One of our brokers recently had a situation with a client that wanted to leave his Medicare Savings Account (MSA) Plan in the middle of the year for a Medicare Supplement Plan. He was within his first year of coverage and had never purchased a Medigap policy before (see SEP code 12J).
Sounds straightforward enough, right? Unfortunately, there is more to making this kind of change than meets the eye.
If you have a client wishing to leave an MSA, then there are a few takeaways you can utilize from this broker’s experience. Keep reading to get the full insight and guidance for clients leaving an MSA.
The Nuances of a Medicare Savings Account Plan
As it turns out, while MSA plans are considered Medicare Advantage plans, there are a few nuances that separate them from your more traditional MA HMO, PPO, and PFFS plans.
Qualifying Special Election Periods
One such nuance is the inability to dis-enroll during the year to take advantage of the above-mentioned Special Election Period.
That leaves the following SEPs that can be utilized outside of the Annual Election Period:
- Member moves into a nursing home (OEPI).
- Member moves out of the service area (MOV).
Grounds for MSA Plan Cancelling Member’s Enrollment
Also, the MSA plan can cancel a member’s enrollment for any of the following reasons:
- Member gets Medicaid.
- Member enrolls in a Federal Employee Health Benefits Program.
- Member has Tricare or VA benefits.
- Member gets benefits that cover all or part of the annual MSA deductible.
- Member is outside of the service area for over 6 months.
What Happens when a Member Leaves an MSA Plan?
If a member does leave an MSA plan prior to the end of the year, they will be required to pay a portion of the annual deposit back to Medicare. The amount paid back will be based on the number of months left in the calendar year.
Alternatively, if the member decides to leave the MSA plan at the end of the year, they will need to make that decision during the Annual Election Period.
Members electing to join a different Medicare Advantage plan will be automatically disenrolled from the MSA at the end of the year. Members that choose to return to Original Medicare will need to notify their MSA plan of their desire to disenroll, or they can call 1-800-MEDICARE.
So, if you have a client turning 65 that wants to enroll in an MSA plan, make sure they are aware that they will need to keep that plan for the remainder of the year. They can still take advantage of the “first 12 months” rule as it pertains to purchasing a Medigap policy. They will just have to wait until the Annual Election Period to make that decision.
Have more questions regarding MSA plans or simply need support serving a client? Think “Plan Advisors first!” We’re here to help you help your clients.
If you’re an existing Plan Advisors brokers, request support on our Broker Portal. New to Plan Advisors? Let’s talk to learn how Plan Advisors can support you.
One of the more common questions agents get asked from their Medicare clients is “what is the Medicare Part D late enrollment penalty?” It is fairly easy to explain that if a Medicare member spends more than 63 consecutive days without having Part D or creditable drug coverage, they will be required to pay a late enrollment penalty should they choose to enroll in a Part D plan in the future. The typical follow-up question is “will I have a late enrollment penalty?” This is also usually pretty easy to answer, assuming the agent asks the proper questions of the client and the client responds with accurate answers about prior coverage.
