Yet few beneficiaries are aware of a special regulation called the Medicare Birthday Rule that can save them thousands of dollars on their Medicare Supplement (Medigap) policy. If you're nearing age 65 or already on a Medigap policy, being aware of this rule might be the key to lowering your premiums and obtaining improved coverage.

What is the Medicare Birthday Rule?

The Medicare Birthday Rule is a state law that allows Medigap policy holders to switch to a different Medigap plan with comparable or lesser benefits without going through medical underwriting. What that does is even if you're no longer healthy, insurance companies cannot deny you or charge you more for your previous conditions.

But this is not a national rule. Currently, it is only being practiced in some states, such as California, Oregon, Idaho, and Illinois. Each state has a slightly different interpretation of the rule, such as how long it takes seniors to be qualified to change policies.

How Does the Medicare Birthday Rule Work?

The Medicare Birthday Rule offers policyholders a short window of time each year to switch Medigap plans without penalty or medical underwriting. The procedure is as follows:

Eligibility Period – Depending on where you live, this period starts on your birthday and continues for a fixed number of days (e.g., 30 to 60 days).

Plan Switching – You can switch to another Medigap plan offering equal or lower benefit.

No Medical Underwriting – You will not be denied or charged more due to medical conditions.

This benefit is most helpful to seniors who have acquired medical conditions along the way because it offers an opportunity to change to a cheaper Medigap policy without being rejected or having to pay more.

Which States Have Adopted the Medicare Birthday Rule?

Although Medicare is a federal program, Medigap policies are overseen on a state-by-state basis.

Nine states currently have a Medigap "birthday rule": California, Idaho, Illinois, Kentucky, Louisiana, Maryland, Nevada, Oklahoma, and Oregon. This rule allows Medigap beneficiaries to switch to another plan of equal or lesser benefits within a specific time frame (typically around their birthday) without needing to go through medical underwriting. Other states may do the same, so it is advisable to ask your broker for additional information.

Other states may do the same, so it is advisable to call your state's insurance department to obtain the latest regulations, or ask your broker to do it for you.

Why is the Medicare Birthday Rule Important?

Most seniors remain with their initial Medigap plan for decades, even though cheaper plans are now offered. The Medicare Birthday Rule shields seniors from being locked into a high-cost plan because of a poor health status. Here's why this rule is a game-changer:

1. Saves Money – You may be able to get a less expensive Medigap plan without compromising coverage.

2. Guards Pre-Existing Conditions – No insurance company can deny you based on medical history.

3. Encourages Plan Shopping – It encourages seniors to shop around and save.

Absent this protection, elderly individuals who sought to change plans would frequently have to undergo medical underwriting, which might result in increased premiums or outright rejection.

How to Take Advantage of the Medicare Birthday Rule

If you reside in a state with such a law, this is what you do:

1. Talk to your Medicare broker/agent. Ask them to compare all of your options to see if they can find you lower premiums or added benefits – or both. Keep in mind not all agents are licensed with all carriers.

2. Have the broker prepare a comparison report showing you the benefits of making a change.

3. Once you feel confident a change will benefit you, ask your broker to assist you making the change.

Apply Within the Timeframe – Apply before your eligibility period ends.

By becoming proactive, you may actually save hundreds, and even thousands of dollars a year on your Medicare Supplement policy.

Final Thoughts: The Medicare Birthday Rule is a little-understood secret that most seniors don't take advantage of, but it can reduce healthcare costs significantly. If you live in a state that offers this benefit, take full advantage of it by shopping for better Medigap rates each year (or ask your broker/agent to do it for you.)

Even if your state doesn't offer this option, it's well worth your while to review your coverage each year to ensure you're getting the best deal. Don't let costly premiums stand between you and the medical coverage you're entitled to. Know your rights, know your options, and begin saving today!