Medicare in Montana

Medicare covers more than one in five Montana residents; State rules changed in 2013 to guarantee access to Medigap plans for disabled beneficiaries under age 65

Photo credit: Jenny W | Flickr

At a glance: Medicare health insurance in Montana

Medicare enrollment in Montana

2020 Medicare enrollment datesAs of December 2018, there were 225,420 Montana residents with Medicare coverage. That’s nearly 21 percent of the state’s population, versus a little more than 18 percent of the total US population enrolled in Medicare.

In most cases, Medicare eligibility starts when a person turns 65. But Medicare also provides coverage for disabled Americans under age 65, once they have been receiving disability benefits for 24 months (or have kidney failure or ALS). Nationwide, 16 percent of Medicare beneficiaries are disabled and under age 65; in Montana, it’s 13 percent. In Alabama, Kentucky, and Mississippi, 23 percent of Medicare beneficiaries are disabled and under age 65, while just 9 percent of Hawaii’s Medicare beneficiaries are eligible due to disability.

Read about Medicare’s open enrollment period and other important enrollment deadlines.

Medicare Advantage in Montana

Medicare beneficiaries can choose to get their coverage through private Medicare Advantage plans, or directly from the federal government via Original Medicare. Medicare Advantage plans are offered by private insurers, so plan availability varies from one area to another. All 56 counties in Montana have Medicare Advantage plans available, but low-population areas like Montana tend to have fewer plan options. Medicare beneficiaries in some counties in Montana only have one Medicare Advantage plan available for purchase. The most plans for sale anywhere in the state are in Yellowstone County, where there are nine Medicare Advantage plans available in 2019.

Twenty-one percent of Medicare beneficiaries in Montana had Medicare Advantage coverage as of 2017, versus about 33 percent nationwide. As of December 2018, there were 41,492 Medicare beneficiaries in Montana who had private Medicare coverage (not counting private supplemental coverage like Part D and Medigap), which is a little more than 18 percent of the state’s total Medicare population. The other 82 percent of the state’s Medicare beneficiaries had coverage under Original Medicare as of late 2018.

The popularity of Medicare Advantage varies from one state to another. In Minnesota, 56 percent of the state’s Medicare population is enrolled in Advantage plans, whereas only 1 percent of Alaska Medicare beneficiaries have Advantage plans (and those are via employer-sponsored coverage, as there are no Medicare Advantage plans available for individuals to purchase in Alaska).

When enrollees are choosing between Original Medicare and Medicare Advantage, there are pros and cons to either option, and the right solution is different for each person.

Medicare’s annual election period (October 15 to December 7 each year) allows Medicare beneficiaries the chance to switch between Medicare Advantage and Original Medicare (and add, drop, or switch to a different Medicare Part D prescription plan). Starting in 2019, people who are already enrolled in Medicare Advantage 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 Montana: Guaranteed-issue for under-65 beneficiaries since 2013

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 Original Medicare on its own.

According to an AHIP analysis, there were 71,716 Montana residents with Medigap coverage as of 2016. That’s about 39 percent of the state’s Original Medicare enrollees (Medigap coverage cannot be used with Medicare Advantage plans).

Medigap insurers in Montana can choose to use attained-age rating (rates increase as an enrollee gets older), issue-age rating (rates are based on the age the person was when they enrolled), or community rating (rates do not vary based on age). Of the 26 insurers that submitted information to the Montana Insurance Commissioner for publication in the state’s 2019-2020 Medigap rate guide, two use issue-age rating, one uses community rating, and the rest use attained age rating (nationwide, attained-age rating is the most common approach).

Medigap plans are sold by private insurers, but they’re standardized under federal rules and regulated by state laws and insurance commissioners. In Montana, several parts of state insurance law apply to Medigap plans.

Federal rules do not require Medigap insurers to offer plans to Medicare beneficiaries under age 65 who are eligible for Medicare due to a disability. Montana began requiring Medigap insurers to offer coverage to disabled Medicare beneficiaries starting in late 2013, although they’re allowed to charge higher premiums for under-65 enrollees.

Prior to 2013, Montana did not require Medigap insurers to offer plans to disabled Medicare beneficiaries under the age of 65. Instead, the state’s high-risk pool (the Montana Comprehensive Health Association; MCHA) served as a safety net, providing supplemental coverage to Medicare beneficiaries who were unable to enroll in Medigap plans. But MCHA shut down at the end of 2013 (its primary function was to provide guaranteed-issue coverage to people who weren’t able to obtain coverage in the medically-underwritten individual insurance market, but the ACA did away with medical underwriting in that market, making high-risk pools largely unnecessary). So at that point, the Montana State Auditor notified Medigap insurers in the state that they would need to start offering coverage on a guaranteed-issue basis to people who became eligible for Medicare prior to age 65 (several states — Alaska, IowaNebraska, North Dakota, South Carolina, Washington, and Wyoming — have kept their high-risk pools operational as a supplemental coverage option for people with Medicare who are unable to obtain Medigap coverage)

Montana’s new regulations provided a guaranteed-issue window during which Medicare beneficiaries with supplemental MCHA coverage were able to transition to a Medigap plan in late 2013/early 2014, and ensured Medigap eligibility for people under the age of 65 who would become eligible for Medicare in the future. But it didn’t address the issue of other Montana residents who already had Medicare, were under age 65, and didn’t have supplemental coverage under MCHA. So in 2015, the state offered a one-time Medigap open enrollment period (aligned with the Part D and Medicare Advantage open enrollment in November/December) for people who were under 65 and already enrolled in Medicare.

Twenty-six insurers submitted information to the Montana Insurance Commissioner for publication in Montana’s 2019-2020 Medigap rate guide. Premiums are significantly more expensive for those under 65, as is the case in most states where insurers are required to offer coverage to under-65 beneficiaries. For example, Medigap Plan A (the least comprehensive plan) for a 65-year-old Montana resident is priced roughly in the range of $85 to $130 per month by most insurers, whereas the same insurers mostly charge premiums in the range of $250 to $450 per month for an enrollee who is under 65.

Disabled Medicare beneficiaries also have access to the normal Medigap open enrollment period when they turn 65. At that point, they can select from among any of the available Medigap plans, with lower premiums that apply to people who are aging onto Medicare when they turn 65.

Disabled Medicare beneficiaries have the option to enroll in a Medicare Advantage plan instead of Original Medicare, as long as they don’t have kidney failure. Medicare Advantage plans are otherwise available to anyone who is eligible for Medicare, and the premiums are not higher for those under 65. But Advantage plans have more limited provider networks than Original Medicare, and total out-of-pocket costs can be as high as $6,700 per year for in-network care, plus the out-of-pocket cost of prescription drugs.

Although the Affordable Care Act eliminated pre-existing condition exclusions in most of the private health insurance market, those rules 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 (although many of them choose not to do so). 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 Medigap insurer can consider your medical history in determining whether to accept your application, and at what premium.

Medicare Part D in Montana

Original Medicare does not provide coverage for outpatient prescription drugs. More than half of Original Medicare beneficiaries nationwide have supplemental coverage either through an employer-sponsored plan (from a current or former employer or spouse’s employer) or Medicaid, and these plans often include prescription coverage.

But Medicare beneficiaries who do not have Medicaid or employer-sponsored drug coverage need Medicare Part D in order to have coverage for prescriptions. Part D was created under the Medicare Modernization Act of 2003, and coverage can be purchased on a stand-alone basis, or obtained as part of a Medicare Advantage plan with built-in Part D benefits. Both options are available for purchase (or plan changes) during the annual election period that runs from October 15 to December 7 each year, with the new coverage effective January 1 of the coming year.

There are 28 stand-alone Part D plans for sale in Montana in 2019, with premiums that range from about $15 to $94/month.

As of December 2018, there were 112,886 Montana Medicare beneficiaries (half of the state’s total Medicare population) with stand-alone Part D plans. Another 39,120 Montana residents had Medicare Advantage plans that included integrated Part D coverage.

Medicare spending in Montana

Original Medicare’s average per-beneficiary spending in Montana is among the lowest in the nation, at $7,396 as of 2016. Only three states — Oregon, Alaska, and Hawaii — had lower average per-beneficiary Original Medicare costs. 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. Nationwide, average per-beneficiary Original Medicare spending stood at $9,533.

Per-beneficiary Medicare spending was highest in Louisiana, at $11,399, and lowest in Hawaii, at just $6,441.

You can read more about Medicare in Montana in our state Medicare guide. You can also contact the Montana State Health and Insurance Information Program with questions related to Medicare coverage in Montana.

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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