Glossary
Guaranteed issue right, defined
A situation in which a Medicare supplement carrier must sell a person a policy, cover all pre-existing conditions and charge the standard premium, regardless of health. It arises when someone loses other coverage through no fault of their own or leaves an Advantage plan under a trial provision.
In practice
Typical triggers include an Advantage plan leaving the area, an employer retiree plan ending, a supplement carrier going insolvent, or dropping an Advantage plan within the first year after joining it from a supplement policy. The window is short, measured in weeks from the loss of coverage, and the proof of the trigger, such as the termination letter, must be kept. The letters available under the right are limited in some situations and by state, and the person must apply within the window. Outside these situations and outside the initial window when Part B begins, supplement carriers can underwrite and decline. Some states add broader rights, such as a birthday rule allowing an annual switch, so the state matters.
A worked example
Suppose a retiree's former employer ends its retiree health plan in June. She has a window to buy a supplement policy on a guaranteed issue basis; she applies in July for a letter plan at $160 a month and is accepted despite a recent cancer diagnosis. Had she applied a year later, the carrier could have underwritten her and declined. Hypothetical figures.
Applies to: Medicare