SB 242: Medicare supplement coverage: open enrollment periods.
- Session Year: 2025-2026
- House: Senate
- Latest Version Date: 2025-05-05
Current Status:
Failed
(2026-02-02: Returned to Secretary of Senate pursuant to Joint Rule 56.)
Introduced
In Committee
Awaiting First Chamber Vote
Passed First Chamber
In Committee
Awaiting Second Chamber Vote
Passed Second Chamber
Enacted
Existing federal law provides for the Medicare Program, which is a public health insurance program for persons 65 years of age and older and specified persons with disabilities who are under 65 years of age. Existing federal law specifies different parts of Medicare that cover specific services, such as Medicare Part B, which generally covers medically necessary services and supplies and preventive services. Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance.
Existing federal law additionally provides for the issuance of Medicare supplement policies or certificates, also known as Medigap coverage, which are advertised, marketed, or designed primarily as a supplement to reimbursements under the Medicare Program for the hospital, medical, or surgical expenses of persons eligible for the Medicare Program, including coverage of Medicare deductible, copayment, or coinsurance amounts, as specified. Existing law, among other provisions, requires supplement benefit plans to be uniform in structure, language, designation, and format with the standard benefit plans, as prescribed. Existing law prohibits an issuer from denying or conditioning the offering or effectiveness of any Medicare supplement contract, policy, or certificate available for sale in this state, or discriminating in the pricing of a contract, policy, or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application that is submitted prior to or during the 6-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Existing law requires an issuer to make available specified Medicare supplement benefit plans to a qualifying applicant under those circumstances who is 64 years of age or younger who does not have end stage renal disease.
This bill would delete the exclusion of otherwise qualified applicants who have end stage renal disease, thereby making the specified Medicare supplement benefit plans available to those individuals. The bill, on and after January 1, 2026, 2027, would prohibit an issuer of Medicare supplement coverage in this state from denying or conditioning the issuance or effectiveness of any Medicare supplement coverage available for sale in the state, or discriminate in the pricing of that coverage because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, except as specified, if an application for coverage is submitted during an open enrollment period, as specified in the bill. The bill would entitle an individual enrolled in Medicare Part B to a 90-day annual open enrollment period beginning on January 1 of each year, as specified, during which period the bill would require applications to be accepted for any Medicare supplement coverage available from an issuer, as specified. The bill would require the open enrollment period to be a guaranteed issue period. The bill would authorize premium rates offered to applicants during the open enrollment period to vary based on the applicants age at the time of issue, as specified, but would prohibit the premiums from varying based on age after the contract is issued.
Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing federal law provides for the Medicare Program, which is a public health insurance program for persons 65 years of age and older and specified persons with disabilities who are under 65 years of age. Existing federal law specifies different parts of Medicare that cover specific services, such as Medicare Part B, which generally covers medically necessary services and supplies and preventive services. Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance.
Existing federal law additionally provides for the issuance of Medicare supplement policies or certificates, also known as Medigap coverage, which are advertised, marketed, or designed primarily as a supplement to reimbursements under the Medicare Program for the hospital, medical, or surgical expenses of persons eligible for the Medicare Program, including coverage of Medicare deductible, copayment, or coinsurance amounts, as specified. Existing law, among other provisions, requires supplement benefit plans to be uniform in structure, language, designation, and format with the standard benefit plans, as prescribed. Existing law prohibits an issuer from denying or conditioning the offering or effectiveness of any Medicare supplement contract, policy, or certificate available for sale in this state, or discriminating in the pricing of a contract, policy, or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application that is submitted prior to or during the 6-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Existing law requires an issuer to make available specified Medicare supplement benefit plans to a qualifying applicant under those circumstances who is 64 years of age or younger who does not have end stage renal disease.
This bill would delete the exclusion of otherwise qualified applicants who have end stage renal disease, thereby making the specified Medicare supplement benefit plans available to those individuals. The bill, on and after January 1, 2026, would prohibit an issuer of Medicare supplement coverage in this state from denying or conditioning the issuance or effectiveness of any Medicare supplement coverage available for sale in the state, or discriminate in the pricing of that coverage because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, if an application for coverage is submitted during an open enrollment period, as specified in the bill. The bill would entitle an individual enrolled in Medicare Part B to a 90-day annual open enrollment period beginning on January 1 of each year, as specified, during which period the bill would require applications to be accepted for any Medicare supplement coverage available from an issuer, as specified. The bill would require the open enrollment period to be a guaranteed issue period.
Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Legislature finds and declares as follows:
(a)Existing state law requires insurance companies that sell Medicare supplement coverage, also known as Medigap coverage, to issue that insurance on a guaranteed-issue basis to eligible individuals without adjusting premiums based on medical underwriting, as long as their applications are submitted within a one-time open enrollment period.
(b)The open enrollment period in the state is during the six-month window beginning when the individual is enrolled for benefits under Medicare Part B. After this open enrollment period, there is no guarantee that Medigap coverage will be issued to individuals with preexisting medical conditions unless the individual satisfies certain conditions, and even if the coverage is issued, the premium may be significantly higher.
(c)As a result, it is extremely difficult for individuals whose health conditions or financial situations may have changed after their open enrollment period to switch to another Medicare supplement coverage plan that is more suitable.
(d)It is, therefore, the intent of the Legislature in enacting this act to do both of the following:
(1)Establish an annual open enrollment for applicants, and require Medigap coverage issuers in California to accept an individuals application for coverage or an application to switch to another eligible plan during that period.
(2)Prohibit issuers from denying the applicant Medigap coverage or making any premium rate distinctions due to any of the following:
(A)Health status.
(B)Claims experience.
(C)Medical condition.
(D)Whether the applicant is receiving health care services.
SEC. 2.Section 1358.11 of the Health and Safety Code is amended to read:1358.11.(a)(1)An issuer shall not deny or condition the offering or effectiveness of any Medicare supplement contract available for sale in this state, nor discriminate in the pricing of a contract because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a contract that is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Each Medicare supplement contract currently available from an issuer shall be made available to all applicants who qualify under this subdivision and who are 65 years of age or older.
(2)(A)An issuer shall make available Medicare supplement benefit plans A, B, C, and F, if currently available, to an applicant who qualifies under this subdivision, who is 64 years of age or younger. An issuer shall also make available to those applicants Medicare supplement benefit plan K or L, if currently available, or Medicare supplement benefit plan M or N, if currently available. The selection between Medicare supplement benefit plan K or L and the selection between Medicare supplement benefit plan M or N shall be made at the issuers discretion.
(B)For contracts sold or issued on or after January 1, 2020, to newly eligible Medicare beneficiaries, as defined in subdivision (b) of Section 1358.92, an issuer shall make available Medicare supplement benefit plans A, B, D, and G, if currently available, to applicants who qualify under this subdivision who are 64 years of age or younger. An issuer shall also make available to those applicants Medicare supplement benefit plan K or L, if currently available, or Medicare supplement benefit plan M or N, if currently available. The selection between Medicare supplement benefit plan K or L and the selection between Medicare supplement benefit plan M or N shall be made at the issuers discretion.
(3)This Except for during the annual open enrollment period established under Section 1358.25, this section and Section 1358.12 do not prohibit an issuer in determining subscriber rates from treating applicants who are under 65 years of age and are eligible for Medicare Part B as a separate risk classification.
(b)(1)If an applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage of at least six months, the issuer shall not exclude benefits based on a preexisting condition.
(2)If the applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage that is less than six months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The manner of the reduction under this subdivision shall be as specified by the director.
(c)Except as provided in subdivision (b) and Section 1358.23, Sections 1358.23 and 1358.25, subdivision (a) does not prevent the exclusion of benefits under a contract, during the first six months, based on a preexisting condition for which the enrollee received treatment or was otherwise diagnosed during the six months before the coverage became effective.
(d)An individual enrolled in Medicare by reason of disability shall be entitled to open enrollment described in this section for six months after the date of their enrollment in Medicare Part B, or if notified retroactively of their eligibility for Medicare, for six months following notice of eligibility. Sales during the open enrollment period shall not be discouraged by any means, including the altering of the commission structure.
(e)(1)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section for six months following:
(A)Receipt of a notice of termination or, if no notice is received, the effective date of termination from any employer-sponsored health plan including an employer-sponsored retiree health plan.
(B)Receipt of a notice of loss of eligibility due to the divorce or death of a spouse or, if no notice is received, the effective date of loss of eligibility due to the divorce or death of a spouse, from any employer-sponsored health plan including an employer-sponsored retiree health plan.
(C)Termination of health care services for a military retiree or the retirees Medicare eligible spouse or dependent as a result of a military base closure or loss of access to health care services because the base no longer offers services or because the individual relocates.
(2)For purposes of this subdivision, employer-sponsored retiree health plan includes any coverage for medical expenses, including coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and the California Continuation Benefits Replacement Act (Cal-COBRA), that is directly or indirectly sponsored or established by an employer for employees or retirees, their spouses, dependents, or other included covered persons.
(f)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section if the individual was covered under a policy, certificate, or contract providing Medicare supplement coverage but that coverage terminated because the individual established residence at a location not served by the issuer.
(g)(1)An individual whose coverage was terminated by a Medicare Advantage plan shall be entitled to an additional 60-day open enrollment period to be added on to and run consecutively after any open enrollment period authorized by federal law or regulation, for any and all Medicare supplement coverage available on a guaranteed basis under state and federal law or regulations for persons terminated by their Medicare Advantage plan.
(2)Health plans that terminate Medicare enrollees shall notify those enrollees in the termination notice of the additional open enrollment period authorized by this subdivision. Health plan notices shall inform enrollees of the opportunity to secure advice and assistance from the HICAP in their area, along with the toll-free telephone number for HICAP.
(h)(1)An individual shall be entitled to an annual open enrollment period lasting 60 days or more, commencing with the individuals birthday, during which time that person may purchase any Medicare supplement coverage that offers benefits equal to or lesser than those provided by the previous coverage. During this open enrollment period, an issuer that falls under this paragraph shall not deny or condition the issuance or effectiveness of Medicare supplement coverage, nor discriminate in the pricing of coverage, because of health status, claims experience, receipt of health care, or medical condition of the individual if, at the time of the open enrollment period, the individual is covered under another Medicare supplement policy, certificate, or contract. An issuer that offers Medicare supplement contracts shall notify an enrollee of their rights under this subdivision at least 30 and no more than 60 days before the beginning of the open enrollment period, and on any notice related to a benefit modification or premium adjustment.
(2)For purposes of this subdivision, the following provisions apply:
(A)A 1990 standardized Medicare supplement benefit plan A shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan A.
(B)A 1990 standardized Medicare supplement benefit plan B shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan B.
(C)A 1990 standardized Medicare supplement benefit plan C shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan C.
(D)A 1990 standardized Medicare supplement benefit plan D shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan D.
(E)A 1990 standardized Medicare supplement benefit plan E shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare benefit plan D.
(F)(i)A 1990 standardized Medicare supplement benefit plan F shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare benefit plan F.
(ii)A 1990 standardized Medicare supplement benefit high deductible plan F shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit high deductible plan F.
(G)A 1990 standardized Medicare supplement benefit plan G shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan G.
(H)A 1990 standardized Medicare supplement benefit plan H shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan D.
(I)A 1990 standardized Medicare supplement benefit plan I shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan G.
(J)(i)A 1990 standardized Medicare supplement benefit plan J shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan F.
(ii)A 1990 standardized Medicare supplement benefit high deductible plan J shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit high deductible plan F.
(K)A 1990 standardized Medicare supplement benefit plan K shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan K.
(L)A 1990 standardized Medicare supplement benefit plan L shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan L.
(M)New or innovative benefits, as described in subdivision (f) of Section 1358.9 and subdivision (f) of Section 1358.91, shall not be included when determining whether benefits are equal to or lesser than those provided by the previous coverage.
(i)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section upon being notified that, because of an increase in the individuals income or assets, they meet one of the following requirements:
(1)They are no longer eligible for Medi-Cal benefits.
(2)They are only eligible for Medi-Cal benefits with a share of cost and certifies at the time of application that they have not met the share of cost.
SEC. 3.Section 1358.25 is added to the Health and Safety Code, to read:1358.25.(a)On and after January 1, 2026, 2027, an issuer of Medicare supplement coverage in this state shall not deny or condition the issuance or effectiveness of any Medicare supplement coverage contract available for sale in the state, or discriminate in the pricing of the contract because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, except as specified in paragraph (4) of subdivision (b), if an application for that coverage is submitted at either of the following times:
(1)Before or during the six-month period beginning with the first day of the month in which an individual first enrolled for benefits under Medicare Part B, as described in subdivision (a) subdivisions (a) and (d) of Section 1358.11.
(2)During an annual open enrollment period, including, but not limited to, the open enrollment period established in subdivision (b).
(b)(1)An individual enrolled in Medicare Part B is entitled to a 90-day annual open enrollment period beginning on January 1 of each year, as described in this section.
(2)During the open enrollment period established pursuant to this subdivision, applications shall be accepted for any Medicare supplement coverage available from an issuer.
(3)The open enrollment period established pursuant to this section is a guaranteed issue period.
(4)(A)(i)Premium rates offered to applicants during the open enrollment period established pursuant to this subdivision may vary based on the applicants age at the time of issue, but shall not vary based on the applicants attained age or actual age after the contract is issued. Age-based premiums shall be structured within specified age bands and no additional age bands shall be permitted. Age bands shall be fixed as follows:
(I)Under age 65.
(II)Age 65-69.
(III)Age 70-79.
(IV)Age 80 and over.
(ii)The premium charged for the under age 65 age band shall be set relative to, and shall not exceed, 2 times the premium charged to the 65-69 age band for the same policy type and benefit level.
(iii)The premium charged for the 70-79 age band shall be set relative to, and shall not exceed, 1.25 times the premium charged to the 65-69 age band for the same policy type and benefit level. Premiums shall not be increased due to age once coverage is in effect.
(iv)The premium charged to the 80 and over age band shall not exceed 1.5 times the premium charged to the 65-69 age band for the same policy type and benefit level. Premiums shall not be increased due to age once coverage is in effect.
(v)The premium charged to any lower age band, except the under age 65 age band, shall not exceed the premium charged to the immediately higher age band for the same policy type and benefit level.
(B)Any other factors affecting ratesetting shall be applied uniformly and shall not result in indirect age-based discrimination.
(c)Nothing in this section shall be construed to permit denial of coverage or variation in premium based on gender, race, ethnicity, or any other factor listed in subdivision (a) of this section.
SEC. 4.Section 10192.11 of the Insurance Code is amended to read:10192.11.(a)(1)An issuer shall not deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this state, nor discriminate in the pricing of a policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a policy or certificate that is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Each Medicare supplement policy and certificate currently available from an issuer shall be made available to all applicants who qualify under this subdivision and who are 65 years of age or older.
(2)(A)An issuer shall make available Medicare supplement benefit plans A, B, C, and F, if currently available, to an applicant who qualifies under this subdivision, who is 64 years of age or younger. An issuer shall also make available to those applicants Medicare supplement benefit plan K or L, if currently available, or Medicare supplement benefit plan M or N, if currently available. The selection between Medicare supplement plan K or L and the selection between Medicare supplement benefit plan M or N shall be made at the issuers discretion.
(B)For policies sold on or after January 1, 2020, to newly eligible Medicare beneficiaries, as defined in subdivision (b) of Section 10192.92, an issuer shall make available Medicare supplement benefit plans A, B, D, and G, if currently available, to applicants who qualify under this subdivision who are 64 years of age or younger. An issuer shall also make available to those applicants Medicare supplement benefit plan K or L, if currently available, or Medicare supplement benefit plan M or N, if currently available. The selection between Medicare supplement benefit plan K or L and the selection between Medicare supplement benefit plan M or N shall be made at the issuers discretion.
(3)This Except for during the annual open enrollment period established under Section 10192.25, this section and Section 10192.12 do not prohibit an issuer in determining premium rates from treating applicants who are under 65 years of age and are eligible for Medicare Part B as a separate risk classification. This Except for during the annual open enrollment period established under Section 10192.25, this section does not prevent the exclusion of benefits for preexisting conditions as defined in paragraph (1) of subdivision (a) of Section 10192.8 or paragraph (1) of subdivision (a) of Section 10192.81.
(b)(1)If an applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage of at least six months, the issuer shall not exclude benefits based on a preexisting condition.
(2)If the applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage that is less than six months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The manner of the reduction under this subdivision shall be as specified by the commissioner.
(c)Except as provided in subdivision (b) and Section 10192.23, Sections 10192.23 and 10192.25, subdivision (a) does not prevent the exclusion of benefits under a policy, during the first six months, based on a preexisting condition for which the policyholder or certificate holder received treatment or was otherwise diagnosed during the six months before the coverage became effective.
(d)An individual enrolled in Medicare by reason of disability shall be entitled to open enrollment described in this section for six months after the date of their enrollment in Medicare Part B, or if notified retroactively of their eligibility for Medicare, for six months following notice of eligibility. Every issuer shall make available to every applicant qualified for open enrollment all policies and certificates offered by that issuer at the time of application. An issuer shall not discourage sales during the open enrollment period by any means, including the altering of the commission structure.
(e)(1)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section for six months following:
(A)Receipt of a notice of termination or, if no notice is received, the effective date of termination from any employer-sponsored health plan including an employer-sponsored retiree health plan.
(B)Receipt of a notice of loss of eligibility due to the divorce or death of a spouse or, if no notice is received, the effective date of loss of eligibility due to the divorce or death of a spouse, from any employer-sponsored health plan including an employer-sponsored retiree health plan.
(C)Termination of health care services for a military retiree or the retirees Medicare eligible spouse or dependent as a result of a military base closure or loss of access to health care services because the base no longer offers services or because the individual relocates.
(2)For purposes of this subdivision, employer-sponsored retiree health plan includes any coverage for medical expenses, including, but not limited to, coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and the California Continuation Benefits Replacement Act (Cal-COBRA), that is directly or indirectly sponsored or established by an employer for employees or retirees, their spouses, dependents, or other included insureds.
(f)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section if the individual was covered under a policy, certificate, or contract providing Medicare supplement coverage but that coverage terminated because the individual established residence at a location not served by the plan.
(g)An individual whose coverage was terminated by a Medicare Advantage plan shall be entitled to an additional 60-day open enrollment period to be added on to and run consecutively after any open enrollment period authorized by federal law or regulation, for any Medicare supplement coverage provided by a Medicare supplement issuer and available on a guaranteed basis under state and federal law or regulation for persons terminated by their Medicare Advantage plan.
(h)(1)An individual shall be entitled to an annual open enrollment period lasting 60 days or more, commencing with the individuals birthday, during which time that person may purchase any Medicare supplement policy that offers benefits equal to or lesser than those provided by the previous coverage. During this open enrollment period, an issuer that falls under this paragraph shall not deny or condition the issuance or effectiveness of Medicare supplement coverage, nor discriminate in the pricing of coverage, because of health status, claims experience, receipt of health care, or medical condition of the individual if, at the time of the open enrollment period, the individual is covered under another Medicare supplement policy or contract. An issuer shall notify a policyholder of their rights under this subdivision at least 30 and no more than 60 days before the beginning of the open enrollment period, and on any notice related to a benefit modification or premium adjustment.
(2)For purposes of this subdivision, the following provisions apply:
(A)A 1990 standardized Medicare supplement benefit plan A shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan A.
(B)A 1990 standardized Medicare supplement benefit plan B shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan B.
(C)A 1990 standardized Medicare supplement benefit plan C shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan C.
(D)A 1990 standardized Medicare supplement benefit plan D shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan D.
(E)A 1990 standardized Medicare supplement benefit plan E shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare benefit plan D.
(F)(i)A 1990 standardized Medicare supplement benefit plan F shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare benefit plan F.
(ii)A 1990 standardized Medicare supplement benefit high deductible plan F shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit high deductible plan F.
(G)A 1990 standardized Medicare supplement benefit plan G shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan G.
(H)A 1990 standardized Medicare supplement benefit plan H shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan D.
(I)A 1990 standardized Medicare supplement benefit plan I shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan G.
(J)(i)A 1990 standardized Medicare supplement benefit plan J shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan F.
(ii)A 1990 standardized Medicare supplement benefit high deductible plan J shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit high deductible plan F.
(K)A 1990 standardized Medicare supplement benefit plan K shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan K.
(L)A 1990 standardized Medicare supplement benefit plan L shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan L.
(M)New or innovative benefits, as described in subdivision (f) of Section 10192.9 and subdivision (f) of Section 10192.91, shall not be included when determining whether benefits are equal to or lesser than those provided by the previous coverage.
(i)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section upon being notified that, because of an increase in the individuals income or assets, they meet one of the following requirements:
(1)They are no longer eligible for Medi-Cal benefits.
(2)They are only eligible for Medi-Cal benefits with a share of cost and certifies at the time of application that they have not met the share of cost.
SEC. 5.Section 10192.25 is added to the Insurance Code, to read:10192.25.(a)On and after January 1, 2026, 2027, an issuer of Medicare supplement coverage in this state shall not deny or condition the issuance or effectiveness of any Medicare supplement coverage policy or certificate available for sale in the state, or discriminate in the pricing of the policy or certificate because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, except as specified in paragraph (4) of subdivision (b), if an application for that coverage is submitted at either of the following times:
(1)Before or during the six-month period beginning with the first day of the month in which an individual first enrolled for benefits under Medicare Part B, as described in subdivision (a) subdivisions (a) and (d) of Section 10192.11.
(2)During an annual open enrollment period, including, but not limited to, the open enrollment period established in subdivision (b).
(b)(1)An individual enrolled in Medicare Part B is entitled to a 90-day annual open enrollment period beginning on January 1 of each year, as described in this section.
(2)During the open enrollment period established pursuant to this subdivision, applications shall be accepted for any Medicare supplement coverage available from an issuer.
(3)The open enrollment period is a guaranteed issue period.
(4)(A)(i)Premium rates offered to applicants during the open enrollment period established pursuant to this subdivision may vary based on the applicants age at the time of issue, but shall not vary based on the applicants attained age or actual age after the contract is issued. Age-based premiums shall be structured within specified age bands and no additional age bands shall be permitted. Age bands shall be fixed as follows:
(I)Under age 65.
(II)Age 65-69.
(III)Age 70-79.
(IV)Age 80 and over.
(ii)The premium charged for the under age 65 age band shall be set relative to, and shall not exceed, 2 times the premium charged to the 65-69 age band for the same policy type and benefit level.
(iii)The premium charged for the 70-79 age band shall be set relative to, and shall not exceed, 1.25 times the premium charged to the 65-69 age band for the same policy type and benefit level. Premiums shall not be increased due to age once coverage is in effect.
(iv)The premium charged to the 80 and over age band shall not exceed 1.5 times the premium charged to the 65-69 age band for the same policy type and benefit level. Premiums shall not be increased due to age once coverage is in effect.
(v)The premium charged to any lower age band, except the under age 65 age band, shall not exceed the premium charged to the immediately higher age band for the same policy type and benefit level.
(B)Any other factors affecting ratesetting shall be applied uniformly and shall not result in indirect age-based discrimination.
(c)Nothing in this section shall be construed to permit denial of coverage or variation in premium based on gender, race, ethnicity, or any other factor listed in subdivision (a) of this section.
SEC. 6.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares as follows:
(a)Existing state law requires insurance companies that sell Medicare supplement coverage, also known as Medigap coverage, to issue that insurance on a guaranteed-issue basis to eligible individuals without adjusting premiums based on medical underwriting, as long as their applications are submitted within a one-time open enrollment period.
(b)The open enrollment period in the state is during the six-month window beginning when the individual is enrolled for benefits under Medicare Part B. After this open enrollment period, there is no guarantee that Medigap coverage will be issued to individuals with preexisting medical conditions unless the individual satisfies certain conditions, and even if the coverage is issued, the premium may be significantly higher.
(c)As a result, it is extremely difficult for individuals whose health conditions or financial situations may have changed after their open enrollment period to switch to another Medicare supplement coverage plan that is more suitable.
(d)It is, therefore, the intent of the Legislature in enacting this act to do both of the following:
(1)Establish an annual open enrollment for applicants, and require Medigap coverage issuers in California to accept an individuals application for coverage or an application to switch to another eligible plan during that period.
(2)Prohibit issuers from denying the applicant Medigap coverage or making any premium rate distinctions due to any of the following:
(A)Health status.
(B)Claims experience.
(C)Medical condition.
(D)Whether the applicant is receiving health care services.
SEC. 2.Section 1358.11 of the Health and Safety Code is amended to read:1358.11.(a)(1)An issuer shall not deny or condition the offering or effectiveness of any Medicare supplement contract available for sale in this state, nor discriminate in the pricing of a contract because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a contract that is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Each Medicare supplement contract currently available from an issuer shall be made available to all applicants who qualify under this subdivision and who are 65 years of age or older.
(2)(A)An issuer shall make available Medicare supplement benefit plans A, B, C, and F, if currently available, to an applicant who qualifies under this subdivision, who is 64 years of age or younger, and who does not have end-stage renal disease. younger. An issuer shall also make available to those applicants Medicare supplement benefit plan K or L, if currently available, or Medicare supplement benefit plan M or N, if currently available. The selection between Medicare supplement benefit plan K or L and the selection between Medicare supplement benefit plan M or N shall be made at the issuers discretion.
(B)For contracts sold or issued on or after January 1, 2020, to newly eligible Medicare beneficiaries, as defined in subdivision (b) of Section 1358.92, an issuer shall make available Medicare supplement benefit plans A, B, D, and G, if currently available, to applicants who qualify under this subdivision who are 64 years of age or younger and who do not have end-stage renal disease. younger. An issuer shall also make available to those applicants Medicare supplement benefit plan K or L, if currently available, or Medicare supplement benefit plan M or N, if currently available. The selection between Medicare supplement benefit plan K or L and the selection between Medicare supplement benefit plan M or N shall be made at the issuers discretion.
(3)This section and Section 1358.12 do not prohibit an issuer in determining subscriber rates from treating applicants who are under 65 years of age and are eligible for Medicare Part B as a separate risk classification.
(b)(1)If an applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage of at least six months, the issuer shall not exclude benefits based on a preexisting condition.
(2)If the applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage that is less than six months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The manner of the reduction under this subdivision shall be as specified by the director.
(c)Except as provided in subdivision (b) and Section 1358.23, subdivision (a) does not prevent the exclusion of benefits under a contract, during the first six months, based on a preexisting condition for which the enrollee received treatment or was otherwise diagnosed during the six months before the coverage became effective.
(d)An individual enrolled in Medicare by reason of disability shall be entitled to open enrollment described in this section for six months after the date of their enrollment in Medicare Part B, or if notified retroactively of their eligibility for Medicare, for six months following notice of eligibility. Sales during the open enrollment period shall not be discouraged by any means, including the altering of the commission structure.
(e)(1)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section for six months following:
(A)Receipt of a notice of termination or, if no notice is received, the effective date of termination from any employer-sponsored health plan including an employer-sponsored retiree health plan.
(B)Receipt of a notice of loss of eligibility due to the divorce or death of a spouse or, if no notice is received, the effective date of loss of eligibility due to the divorce or death of a spouse, from any employer-sponsored health plan including an employer-sponsored retiree health plan.
(C)Termination of health care services for a military retiree or the retirees Medicare eligible spouse or dependent as a result of a military base closure or loss of access to health care services because the base no longer offers services or because the individual relocates.
(2)For purposes of this subdivision, employer-sponsored retiree health plan includes any coverage for medical expenses, including coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and the California Continuation Benefits Replacement Act (Cal-COBRA), that is directly or indirectly sponsored or established by an employer for employees or retirees, their spouses, dependents, or other included covered persons.
(f)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section if the individual was covered under a policy, certificate, or contract providing Medicare supplement coverage but that coverage terminated because the individual established residence at a location not served by the issuer.
(g)(1)An individual whose coverage was terminated by a Medicare Advantage plan shall be entitled to an additional 60-day open enrollment period to be added on to and run consecutively after any open enrollment period authorized by federal law or regulation, for any and all Medicare supplement coverage available on a guaranteed basis under state and federal law or regulations for persons terminated by their Medicare Advantage plan.
(2)Health plans that terminate Medicare enrollees shall notify those enrollees in the termination notice of the additional open enrollment period authorized by this subdivision. Health plan notices shall inform enrollees of the opportunity to secure advice and assistance from the HICAP in their area, along with the toll-free telephone number for HICAP.
(h)(1)An individual shall be entitled to an annual open enrollment period lasting 60 days or more, commencing with the individuals birthday, during which time that person may purchase any Medicare supplement coverage that offers benefits equal to or lesser than those provided by the previous coverage. During this open enrollment period, an issuer that falls under this paragraph shall not deny or condition the issuance or effectiveness of Medicare supplement coverage, nor discriminate in the pricing of coverage, because of health status, claims experience, receipt of health care, or medical condition of the individual if, at the time of the open enrollment period, the individual is covered under another Medicare supplement policy, certificate, or contract. An issuer that offers Medicare supplement contracts shall notify an enrollee of their rights under this subdivision at least 30 and no more than 60 days before the beginning of the open enrollment period, and on any notice related to a benefit modification or premium adjustment.
(2)For purposes of this subdivision, the following provisions apply:
(A)A 1990 standardized Medicare supplement benefit plan A shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan A.
(B)A 1990 standardized Medicare supplement benefit plan B shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan B.
(C)A 1990 standardized Medicare supplement benefit plan C shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan C.
(D)A 1990 standardized Medicare supplement benefit plan D shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan D.
(E)A 1990 standardized Medicare supplement benefit plan E shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare benefit plan D.
(F)(i)A 1990 standardized Medicare supplement benefit plan F shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare benefit plan F.
(ii)A 1990 standardized Medicare supplement benefit high deductible plan F shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit high deductible plan F.
(G)A 1990 standardized Medicare supplement benefit plan G shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan G.
(H)A 1990 standardized Medicare supplement benefit plan H shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan D.
(I)A 1990 standardized Medicare supplement benefit plan I shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan G.
(J)(i)A 1990 standardized Medicare supplement benefit plan J shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan F.
(ii)A 1990 standardized Medicare supplement benefit high deductible plan J shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit high deductible plan F.
(K)A 1990 standardized Medicare supplement benefit plan K shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan K.
(L)A 1990 standardized Medicare supplement benefit plan L shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan L.
(M)New or innovative benefits, as described in subdivision (f) of Section 1358.9 and subdivision (f) of Section 1358.91, shall not be included when determining whether benefits are equal to or lesser than those provided by the previous coverage.
(i)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section upon being notified that, because of an increase in the individuals income or assets, they meet one of the following requirements:
(1)They are no longer eligible for Medi-Cal benefits.
(2)They are only eligible for Medi-Cal benefits with a share of cost and certifies at the time of application that they have not met the share of cost.
SEC. 3.Section 1358.25 is added to the Health and Safety Code, to read:1358.25.(a)On and after January 1, 2026, an issuer of Medicare supplement coverage in this state shall not deny or condition the issuance or effectiveness of any Medicare supplement coverage contract available for sale in the state, or discriminate in the pricing of the contract because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, if an application for that coverage is submitted at either of the following times:
(1)Before or during the six-month period beginning with the first day of the month in which an individual first enrolled for benefits under Medicare Part B, as described in subdivision (a) of Section 1358.11.
(2)During an annual open enrollment period, including, but not limited to, the open enrollment period established in subdivision (b).
(b)(1)An individual enrolled in Medicare Part B is entitled to a 90-day annual open enrollment period beginning on January 1 of each year, as described in this section.
(2)During the open enrollment period established pursuant to this subdivision, applications shall be accepted for any Medicare supplement coverage available from an issuer.
(3)The open enrollment period established pursuant to this section is a guaranteed issue period.
SEC. 4.Section 10192.11 of the Insurance Code is amended to read:10192.11.(a)(1)An issuer shall not deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this state, nor discriminate in the pricing of a policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a policy or certificate that is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Each Medicare supplement policy and certificate currently available from an issuer shall be made available to all applicants who qualify under this subdivision and who are 65 years of age or older.
(2)(A)An issuer shall make available Medicare supplement benefit plans A, B, C, and F, if currently available, to an applicant who qualifies under this subdivision, who is 64 years of age or younger, and who does not have end-stage renal disease. younger. An issuer shall also make available to those applicants Medicare supplement benefit plan K or L, if currently available, or Medicare supplement benefit plan M or N, if currently available. The selection between Medicare supplement plan K or L and the selection between Medicare supplement benefit plan M or N shall be made at the issuers discretion.
(B)For policies sold on or after January 1, 2020, to newly eligible Medicare beneficiaries, as defined in subdivision (b) of Section 10192.92, an issuer shall make available Medicare supplement benefit plans A, B, D, and G, if currently available, to applicants who qualify under this subdivision who are 64 years of age or younger and who do not have end-stage renal disease. younger. An issuer shall also make available to those applicants Medicare supplement benefit plan K or L, if currently available, or Medicare supplement benefit plan M or N, if currently available. The selection between Medicare supplement benefit plan K or L and the selection between Medicare supplement benefit plan M or N shall be made at the issuers discretion.
(3)This section and Section 10192.12 do not prohibit an issuer in determining premium rates from treating applicants who are under 65 years of age and are eligible for Medicare Part B as a separate risk classification. This section does not prevent the exclusion of benefits for preexisting conditions as defined in paragraph (1) of subdivision (a) of Section 10192.8 or paragraph (1) of subdivision (a) of Section 10192.81.
(b)(1)If an applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage of at least six months, the issuer shall not exclude benefits based on a preexisting condition.
(2)If the applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage that is less than six months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The manner of the reduction under this subdivision shall be as specified by the commissioner.
(c)Except as provided in subdivision (b) and Section 10192.23, subdivision (a) does not prevent the exclusion of benefits under a policy, during the first six months, based on a preexisting condition for which the policyholder or certificate holder received treatment or was otherwise diagnosed during the six months before the coverage became effective.
(d)An individual enrolled in Medicare by reason of disability shall be entitled to open enrollment described in this section for six months after the date of their enrollment in Medicare Part B, or if notified retroactively of their eligibility for Medicare, for six months following notice of eligibility. Every issuer shall make available to every applicant qualified for open enrollment all policies and certificates offered by that issuer at the time of application. An issuer shall not discourage sales during the open enrollment period by any means, including the altering of the commission structure.
(e)(1)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section for six months following:
(A)Receipt of a notice of termination or, if no notice is received, the effective date of termination from any employer-sponsored health plan including an employer-sponsored retiree health plan.
(B)Receipt of a notice of loss of eligibility due to the divorce or death of a spouse or, if no notice is received, the effective date of loss of eligibility due to the divorce or death of a spouse, from any employer-sponsored health plan including an employer-sponsored retiree health plan.
(C)Termination of health care services for a military retiree or the retirees Medicare eligible spouse or dependent as a result of a military base closure or loss of access to health care services because the base no longer offers services or because the individual relocates.
(2)For purposes of this subdivision, employer-sponsored retiree health plan includes any coverage for medical expenses, including, but not limited to, coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and the California Continuation Benefits Replacement Act (Cal-COBRA), that is directly or indirectly sponsored or established by an employer for employees or retirees, their spouses, dependents, or other included insureds.
(f)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section if the individual was covered under a policy, certificate, or contract providing Medicare supplement coverage but that coverage terminated because the individual established residence at a location not served by the plan.
(g)An individual whose coverage was terminated by a Medicare Advantage plan shall be entitled to an additional 60-day open enrollment period to be added on to and run consecutively after any open enrollment period authorized by federal law or regulation, for any Medicare supplement coverage provided by a Medicare supplement issuer and available on a guaranteed basis under state and federal law or regulation for persons terminated by their Medicare Advantage plan.
(h)(1)An individual shall be entitled to an annual open enrollment period lasting 60 days or more, commencing with the individuals birthday, during which time that person may purchase any Medicare supplement policy that offers benefits equal to or lesser than those provided by the previous coverage. During this open enrollment period, an issuer that falls under this paragraph shall not deny or condition the issuance or effectiveness of Medicare supplement coverage, nor discriminate in the pricing of coverage, because of health status, claims experience, receipt of health care, or medical condition of the individual if, at the time of the open enrollment period, the individual is covered under another Medicare supplement policy or contract. An issuer shall notify a policyholder of their rights under this subdivision at least 30 and no more than 60 days before the beginning of the open enrollment period, and on any notice related to a benefit modification or premium adjustment.
(2)For purposes of this subdivision, the following provisions apply:
(A)A 1990 standardized Medicare supplement benefit plan A shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan A.
(B)A 1990 standardized Medicare supplement benefit plan B shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan B.
(C)A 1990 standardized Medicare supplement benefit plan C shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan C.
(D)A 1990 standardized Medicare supplement benefit plan D shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan D.
(E)A 1990 standardized Medicare supplement benefit plan E shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare benefit plan D.
(F)(i)A 1990 standardized Medicare supplement benefit plan F shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare benefit plan F.
(ii)A 1990 standardized Medicare supplement benefit high deductible plan F shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit high deductible plan F.
(G)A 1990 standardized Medicare supplement benefit plan G shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan G.
(H)A 1990 standardized Medicare supplement benefit plan H shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan D.
(I)A 1990 standardized Medicare supplement benefit plan I shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan G.
(J)(i)A 1990 standardized Medicare supplement benefit plan J shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan F.
(ii)A 1990 standardized Medicare supplement benefit high deductible plan J shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit high deductible plan F.
(K)A 1990 standardized Medicare supplement benefit plan K shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan K.
(L)A 1990 standardized Medicare supplement benefit plan L shall be deemed to offer benefits equal to those provided by a 2010 standardized Medicare supplement benefit plan L.
(M)New or innovative benefits, as described in subdivision (f) of Section 10192.9 and subdivision (f) of Section 10192.91, shall not be included when determining whether benefits are equal to or lesser than those provided by the previous coverage.
(i)An individual enrolled in Medicare Part B is entitled to open enrollment described in this section upon being notified that, because of an increase in the individuals income or assets, they meet one of the following requirements:
(1)They are no longer eligible for Medi-Cal benefits.
(2)They are only eligible for Medi-Cal benefits with a share of cost and certifies at the time of application that they have not met the share of cost.
SEC. 5.Section 10192.25 is added to the Insurance Code, to read:10192.25.(a)On and after January 1, 2026, an issuer of Medicare supplement coverage in this state shall not deny or condition the issuance or effectiveness of any Medicare supplement coverage policy or certificate available for sale in the state, or discriminate in the pricing of the policy or certificate because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, if an application for that coverage is submitted at either of the following times:
(1)Before or during the six-month period beginning with the first day of the month in which an individual first enrolled for benefits under Medicare Part B, as described in subdivision (a) of Section 10192.11.
(2)During an annual open enrollment period, including, but not limited to, the open enrollment period established in subdivision (b).
(b)(1)An individual enrolled in Medicare Part B is entitled to a 90-day annual open enrollment period beginning on January 1 of each year, as described in this section.
(2)During the open enrollment period established pursuant to this subdivision, applications shall be accepted for any Medicare supplement coverage available from an issuer.
(3)The open enrollment period is a guaranteed issue period.
SEC. 6.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
|
Date
|
Status
|
|---|---|
| Feb 2, 2026 | Returned to Secretary of Senate pursuant to Joint Rule 56. |
| May 23, 2025 | May 23 hearing: Held in committee and under submission. |
| May 20, 2025 | Set for hearing May 23. |
| May 19, 2025 | May 19 hearing: Placed on APPR. suspense file. |
| May 9, 2025 | Set for hearing May 19. |
| May 5, 2025 | Read second time and amended. Re-referred to Com. on APPR. |
| May 1, 2025 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 9. Noes 2. Page 965.) (April 30). |
| Apr 4, 2025 | Set for hearing April 30. |
| Feb 14, 2025 | Referred to Com. on HEALTH. |
| Feb 3, 2025 | From printer. May be acted upon on or after March 2. |
| Jan 30, 2025 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| May 19, 2025 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Apr 30, 2025 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Health |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| ALS Association | ** Support | |
| American Diabetes Association | ** Support | |
| AmericaS Health Insurance Plans | ** Against | |
| APLA Health | ** Support | |
| Asian Americans Advancing Justice Southern California | ** Support | |
| Association Of California Life And Health Insurance Companies | ** Against | |
| California Agents & Health Insurance Professionals | ** Against | |
| California Alliance For Retired Americans | ** Support | |
| California Association Of Health Plans | ** Against | |
| California Conference Board Of The Amalgamated Transit Union | ** Support | |
| California Conference Of Machinists | ** Support | |
| California Health Advocates | ** Support | |
| California Hospital Association | ** Support | |
| California Kidney Care Alliance | ** Support | |
| California LGBTQ Health and Human Services Network | ** Support | |
| California Life Sciences Association | ** Support | |
| California Long-Term Care Ombudsman Association | ** Support | |
| California Medical Association | ** Support | |
| California Pan-Ethnic Health Network | ** Support | |
| California Physicians Alliance | ** Support | |
| Courage California | ** Support | |
| DaVita Kidney Care | ** Support | |
| Dialysis Patient Citizens | ** Support | |
| End the Epidemics | ** Support | |
| Engineers and Scientists of California | ** Support | |
| Fresenius Medical Care North America | ** Support | |
| Friends Committee On Legislation Of California | ** Support | |
| Health Access California | ** Support | |
| Healthcare for All | ** Support | |
| Healthy California Now | ** Support | |
| Hemophilia Council Of California | ** Support | |
| Justice in Aging | ** Support | |
| Movement to End Privatization of Medicare | ** Support | |
| National Association Of Insurance And Financial Advisors | ** Against | |
| National Union Of Healthcare Workers | ** Support | |
| Providence St. Joseph Health | ** Support | |
| Scripps Health | ** Support | |
| The Leukemia & Lymphoma Society | ** Support | |
| UNITE HERE International Union | ** Support | |
| United Automobile, Aerospace and Agricultural Implement Workers of America | ** Support | |
| Utility Workers Union of America | ** Support |
SENATE COMMITTEE ON APPROPRIATIONS
Senator Anna Caballero, Chair
2025 - 2026 Regular Session
SB 242 (Blakespear) - Medicare supplement coverage: open enrollment periods
Version: May 5, 2025 | Policy Vote: HEALTH 9 - 2 |
Urgency: No | Mandate: Yes |
Hearing Date: May 19, 2025 | Consultant: Agnes Lee |
Bill Summary:
SB 242 would establish new open enrollment opportunities for Medicare enrollees purchasing Medicare supplement coverage.
Fiscal Impact:
- The Department of Managed Health Care (DMHC) indicates minor and absorbable costs for state administration.
- Unknown potential costs for the California Department of Insurance (CDI) for state administration (Insurance Fund).
Background:
Medicare is a federally funded and administered program for people who are 65 or older and either a U.S. citizen or a legal permanent resident with at least five years of continuous residency in the U.S.; and, people who are under 65 with a permanent disability who have received Social Security Disability Insurance benefits for 24 consecutive months, have Lou Gehrig’s disease, or have end stage renal disease. There are multiple types of Medicare coverage, which are referred to as “parts.” Part A is hospital coverage and includes home health, skilled nursing care in a facility, and hospice care. Part B is medical coverage (doctors, ambulance, labs and X-rays, diagnostic tests, durable medical equipment, preventive care, outpatient therapy and mental health services) which is voluntary, and requires payment of a monthly premium. Part C is also known as Medicare Advantage, which is administered by health insurance plans and has limited networks of contracted providers who provide benefits covered under Parts A, B, and D. Part D is prescription drug coverage.
Medicare supplement coverage, also referred to as “Medigap,” is an option for people on Medicare without employer sponsored retiree coverage or Medicaid. It helps to fill the gaps in Medicare coverage, and makes cost-sharing more predictable and stable. As long as the premium is paid, a Medigap policy is guaranteed renewable, meaning it is automatically renewed each year. Existing state law requires an issuer to make available specified Medicare supplement coverage to a qualifying applicant who is 64 years of age or younger who does not have end stage renal disease. Under federal requirements, a person applying for a policy in the first six months after turning 65 who has part B, or within 63 days of a special enrollment event, cannot be denied a Medigap policy, charged a premium based on medical status, or have to endure a pre-existing condition waiting period. The DMHC and the CDI regulate Medicare supplement plans/policies in California.
Proposed Law:
Specific provisions of the bill would:
- Require that an issuer of Medicare supplement coverage in this state cannot deny or condition the issuance or effectiveness of any Medicare supplement coverage contract available for sale in the state, or discriminate in the pricing of the contract/policy because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant (except as specified), if an application for that coverage is submitted at either of the following times:
- Before or during the six-month period beginning with the first day of the month in which an individual first enrolled for benefits under Medicare Part B, as described in existing law.
- During an annual open enrollment period, including, but not limited to, the open enrollment period established under this bill.
- Require that an individual enrolled in Medicare Part B is entitled to a 90-day annual open enrollment period beginning on January 1 of each year, and provide that:
- During the open enrollment period established under this bill, applications must be accepted for any Medicare supplement coverage available from an issuer.
- The open enrollment period established under this bill is a guaranteed issue period.
- Premium rates offered may vary by age, as specified.
- Delete the existing exclusion of individuals who have end stage renal disease from qualifying for Medicare supplement coverage.
Related Legislation:
SB 1236 (Blakespear, 2024) was similar to this bill. The bill was held on the suspense file in this committee.
Staff Comments:
According to the California Health Benefits Review Program (CHBRP) analysis of SB 242 (introduced version), the average monthly premiums for Medicare Supplement coverage will increase from $40 per member per month, a 14 percent increase, because the average new enrollee in Medicare Supplements will use more services than the average enrollee at baseline.
Based on the May 5, 2025 version of the bill:
“CHBRP anticipates the amended language would result in a smaller but still significant premium increase because there would be a barrier to enrollment in Medicare Supplement plans for older beneficiaries - it would not be as worthwhile for beneficiaries to wait until they are older. However, the guaranteed issue provision remaining in SB 242 would still cause some people to choose to wait to purchase Medicare Supplement plans. The amended language would likely reduce adverse selection, which in turn should reduce the magnitude of premium increases and thus increase enrollment of lower risk, less costly individuals.”
-- END --
SENATE COMMITTEE ON HEALTH
Senator Caroline Menjivar, Chair
BILL NO: SB 242
AUTHOR: | Blakespear | ||
VERSION: | January 30, 2025 | ||
HEARING DATE: | April 30, 2025 | ||
CONSULTANT: | Teri Boughton | ||
SUBJECT: Medicare supplement coverage: open enrollment periods
SUMMARY:
Allows for an annual open enrollment in Medicare supplement, also called “Medigap,” insurance with protections from plan denials, and premiums rates based on age, and health status. Ends the ability of Medigap plans to exclude from enrollment people under age 65 who have end stage renal disease.
Existing law:
- Establishes, under federal law, the Medicare Program, administered by the Centers for Medicare and Medicaid Services (CMS), under which qualified individuals over 65 years old or individuals under aged 65 years old with qualifying disabilities, those who have permanent kidney failure, or those with amyotrophic lateral sclerosis (Lou Gehrig’s disease) receive health care, after applicable deductibles, coinsurance, or other required cost sharing. [42 USC §1395, et seq.]
- Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurance. [HSC §1340, et seq. and INS §106, et seq.]
- Prohibits an issuer (health plans, insurers, fraternal benefit societies, and other entities) from denying or conditioning the offering or effectiveness of any Medicare supplement contract, policy or certificate, available for sale in California, or discriminating in the pricing of a contract because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a contract that is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. [HSC §1358.4, §1358.11 and INS §10192.4, §10192.11]
- Requires an issuer to make available specified Medicare supplement benefit if currently available, to an applicant who is 64 years of age or younger, and who does not have end-stage renal disease (ESRD). Requires an individual enrolled in Medicare by reason of disability to be entitled to open enrollment described in 3) above for six months after the date of their enrollment in Medicare Part B, or if notified retroactively of their eligibility for Medicare, for six months following notice of eligibility. Prohibits sales during the open enrollment period from being discouraged by any means, including the altering of the commission structure. [HSC §1358.11 and INS §10192.11]
- Requires, where a Medicare supplement contract replaces another Medicare supplement policy or certificate, or contract, the issuer to waive any preexisting condition waiting periods or probationary periods to the extent those periods were met under the original contract, or if the original policy, certificate, or contract was in effect for at least six months. [HSC §1358.23 and INS §10192.8]
- Entitles an individual to an annual open enrollment period lasting 60 days or more, commencing with the individual’s birthday, during which time that person may purchase any Medicare supplement coverage that offers benefits equal to or lesser than those provided by their previous Medicare supplement coverage. Prohibits an issuer from denying or conditioning the issuance or effectiveness of Medicare supplement coverage, or discriminating in the pricing of coverage, because of health status, claims experience, receipt of health care, or medical condition, if at the time of the open enrollment period, the individual is covered under another Medicare supplement policy, certificate, or contract. [HSC §1358.11 and INS §10192.11]
- Entitles an individual whose Medicare Advantage plan coverage was terminated, to an additional 60-day open enrollment period after any open enrollment period authorized by federal law or regulation, for any and all Medicare supplement coverage available on a guaranteed basis under state and federal law or regulations for persons terminated by a Medicare Advantage plan. [HSC §1358.11 and INS §10192.11]
- Entitles an individual whose Medicare Advantage plan to guaranteed issue of a Medicare supplement policy if the Medicare Advantage plan reduces any of its benefits or increases the amount of cost-sharing or premium, or discontinues for other than quality of care its relationship or contract under the plan with a provider who is currently furnishing services to the individual. Requires the individual to be eligible for a Medicare supplement policy issued by the same issuer, a subsidiary of the parent company of that issuer, or a network that contracts with the parent company of that issuer. If none of those are available the individual is eligible for a Medicare supplement policy from any issuer if the plan the individual is enrolled in:
- Increases the premium by 15% or more;
- Increases physician, hospital, or drug copayments by 15% or more;
- Reduces any benefits under the plan; or,
- Discontinues, for other than good cause relating to quality of care, its relationship with a provider currently furnishing services to the individual. [HSC §1358.12 and INS §10192.12]
- Requires Medigap carriers to demonstrate to DMHC or CDI that the loss ratios of the plan or or policy are at least 75% for group coverage or 65% for individual coverage, meaning the premium has to cover at least 75% or 65% of enrollee/insured cost-sharing for the period of the policy. [HSC §1358.14 and Ins §10192.14]
This bill:
- Deletes an exclusion for specified Medicare supplement plans for an applicant who has end state renal disease and is 64 years of age or younger.
- Allows, after January 1, 2026 an applicant for Medicare supplement coverage to enroll:
- Before or during the six-month period beginning with the first day of the month in which an individual first enrolled for Medicare Part B benefits, as specified; or,
- During an annual open enrollment period, including, but not limited to, a 90-day annual open enrollment period beginning on January 1 of each year.
- Requires, during the open enrollment period, applications to be accepted for any Medicare supplement coverage available from an issuer.
- Requires the open enrollment period to be a guaranteed issue period.
- Prohibits, after January 1, 2026, an issuer of Medicare supplement coverage from denying or conditioning the issuance or effectiveness of any Medicare supplement coverage contract available for sale in the state, or discriminating in the pricing of the contract because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, if an application for that coverage is submitted at either of the times described in 2) above.
FISCAL EFFECT:
This bill has not been analyzed by a fiscal committee.
COMMENTS:
- Author’s statement. According to the author, seniors and people under 65 with ESRD should be able to access health insurance options without penalty for their preexisting conditions, but that is not the case in California today. Private insurers that offer Medicare Supplemental Insurance, known as Medigap, are allowed to penalize seniors for their pre-existing health conditions if they try to enroll after their initial enrollment at 65. In many cases, seniors need to enroll in Medigap because of unaffordable out-of-pocket costs or changes to the providers in their network. Because insurers may penalize seniors for preexisting conditions, they can deny seniors coverage or charge them exorbitant rates, which compromises their access to lifesaving care. State law also allows private insurers to deny Medigap coverage to people under 65 with ESRD. Without Medigap, lifesaving treatment remains out of reach for these patients.
- Medicare coverage. Medicare is a federally funded and administered program for people who are 65 or older and either a U.S. citizen or a legal permanent resident with at least five years of continuous residency in the U.S.; and, people who are under 65 with a permanent disability who have received Social Security Disability Insurance benefits for 24 consecutive months, have Lou Gehrig’s disease, or have ESRD. There are multiple types of Medicare coverage: Part A is hospital coverage and includes home health, skilled nursing care in a facility, and hospice care. Part B is medical coverage (doctors, ambulance, labs and X-rays, diagnostic tests, durable medical equipment, preventive care, outpatient therapy and mental health services) which is voluntary, and requires payment of a deductible ($257 in 2025) and typically 20% coinsurance. There is no limit on out-of-pocket costs. Eligibility rules for part B depend on whether a person is eligible for premium-free part A or whether the individual has to pay a premium for part A coverage. A person must actively enroll in part B. If a person doesn’t enroll in part B or terminated their enrollment, they have to enroll during certain enrollment periods and must pay a late enrollment penalty for as long as the person has part B. Part C is known as Medicare Advantage, which is administered by health insurance plans and has limited networks of contracted providers who provide benefits covered under Parts A, B, and D. Part D is prescription drug coverage. Medicare Advantage is an alternative to traditional Medicare. Medicare Advantage has maximum limits on out-of-pocket costs, and limits on cost-sharing.
- Traditional Medicare enrollment periods. The initial enrollment period for Medicare begins three months before the month of a person’s 65th birthday and ends three months after that date, for a total of seven months. A general enrollment period is a three-month period that takes place from January 1 through March 31 of each year. Part B and premium part A coverage begins the month after a person enrolls during the general enrollment period. Special enrollment periods allow a person to sign up for part B (and premium part A) without paying a late enrollment penalty. Special enrollment periods are time limited.
- Medicare supplement coverage. Medicare supplement coverage, also referred to as “Medigap,” is an option for people on traditional Medicare without employer sponsored retiree coverage or Medicaid. It helps to fill the gaps in original (also referred to as traditional) Medicare coverage, and makes cost-sharing more predictable and stable. A person can enroll in Medigap or Medicare Advantage. Medigap policies are also sold by private health insurance companies. Medigap policies do not have a network of providers, and they cover the cost-sharing required under traditoinal Medicare. As long as the premium is paid, a Medigap policy is guaranteed renewable, meaning it is automatically renewed each year. Insurance companies can only sell “standardized” Medigap policies that follow federal and state laws (these standardized policies are identified by letters A through N). Costs can vary, but the basic benefits per letter standard are the same. Some Medigap policies cover extra benefits that are not typically covered by Medicare, like hearing, dental, or vision care. Guaranteed issue rights to buy Medigap policies vary under certain circumstances. In most cases outside of a guarantee issue period a health insurance company does not have to sell a person a Medigap policy, or the company can impose waiting periods, or charge higher premiums based on a health condition.
- Medigap enrollment periods. Under federal requirements, a person applying for a policy in the first six months after turning 65 who has part B, or within 63 days of a special enrollment event, cannot be denied a Medigap policy, charged a premium based on medical status, or have to endure a pre-existing condition waiting period. This is known as a guaranteed issue period. Some states have broader open enrollment periods. Federally, people under age 65 who have Medicare because of a disability are not entitled to these same open enrollment periods. Most states do not extend guarantee issue protections to people over age 65 beyond a one-time open enrollment period. According to the California Health Benefit Review Program (CHBRP), Connecticut, Massachusetts, Maine, New York, Rhode Island, and Vermont require either continuous or annual guaranteed issue protections for Medigap enrollees ages 65 and older regardless of medical history. Minnesota has passed a similar law that will be in effect in 2025. For someone younger than age 65 who qualifies because of a disability (except ESRD), open enrollment rights begin six months after the effective date of Part B coverage, or if notified retroactively, the date of the acceptance notice from Social Security. Once a person with a disability turns 65 they are granted the open enrollment opportunity for a 65 year old and they can enroll in or switch to another Medigap plan.
- Coverage in California. Approximately 6.6 million Californians are enrolled in Medicare, including five million Medicare-only beneficiaries, and 1.6 million beneficiaries who are dually eligible for Medicare and Medi-Cal. Across all people on Medicare in California, approximately 90% are age 65 and older. People who are dually eligible for Medicare and Medi-Cal may be eligible for other types of state administered Medicare Savings Programs. CHBRP indicates there are approximately 1.1 million Californians in Medigap policies, and the average annual premium for a Medigap policy in California is over $2,800. CHBRP assumes baseline claims costs are 83.9% based on a nationwide loss ratio of 83.9% reported in a National Association of Insurance Commissioners report. As of 2025, there are approximately 20 separate carriers offering Medigap policies in California. For individuals over the age of 65 years, California allows carriers to set premiums using any of the three methodologies (issue age, attained age and community rating), and according to California Health Advocates, the most common way Medigap policies are priced in California is attained age. California does not require Medicare Supplement plans to offer coverage for Medicare beneficiaries under the age of 65 years who have ESRD. However, California does offer an open enrollment period for those under 65 years eligible for Medicare due to disability (excluding ESRD).
- Kaiser Family Foundation (KFF) report. A 2023 Medicare Snapshot published by KFF indicates that two in ten Medicare beneficiaries have Medigap coverage. In 2021 they were more likely to be White, have incomes above $20,000 per person, self-report excellent, very good, or good health, and have a bachelor’s degree or higher. The report indicates that Medigap policies can be costly and can rise with age, among other factors, depending upon the state in which they are regulated. CHBRP indicates enrollees in traditional Medicare with Medigap plans and employer-sponsored insurance had higher incomes, were in relatively good health, had more years of education, and were less likely to be under age 65 years with disabilities than all traditional Medicare enrollees. Nationally, as more enrollees have shifted to Medicare Advantage plans, the number of Medicare enrollees in traditional Medicare without a Medigap policy has declined from 5.6 million in 2018 to 3.2 million in 2022. Traditional Medicare beneficiaries with no Medigap coverage were more likely to be under the age of 65 years and have relatively lower incomes compared to traditional Medicare enrollees overall. Medicare Advantage enrollees were more likely to be Black or Hispanic, self-report relatively poor health, have incomes below $20,000 per person, and have lower levels of education, compared to traditional Medicare enrollees in 2022.
- Rules for setting Medigap premium rates. Medicare Supplement plans may set premiums based on the methodologies described below. This bill requires community rating and guaranteed issue, which includes no underwriting or denials based on health status or age.
- Community rating means enrollees are generally charged the same premium, regardless of age or gender, which results in younger enrollees paying more than their actuarially expected cost and older beneficiaries paying less. As an example, a 65 year old male and a 72 year old female would both pay $165 a month for the same Medigap plan.
- Issue-age or Entry-age rating sets premiums based on the age of an enrollee when the enrollee first enrolls in the plan. Premiums do not increase as the individual ages, except that premiums may go up because of inflation and other factors, but not because of age. An individual who enrolls at 65 will have lower premiums ($145) than someone who enrolls at 72 ($175), for example.
- Attained-age rating sets premiums based on the age of the enrollee, which allows premiums to increase as the enrollee ages. Premiums are low for younger enrollees but eventually become much higher as the enrollee ages. Someone who enrolls at age 65 pays $120, at the next birthday age 66, pays $126, and the following birthday at age 67, pays $132. Someone who enrolls in the same plan at age 72 pays $165, and at next birthday pays $171, and the birthday after that pays $177. Premiums increase because of age, inflation, and other factors.
- CHBRP report. AB 1996 (Thomson, Chapter 795, Statutes of 2002) requests the University of California to assess legislation proposing a mandated benefit or service and prepare a written analysis with relevant data on the medical, economic, and public health impacts of proposed health plan and health insurance benefit mandate legislation. CHBRP was created in response to AB 1996, and reviewed this bill. Key enrollment and expenditure findings include:
- Medi-Cal. This bill is unlikely to impact Medi-Cal beneficiaries because Medicare enrollees who also are eligible for Medi-Cal already get help with their out-of-pocket Medicare costs from Medi-Cal. Medicare enrollees who are dually enrolled in Medi-Cal are unlikely to purchase a Medigap policy because it is not necessary since they have Medi-Cal.
- Adverse selection and moral hazard. The predicted increases in Medigap plan premiums due to this bill are driven by what is commonly known as adverse selection and moral hazard.
- Adverse selection occurs when lower cost or healthier patients forgo buying insurance until they need it, while higher cost or sicker patients actively buy insurance to protect them from risk. This imbalance in enrollment results in fewer lower cost healthier enrollees and a greater number of higher cost or sicker enrollees in insurance products. The higher use of services by higher cost or sicker patients causes premiums to increase. A change in rules could also impact Medigap plan premiums if broadening guaranteed issue protections results in adverse selection in the Medigap plan market. There is evidence that Medicare Advantage enrollees with higher health needs disenroll from Medicare Advantage into traditional Medicare at relatively higher rates, such as enrollees who have two or more complex chronic conditions or impairments in activities of daily living. If higher cost beneficiaries gain access to Medigap plans, premiums could rise.
- Moral hazard refers to the risks that someone or something becomes more inclined to take because they have reason to believe that an insurer will cover the costs.
- Enrollees who will benefit from this bill.
- Traditional Medicare enrollees who did not purchase a Medigap plan during their first open enrollment period when enrolling in Part B.
- Traditional Medicare enrollees who were denied Medigap before or faced waiting periods or exclusions based on pre-existing conditions, health status, or age.
- Medicare Advantage enrollees who signed up for Medicare Advantage due to the added protection against high out-of-pocket spending but have become dissatisfied with the plan could switch to traditional Medicare and enroll in Medigap when benefits are needed.
- A Medigap enrollee who cancels their policy to save from paying premiums could enroll in Medigap at a future date when benefits are needed.
- Impacts. CHBRP estimates 6,400 (-1%) of current Medigap enrollees would leave the market in 2026 because of community rating requirements of this bill. CHBRP estimates 7.5% of Medicare enrollees with conditions such as lymphoma, leukemia, lung cancer, and the need for skilled nursing, would enroll in Medigap in 2026 because of this bill. Overall, the average monthly premiums for Medigap policies will increase by $40.00 (14%) per member per month (PMPM) due to this bill, because new enrollees in Medigap will use more services than the average enrollee at baseline. Approximately, 90,700 enrollees at baseline would disenroll from their coverage due to increases in premiums, whereas there are 84,300 new enrollees who will enroll in Medigap. The new entrants to the Medigap market are likely to be higher cost enrollees, and they will displace lower cost enrollees who find it advantageous to disenroll from their Medigap rather than pay higher premiums to continue their coverage. Note: these estimates are lower than those in the 2024 CHBRP analysis of bill SB 1236 (in 2024) because based on additional studies from other states, the estimated disenrollment was reduced to 8% from last year’s estimate (of SB 1236) of 14%, assumed shift of high cost cohorts was lowered to 7.5% from 20%, and the assumption of members leaving Medicare Advantage for Medigap policies due to network frustrations was also included.
- Prior legislation. SB 1236 (Blakespear of 2024) was substantially similar to this bill. SB 1236 was held in the Senate Appropriations Committee.
SB 407 (Monning, Chapter 157, Statutes of 2019) requires an issuer of a Medigap contract with new or innovative benefits to identify the portion of the premium attributed to the new or innovative benefits as a separate line item on the payment or invoice, and extends the Medigap open enrollment period by 30 days. SB 407 requires DMHC and CDI to collaborate to develop and implement policies and procedures that standardize new or innovative benefits for purposes of allowing consumer comparison of benefits, out-of-pocket costs, and premiums.
- Support. The Leukemia & Lymphoma Society is one of this bill’s cosponsors and writes that pre-existing conditions should not be used against Medicare beneficiaries when they purchase a Medigap. Right now, insurance companies in California can deny Medigap coverage or charge more if someone has a pre-existing condition—unless they sign up when they first become eligible for Medicare. This means many people may not be able to get the extra coverage they need, leading to high medical bills. People on Medicare should be able to change their healthcare plans when needed and have access to the care they need. This bill gives them that choice. Another cosponsor, California Health Advocates, writes currently, statutory protections for Medigap in California are very limited in scope with respect to guaranteed-issue enrollment periods, in which insurers cannot discriminate based on patients’ pre-existing conditions, and premium pricing. Outside of guaranteed enrollment periods, health insurers can deny coverage outright or charge patients much higher premium rates based on their age and health. Unfortunately, there are many instances where Medicare Advantage patients cannot receive timely care or access specialists they need through their Medicare Advantage plan’s limited provider network. Increasingly, Medicare Advantage patients are losing access to their health care providers who choose to leave Medicare Advantage networks altogether. These patients should have the right to switch to traditional Medicare and be able to purchase Medigap coverage regardless of their pre-existing conditions and without being subjected to excessive premium costs. The California Alliance for Retired Americans, another cosponsor, writes guaranteed issue and community rating in the Medigap insurance market can help patients better afford their care. Without guaranteed issue and community rating, companies can deny patients access to Medigap plans entirely or charge much higher rates based on health and age. For seniors, these two policy changes will simplify the complex Medicare market, helping patients get the right coverage at the right time. Moreover, guaranteed issue enables Medicare Advantage enrollees to switch to traditional Medicare with a Medigap supplement, providing more choice for California’s senior population, and protection from exorbitant out-of-pocket costs. Medicare Advantage enrollees switching to traditional Medicare are more likely to be burdened with treatment costs for conditions like cancer than other Medicare Advantage disenrollees. Denial of access to Medigap extends these cost burdens on these patients and increases the chances that they will either not be able to afford life-saving treatments or go bankrupt obtaining them.
- Concerns. CDI writes with concerns about the potential of this bill to generate large rate increases and adverse selection in the Medigap market. CDI supports the removal of the ESRD exclusion because it discriminates against a person based solely upon their health status and indicates rate increases because of this would be modest (1-2%). CDI generally supports the elimination of the separate risk pool for individuals under 65, CDI notes that it will have an impact upon consumers, increasing rates by approximately 2% for the 65 and over population, while reducing rates for the under 65 population by 50%. Unlike the Affordable Care Act (ACA), this bill does not include protections to address concerns with moving to community rating. CDI provides examples of impacts. If this bill requires all existing plans to reissue Medigap policies based on community rating, CDI expects significant rate increases over the next 2-3 years paid by young seniors, as well as noticeable disruption and upheaval in the market. If this bill provides community rates only for new insureds, there will be initially no disruption to the market but insureds in the higher age brackets or individuals under 65 will benefit from switching markets, but younger healthier insureds would exit the market. This will put upward pressure on the community rates charged by insurers. This bill’s annual guaranteed issue enrollment period will cause migration of 5-20% of certain groups of insureds (people moving from Medicare Advantage to Medigap as they age, and people opting not to enroll in Medigap until they age) which has the potential to increase premium rates in the range of 4-17%. These increases may seem small but will be difficult for seniors with limited incomes. CDI is concerned smaller Medigap carriers will leave the market leaving only the larger carriers and less competition in the market. CDI believes an alternative that would cause less disruption would be to use a prescribed mandated age curve similar to the ACA.
- Opposition. The California Agents and Health Insurance Professionals and the National Association of Insurance and Financial Advisors-California write that this bill would significantly increase premiums for seniors and would likely reduce access to coverage by driving competition out of the Medicare marketplace as we have seen in other states that have implemented similar enrollment requirements. With the cost pressures generated by this bill, California seniors will likely lose choice, affordable coverage options, and other consumer benefits. The California Association of Health Plans, America’s Health Insurance Plans, and the Association of California Life and Health Insurance Companies write that when a new Medicare enrollee signs up for a Medigap policy, the premium they are quoted is structured on the assumption that the policyholder will keep the policy for the rest of their life. This structure is in direct contrast to commercial health insurance coverage or Medicare Advantage, which set premiums, cost-sharing, and benefits on an annual basis. If the benefits may change annually or the plan might not be offered the following year, then it is reasonable to have an annual open enrollment period. However, because Medigap benefits cannot change, the policies cannot be cancelled by the issuer, and the premium structures are established based on the full lifetime of the enrollee, an annual open enrollment period is not only unreasonable, but it will also increase premiums for seniors and undermine the health and stability of the Medigap market in California. Recent actuarial studies demonstrate this fact. A fundamental principle of insurance involves the pooling of risk to ensure affordability for everyone in the risk pool. Premiums are kept stable when the risk pool includes a balanced mix of healthy people as well as those who need more health care services. Adverse selection results in an increase of the risk pool’s average costs and means that everyone in the Medigap risk pool – many of whom are on fixed incomes – will pay higher premiums. Plan requirements help guard against adverse selection and enhance risk pool stability. The end result is effective plan offerings at reasonable premium rates.
- Policy comment. This may be too much to do at once. It seems fair to move the Medigap market in a direction similar to other insurance market reforms like under the ACA. But as was learned with the ACA, existing enrollees will be impacted and the Legislature may wish to mitigate harms to existing Medigap participants and incent them to remain in the market.
- Amendments. CDI recommends amendments to reconcile this bill with conflicts in existing law.
SUPPORT AND OPPOSITION:
Support: The Leukemia & Lymphoma Society (cosponsor)
California Health Advocates (cosponsor)
California Alliance for Retired Americans (cosponsor)
ALS Association
American Diabetes Association
APLA Health
Asian Americans Advancing Justice – Southern California
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Health Advocates
California Hospital Association
California Kidney Care Alliance
California LGBTQ Health and Human Services Network
California Life Sciences Association
California Long-Term Care Ombudsman Association
California Medical Association
California Pan-Ethnic Health Network
California Physicians Alliance
Courage California
DaVita Kidney Care
Dialysis Patient Citizens
End the Epidemics
Engineers and Scientists of California
Fresenius Medical Care North America
Friends Committee on Legislation of California
Health Access California
Health Care for All
Healthy California Now
Hemophilia Council of California
Justice in Aging
Movement to End Privatization of Medicare
National Union of Healthcare Workers
Providence St. Joseph Health
Scripps Health
United Automobile, Aerospace, & Agricultural Implement Workers of America
Unite Here International Union
Utility Workers Union of America
Oppose: America’s Health Insurance Plans
Association of California Life and Health Insurance Companies
California Association of Health Plans
California Agents & Health Insurance Professionals
National Association of Insurance and Financial Advisors
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