Question from John: Why are Supplement companies allowed to deny people policies for having pre-existing medical conditions? My wife has plan G and it’s now almost $400 per month. She’s either stuck paying higher premiums each year or will be forced to move to an Advantage Plan, which she doesn’t want to do. I also have a good friend who’s on an Advantage Plan and paying thousands of dollars out-of-pocket every year because he needs Remicade. He wants to move to a Supplement that covers the full cost of Remicade but can’t. None of it seems fair at all. 

Answer: This is a great question and one that needs addressed on several levels. 

Everyone has one time opportunity to enroll in a Supplement with no questions asked

First, let me explain there is one time opportunity when all Supplement companies must accept everyone and provide their lowest rate with zero questions asked. This is known as the Initial Enrollment Period (IEP). It starts three months prior to one’s initial Medicare Part B effective date and runs through the following six months.  For example, anyone with a January 1, 2027 Part B effective date has from October 1^st of 2026 until June 30^th of 2027 to enroll in a Supplement without having their current or previous health issues considered. Those who enrolled in a Medicare Advantage Plan during their IEP may have an additional six months. 

However, after this time, in 43 states, Supplement companies are allowed to discriminate who they accept into their plans using a practice known as medical underwriting which is defined as: “The process where insurance companies evaluate an applicant's medical history, health status, and lifestyle habits to assess risk. This evaluation determines if they will offer coverage, at what premium, and if any pre-existing conditions will be excluded. It is primarily used for life, disability, and some supplemental insurance.” 

States with no underwriting have much higher premiums and fewer choices

Why, after the IEP, does Medicare allow Supplement companies to utilize underwriting and discriminate against those with pre-existing medical conditions? Because forcing Supplement companies to accept everyone into any plan of their choice creates much higher premiums for everyone, not just people like John’s wife. Let me explain.

Currently, three states have that regulation.  And what happens in those states is most people choose a $0 premium Advantage Plan to save money, knowing they can make a change to a Supplement if they get sick. This leaves Supplement companies with a majority of unhealthy people in their pool of insureds, causing an increase in the number of claims, as well as a higher volume of more expensive claims for services such as infusion, like John’s friend is getting. 

The result in states where Supplement companies are forced to accept everyone is limited competition and much higher premiums. Let’s use a 75-year-old female for example. In Pennsylvania, a state where underwriting is allowed, the least expensive Plan N is $125 per month and there are almost 20 companies competing for business.  In Connecticut there are only 4 choices in Supplement companies, and the least expensive Plan N is $222/month. In New York, only three companies offer plans, and the best price is $267.  In Massachusetts, again only 3 companies are available, and the best price for that same 75-year-old is $240/month. These states are also more likely to see very high premium hikes year to year. At a 20% annual increase, which is almost certain with a majority of unhealthy people insured, in just 3 years the least expensive Plan N in Connecticut will be $383/month, New York $461, and Massachusetts $415. While Plan N in Pennsylvania will be $216 in 3 years if the same 20% annual increase occurs.

I hate to hear about scenarios like the one John’s wife is facing. But it’s my opinion that a national mandate to force all companies to accept anyone who applies at any time will lead to millions fewer Americans able to afford Supplements, which also isn’t fair. In addition, it would be a huge burden on taxpayers when all those people move to Advantage Plans which cost the government 15% to 20% more per person than Original Medicare. 

Educating oneself is vital!

If there is going to be more regulation in the Medicare insurance industry, it needs to be focused on ensuring everyone going on Part B for the first time has the IEP rules of Supplements and the risks of Advantage Plans explained and disclosed properly. As I recently wrote about in the Aaron’s Advice series, Medicare Advantage Plans pay agents much higher commissions than Supplements. Unfortunately, this influences the majority of agents to push Advantage Plans almost exclusively, and they conveniently leave out the part about possibly not being able to buy a Supplement in the future if one isn’t chosen during the IEP. They also never explain another risk; that Advantage Plan premiums, co-pays, and MOOP can increase and the ancillary benefits that are so popular, dental, vision, and Over the Counter allowances, can be reduced or eliminated. This started to happen in most of the country in 2025 and 2026, although Pennsylvania plans weren’t affected as much. However, I’m anticipating changes to Advantage Plans in Pennsylvania and other states to be more dramatic in 2027 and 2028. 

Shifting back to Supplements, Plan G, which most people currently have, is antiquated, as I wrote about just last week. Almost no one should choose it, or have purchased it, during their IEP. Unfortunately, most of those going on Medicare for the first time aren’t aware, and most agents don’t explain how miniscule the differences are between G and Plan N, which we recommend almost exclusively. Why? Because it’s jaw dropping how much less expensive N is as time passes, over $20.000 versus G over the next 10 years if the rate increases we’ve seen in 2025 and 2026 continue. 

The bottom line is that people must be educated on the intricacies, rules, regulations, and risks of both Supplements and Advantage Plans, especially when going on Medicare Part B for the first time. 

Addressing long term affordability of Supplements

One other action Medicare should take to address affordability is the introduction of new Supplement plan options that would have even lower premiums than Plan N. It’s been over 15 years since one was introduced and it’s far past due. These new plans would have affordable co-pays for services such as CT scans, MRIs, outpatient surgeries, and hospitalizations. But again, they would be much less expensive, especially long term compared to both Plans G and N. 

If you have any questions regarding this week’s question or any other Medicare topic, or would like to make an appointment for a no-cost consultation, give the office a call at 724-603-3403. Feel free to email me personally as well. Aaron@GetYourBestPlan.com. 

I’d like to remind our readers that the agents of The Health Insurance Store are licensed in over 20 states and can provide the same great guidance, advocacy, and service no matter where you call home.