New Medicare Law for California Residents

Of late, it is becoming harder and harder to relate to my readers any good news coming out of Washington and Sacramento. Here are a few good things. President Trump has a new law going into effect January 1 which will lower the cost of insulin for most people who are diabetic.

This will apply to people with Medicare Advantage HMO plans as well as the stand-alone prescription drug plans that are typically coupled with the Medicare Supplement.

Now, on to California. For many years, people with a Medicare Supplement plan (Not a Medicare Advantage HMO) have had an opportunity to shop and look at other plans for a very limited annual window of opportunity. The insurance companies are required by law to notify Medicare Supplement plan holders each year prior to their birthday about the California “Birthday Rule”.

The letter informs that they have a limited window of 30 days from their birthday to change plans to a plan of “equal or lesser” coverage. Most of these letters are not as specific as they might be, as the option is for a change to ANY company, not just chang-ing within the company you are currently with.

The current cost of a policy varies greatly. For older clients, the contract code they are receiving benefits differs from that of the younger policyholder with a policy of the same name (i.e. Plan F). The older policy is among other elders who might be using their policies more than the younger persons. Therefore, the rates are much higher for the 85-year-old than say a 75-year-old on the newer contract…same benefits, just lower monthly premiums.

Along with this thinking is that the insurance agent is receiving higher renewal commissions on the older policy, and there is little incentive to notify his/her clients that they are getting screwed over. I personally lose money each year when there are better deals for my existing clients, but this is often offset by the referrals I receive for new business. (If the savings is nominal, I don’t bother the clients with “junk mail”.

A good example would be Jack G who lives in Bakersfield. At the age of 80, his current Medicare Supplement Plan F is costing him $291.86 and will be going to $324.18 per month on his birth month. Using the “Birthday Rule” Jack can stay with the same company but get a more modernized plan in a lower risk group. Premium is only $293.20. Or he can change plans and for almost the same benefits (he would have to meet a Part B deductible of $198.00 (2020) and have a monthly cost of $224.97.

In other words, by assuming the $198 deductible (annual) Jack would lower his monthly expenses by $99.21. That is $1,190.52 in his pocket less the $198.00. BTW, Jack doesn’t even need to concern himself with the current deductible, as it has previously been satisfied earlier this year.

Effective July 2020, the Birthday Rule has been improved. Now, rather than a 30-day window following your birthday, the new rule is 60 days. So, you can apply for a new policy up to 30 days BEFORE your birthday, and the new coverage will take effect on the first of the month following the application.

Some plans in California offer additional benefits over the basic benefits available nationally. Gym membership, vision and hearing are just a few of the benefits offered by the newer plans, often with monthly premiums lower than the plans, people are currently on.

As always, we are happy to offer a no-obligation review of your coverage.
Harry P. Thal, MA, is a licensed insurance broker in California (0621106) and 24 other states. His offices are in Kernville. He is a member of the Society of Certified Senior Advisors and Past-Pres-ident of the Kern Association of Health Underwriters. He may be reached at 760-376-2100, e-mail harrythal@aol. com or visit him on the web at