicare Cost coverage. Medicare Advantage plans, in contrast, tend to have localized networks that might not be suitable for a senior who lives in two different states during the year. A Medigap plan plus Original Medicare will allow a person in that situation to have access to health providers in both locations, although Medigap tends to be more expensive than Medicare Advantage. There are pros and cons to both options, and no one-size-fits-all solution.
As of 2020, there are still Medicare Cost plans available in 21 counties in Minnesota. Medicare Cost plans in the state are offered by Blue Cross Blue Shield of Minnesota, Health Partners, and Medica.
Medigap in Minnesota: Legislation under consideration in 2020 would grant year-round guaranteed-issue access
Original Medicare does not limit out-of-pocket costs, so most enrollees maintain some form of supplemental coverage. Nationwide, more than half of Original Medicare beneficiaries get their supplemental coverage through an employer-sponsored plan or Medicaid. But for those who don’t, Medigap plans (also known as Medicare supplement plans, or MedSupp) will pay some or all of the out-of-pocket costs they would otherwise have to pay if they had only Original Medicare.
In all but three states, Medigap plans are standardized under federal rules. But Minnesota is one of three states that have federal waivers that allow the state to do its own Medigap standardization. So instead of the ten Medigap plans (A through N) that are marketed in most states, Minnesota Medigap plans include Basic, Basic with riders, Extended Basic, and Medigap plans F, K, L, M, and N. There are also Medicare Select Medigap plans in Minnesota (available from Blue Cross Blue Shield of Minnesota and Sanford), just as there are in other states.
Minnesota law prevents Medigap insurers from imposing pre-existing condition waiting periods if the enrollee signs up during their initial six-month open enrollment window. For those who apply after that, Medigap insurers are not allowed to impose pre-existing condition waiting periods if the enrollee wasn’t diagnosed or treated for the condition in the 90 days prior to enrolling in the Medigap plan.
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 13 percent of Minnesota Medicare beneficiaries are under age 65. Federal rules do not guarantee access to Medigap plans for people who are under 65, but the majority of the states — including Minnesota — have implemented rules to ensure that disabled Medicare beneficiaries have at least some access to Medigap plans. Minnesota law grants a six-month open enrollment period to anyone who enrolls in Medicare Part B, regardless of age (federal rules only grant this window to people who enroll in Part B and are also at least 65 years old).
After that six-month window ends, Medigap insurers can use medical underwriting to determine an applicant’s eligibility for coverage. But bipartisan legislation has been introduced in Minnesota in 2020 (SF3897 and HF4030) that would require Medigap plans to be guaranteed-issue year-round. If this legislation is enacted, Minnesota would join New York and Connecticut in providing ongoing guaranteed-issue access to Medigap plans.
Minnesota also prohibits Medigap insurers from basing premiums on an enrollee’s age. Premiums for Medigap plans in Minnesota only vary based on tobacco use and where the enrollee lives. These rating rules also apply to people who are eligible for Medicare before the age of 65, which is somewhat unusual; most of the states that have guaranteed access to Medigap for under-65 enrollees do allow the insurers to charge those enrollees higher premiums.
When Minnesota’s pre-ACA high-risk pool discontinued its policies at the end of 2014, the Minnesota Department of Commerce created a special enrollment period during which Medicare-eligible individuals who had been covered with traditional health plans in the high-risk pool were able to transition to Medigap plans on a guaranteed-issue basis.
Medicare Part D in Minnesota
Original Medicare does not provide coverage for outpatient prescription drugs. More than half of Original Medicare beneficiaries nationwide have supplemental coverage via an employer-sponsored plan (from a current or former employer or spouse’s employer) or Medicaid, and these plans often include prescription coverage. Some Medigap plans that were sold prior to 2006 included coverage for prescription drugs, but sales of those plans ceased as of 2006, when Medicare Part D became available. Part D was created under the Medicare Modernization Act of 2003, which was signed into law by President George W. Bush.
For people who have enrolled in Medicare since 2006 and who don’t have drug coverage through Medicaid or an employer-sponsored plan, Medicare Part D is essential in order to have coverage for prescriptions. Part D can be purchased as a stand-alone plan, or integrated with a Medicare Advantage plan.
There are 29 stand-alone Part D plans for sale in Minnesota in 2020, with premiums that range from about $13 to $90/month.
In Minnesota as of December 2019, there were 398,421 people with stand-alone Part D coverage. Another 402,293 Medicare beneficiaries in Minnesota had Part D prescription coverage as part of their Medicare Advantage plans.
Medicare spending in Minnesota
Original Medicare’s average per-beneficiary spending in Minnesota was almost 10 percent lower than the national average in 2018, at $9,126 (the national average was $10,096). The spending amounts are based on data that were standardized to eliminate regional differences in payment rates, and did not include costs for Medicare Advantage.
You can read more about Medicare in Minnesota in our state Medicare guide. You can also contact Minnesota’s Health Insurance Counseling Program with questions related to Medicare coverage in the state.
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 healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.