Medicare Advantage

Understanding Medicare Seamless Conversion

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On October 21, 2016, the Centers for Medicaid and Medicare Services (CMS) released a list of insurance companies on the federal health insurance marketplace that went almost unnoticed. We know that the list went almost unnoticed because complaints regarding the purpose of the list are on the rise all over the country, and it seems as though the CMS is finally paying attention.

The list is made up of 29 insurance providers on the marketplace who were approved by the CMS to offer seamless conversion to their clients. Seamless conversion means that any client covered by the insurance company is automatically moved into that company’s Medicare Advantage (MA) plan on the day of their 65th birthday. The CMS itself must approve an insurance company’s application, and an approved insurance company is required to provide automatic enrollment into their MA program for every qualified client that they insure.

What is MA?

Medicare Advantage (MA) is a plan that’s offered by private insurers with a significant financial benefit for insurance companies. There are also advantages to enrolling in an MA plan from the consumer perspective. For people who need more than standard medical care or a lot of prescription drugs, Medicare Advantage plans offer more robust options than traditional Medicare. But there are downsides to these plans as well. Networks for MA plans are often small, and people who are new to the plans are often asked to change doctors to accommodate the plan’s network. MA plans also do not cover care given by out-of-state hospitals, which means that patients on an MA plan who get injured on vacation may wind up receiving huge medical bills when they get home. Traditional Medicare has no issues with networks or out-of-state care.

The 60-Day Warning

People who are insured with one of companies on the CMS seamless conversion list are sent a letter 60 days before automatic enrollment explaining the MA program. But unlike almost every other health insurance plan, people under the seamless conversion rule are automatically opted-in to an MA program and must opt-out if they’re not interested. Many seniors make the decision to go with traditional government insurance long before their 65th birthday and tend to ignore mail from other insurance companies because they feel they have already made their decision. By the time they find out what has happened, they are getting significant medical bills in the mail.

The Overlap Problem

One of the issues that’s been causing a lot of confusion is a little-known rule involving marketplace health insurance plans. By federal law, an insurance company cannot kick enrollees off of a private insurance plan just because they reach their 65th birthday. One person also cannot be signed up for two primary government programs at the same time.

Since the insured can’t be dropped by a private insurer, the insurance company can automatically enroll a beneficiary into a Medicare Advantage plan the moment that person turns 65. If the insured has signed up for any other government plan, that enrollment is nullified because the private insurance is still in effect. Most people don’t know that they have to drop their private insurance when they sign up for government coverage. In these scenarios, private coverage takes precedence, meaning government-sponsored insurance – like traditional Medicare – is dropped before the private plan is, which can create a significant problem when it comes time to pay medical bills.

Trying to Put a Stop to It

The seamless conversion issue had not been a major issue until recent years. Since the government marketplace has been in effect, more seniors are starting to complain to advocacy groups about enormous medical bills because they didn’t realize that they were automatically enrolled in an MA program instead of original Medicare.

In October 2016, it was announced that the CMS put a stop to approving applications for automatic enrollment into MA plans until further notice. Companies that had already been approved will retain their ability to transition patients into MA coverage, but no new applications are being approved until the CMS examines the situation. The complaints from patients and advocacy groups had reached the point where the CMS could no longer ignore the problem.

How to Handle Seamless Conversion Enrollment

If your current insurance company is on the list released by the CMS, then you do have the option to opt out of seamless conversion. You’ll receive a letter 60 days before your 65th birthday regarding the automatic transition from your current coverage to the company’s Medicare Advantage program. It’s easy to disregard the letter, especially since the letter is only sent once, but it’s important to read any mail that you get from your insurer since you only have a short window to handle your enrollment.

You can use the notice letter to opt-out of the MA conversion before it begins. If you have already signed up for traditional Medicare, do not assume that this insurance takes priority over the MA conversion. Once you have opted-out of the transition, remember to cancel your private insurance on your 65th birthday.

The entire MA transition process seems a bit covert, and it can cause plenty of headaches if you aren’t expecting it. Be vigilant and protect your right to have the kind of insurance that you want.