CALIFORNIA- Senate Bill SB242 - Medicare Supplemental Policies - Potential Changes

[GailL1]

California Health Benefits Review Program (CHBRP), University of California, Berkeley- 04/20/2025 - ... 

This is the Report to the 2025–2026 California State Legislature by this organization about this legislation.  It was introduced this year in the California Senate. It has not yet been passed by both the Senate and the Assembly and then signed into law by the Governor. The bill is focused on expanding open enrollment periods for Medicare supplement coverage. 

I am only posting some of the highlights - Understand that this does not affect the “Birthday Rule” in the state where a beneficiary can switch their Medicare Supplemental plan to another plan - of equal or lesser value.    

This is actually opening up the Medigap marketplace to those who do not yet have a Medigap plan - they either have nothing or they have a Medicare Advantage (MA) plan.  It also gives those with ESRD a period to get a Medigap plan.  So this is an additional guaranteed issue period for those who missed their 1st initial enrollment guaranteed issue period and now want a Medigap plan instead of a MA plan.

This is estimated by this organization to add $ 40.00 a month to the premiums of ALL Medigap policies offered in the state.

from the link ~ copy and paste from here down from the above link . 

The California Senate Committee on Health requested that the California Health Benefits Review Program (CHBRP) provide an abbreviated analysis of the financial impacts of California Senate Bill 242, Medicare Supplements. In 2024,

California introduced Assembly Bill 1236, with similar provisions as SB 242. This analysis is built from that earlier CHBRP analysis, with refinements based on new literature and supporting data.

SB 242 would require a new open enrollment period for Medicare Supplement Insurance that lasts 90 days each year (January 1st to March 31st) where any Medicare beneficiary could enroll in guaranteed issue supplement coverage. This

new period does not conflict or replace the existing 6-month open enrollment period that every Medicare beneficiary experiences when they sign up for Part B. Under SB 242, plans would be prohibited from discriminating in the pricing of

monthly premiums or denying applicants for pre-existing conditions due to age, applicant health status, claims experience, receipt of health care, or medical condition.

.. . . The predicted increases in Medicare Supplement plan premiums due to SB 242 are largely driven by what is commonly known as adverse selection. Adverse selection occurs when lower cost or healthier patients opt out of more expensive

plans or forego buying insurance until they need it, while higher cost or sicker patients actively buy more generous protective insurance to protect them from risk. This imbalance in enrollment results in fewer lower cost or healthier enrollees and a greater number of higher cost or sicker enrollees in insurance products. The higher use of services by higher cost or sicker patients causes premiums to increase in that insurance product.

Impact

• CHBRP estimates the average monthly premium  for Medicare Supplement policies will increase by $40.00 (14%) per member per month (PMPM). This is due to new enrollees in Medicare Supplements using disproportionately more services than the average enrollee at baseline. This is referred to as adverse selection.

• SB 242 is unlikely to impact Medi-Cal.

end copy / paste 

more at the link provided - 

Insurance is a share and share alike product - they pay for you while you pay for them - Without underwriting and adding more guaranteed issue periods, this sharing cost everybody more in premiums - 

[GailL1]

Adding MORE to my original post.  This is a very similar bill that was introduced in 2024 which did not pass at that time.  However, new data - new more supportive data has been brought forward that may now make it more appealing for the California legislature to consider and pass - maybe.

From the link (my OP) - copy/paste

Enrollment and Expenditures

The number of enrollees in Medicare Supplement policies will decrease by 6,400 (−1%) post mandate (see Table 3). Overall, the average monthly premiums for Medicare Supplement policies will increase by $40.00 (14%) per member per month (PMPM) due to SB 242, because new enrollees in Medicare Supplements will use more services than the average enrollee at baseline.

90,700 enrollees at baseline would disenroll from their coverage postmandate due to increases in premiums, whereas there are 84,300 new enrollees who will enroll in Medicare Supplements postmandate. The new entrants to the Medicare Supplement market are likely to be higher cost enrollees, and they will displace lower cost enrollees who find it advantageous to disenroll from their Medicare Supplement rather than pay higher premiums to continue their coverage.

Note: these estimates are lower than those in the 2024 CHBRP analysis of bill AB 1236 (in 2024) because based on additional studies from other states, we have reduced the estimated disenrollment to 8% from last year’s estimate (of SB 1236) of 14%, lowered the assumed shift of high cost cohorts to 7.5% from 20%, and also included the assumption of members leaving Medicare Advantage for Medicare Supplement policies due to network frustrations.

[end copy / paste from the original OP link

So will the new data change the mind of the California legislature and pass it this time around?  Which camp would you be in - keep your California Medigap policy even if the premiums were $40 a month higher just because of this legislation ?

I do see people here and in other social media cites talk about the superiority of having a Medicare Supplemental and Traditional Medicare over the other form of Medicare - the Medicare Advantage plans - so I am sure you want to give these (most likely sicker) beneficiaries to sign on to these great plans AND help them with their associative cost.  

Historically, there has been a reason for underwriting - to keep down premium cost.

But in some states this has been thrown out over what could be said it a fairer system - but is it really?

How would you vote on this piece of legislation?  In fact, where would the organization of AARP place their support - for or against the measure????