June 30, 2016 by Brad Gunning

Illegal Medigap Sales Practices


rulesBuying Medicare Supplement Insurance (Medigap) on your own isn’t easy. It’s possible, but you’d have to (1) decide which of the standardized Medigap plans (A through N) is best for you, (2) call your state health insurance assistance program to find out which insurance carriers sell Medigap policies in your state, (3) call each of these insurance companies, give them your information, and compare costs, and then finally (4) buy the Medicare Supplement policy.

Since using an insurance agency is no cost, most people just call up an insurance agent and have them assist with each of the four steps. And, as an independant insurance agency ourselves, that’s what we recommend! But it’s important to aware of potential illegal practices by insurance agents, especially with regard to Medicare. This is a highly regulated type of insurance and insurance agents are held to high ethical standards. We thought it might be helpful to look at the illegal activities insurance agents cannot engage in with regard to sale of a Medigap policy.

Illegal Medigap Sales Activities

• An agent cannot pressure you into buying a Medigap policy. An agent cannot lie or mislead you with regard to any Medigap policy and cannot attempt to convince you to switch from one company or policy to another. With Medigap, your interaction with the insurance agent truly should be no-hassle.
• Selling you a second Medigap policy when the agent knows you already have one is illegal. The only exception to this rule is if you have already told the insurance company in writing that you want to cancel your current Medigap plan.
• With very few exceptions, it is illegal for an agent to sell you a Medigap policy if you already have Medicaid.
• Likewise, an agent cannot sell you a Medigap policy if they know you’re in a Medicare Advantage Plan. The exception to this rule is if your Medicare Advantage coverage will end before the effective date of the Medigap policy.
• Medigap is not part of Medicare. It is illegal for an insurance agent to tell you that Medicare is part of any federal program. Remember, Medigap is private health insurance.
• Likewise, claiming that a Medicare Advantage is a Medigap policy is illegal. If you have a Medicare Advantage policy, you cannot have a Medigap policy.
• This rule is pretty obvious, but since some Medigap policies are only available in certain states, agents cannot sell you a policy that isn’t permitted in your state.
• We mentioned earlier that Medigap is not a government program. Therefore, it’s illegal for an insurance agency to suggest a Medigap policy has been approved or recommended by the federal government.
• An insurance agent who works for a Medigap insurance company can’t claim they are a “Medicare representative.”
• If you tell an insurance agent that you want to stay in Original Medicare and buy a Medigap policy, they can’t sell you a Medicare Advantage policy. As we said earlier, if you have a Medicare Advantage policy, you cannot also have a Medigap policy.

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We don’t list these regulations to scare you off, but to assure you that insurance agents must abide by strict guidelines and rules when it comes to the sale of Medicare Supplement Insurance. Perhaps the rule most pertinent to you is that agents cannot engage in high-pressure sales techniques. You should never feel obligated to make a purchase just because an agent helped guide you through the process.

With that in mind, if you’d like to speak to one of our agents, we’re always happy to be of assistance. You can call us or send us an email. You can also request a quote at no cost.

The Standard, MetLife, Principal Financial Group, Genworth, & Lincoln Financial Group