New York Medicare supplement regulation: open enrollment, marketing, compensation, suitability, replacement, and disclosure (Reg 193)

Why New York regulates Medigap separately

Medicare supplement insurance, or Medigap, is a private policy that pays for health care costs Original Medicare does not. New York Insurance Law § 3218 defines it as any individual or group accident and health policy that pays for services not provided by Medicare, and it orders the superintendent of the Department of Financial Services (DFS) to write rules for it. Those rules are Regulation 193. The statute tells you what Regulation 193 has to do:

• treat Medicare supplement insurance as a separate classification with minimum standards;
• require a minimum ratio of benefits to premiums (a loss ratio), proved by annual filings;
• use a uniform designation system (the standardized plan letters);
• require full disclosure in clear, everyday language;
• prohibit advertising, selling or soliciting any accident or health policy as supplemental to Medicare unless it meets the minimum standards; and
• publish a consumer shopping guide.

No insurer may issue or deliver a Medigap policy in New York unless it includes the approved minimum standards.

Open enrollment: year-round in New York

Federal law gives a six-month Medigap open enrollment window that starts when a person is 65 and enrolled in Part B. New York goes much further. Any insurer writing Medigap here must accept a Medicare enrollee's application at any time of year, and may not deny the policy or charge a different rate because of health status, claims experience, medical condition or current health care. The protection applies whether the person is eligible by age or disability, and to people with end-stage renal disease. To buy Medigap, the applicant must be enrolled in both Part A and Part B.

A policy may impose a pre-existing condition waiting period of up to six months, but the insurer must reduce it day-for-day by prior creditable coverage, provided there was no break longer than 63 days.

Every insurer must offer Plans A and B, and for policies sold on or after January 1, 2020, either Plan D or Plan G. Plans C and F (which cover the Part B deductible) cannot be sold to people newly eligible on or after that date. Medigap is guaranteed renewable.

Marketing rules

Regulation 193 follows the national model rules on marketing. An insurer must have procedures so that its agents make fair and accurate comparisons of policies and do not sell excessive insurance. Prohibited practices include twisting (misrepresenting a policy to induce a switch), high-pressure tactics (force, fright or threats), and cold-lead advertising, meaning any method that hides that its purpose is to sell insurance and that an agent will make contact. No ad may suggest the policy is a government program, and nothing may be marketed as a Medicare supplement unless it meets the minimum standards.

Compensation

Under the model rules Regulation 193 adopts, first-year commission on a Medigap sale may be no more than 200% of the second-year commission. Renewal commissions must then be level for at least five renewal years. Replacing a policy may not earn more than renewal-level compensation unless the new policy's benefits are clearly and substantially greater. The aim is to remove the incentive to churn clients.

Suitability and replacement

The agent must make reasonable efforts to determine whether a purchase or replacement is appropriate. The application must ask whether the applicant already has Medigap, Medicare Advantage or other health coverage and whether the new policy will replace it. A sale that would leave someone with more than one Medigap policy is prohibited. When a replacement is involved, the applicant must receive and sign a Notice Regarding Replacement. The new policy must credit time already served under the old policy's pre-existing condition and waiting periods.

Disclosure

At application, the agent delivers an outline of coverage and the Guide to Health Insurance for People with Medicare, and obtains a signed acknowledgment of receipt. Every policy carries a 30-day free look: the insured may return it for a full premium refund.

Exam tip: In New York, the "open enrollment period" question has a different answer from the federal one. NY Medigap is open all year, with no underwriting and no health-based rate differences.