Can Your Medigap Policy Be Cancelled? Know Your Rights

The Question That Keeps Medicare Beneficiaries Up at Night

Last week, a client called our office in a panic. Her neighbor had told her that insurance companies "cancel Medigap policies all the time, especially when you get older and sicker." She'd had her Plan G for eight years and was terrified she'd lose coverage just when she might need it most. This fear is common—but fortunately, it's based on a misunderstanding of how Medigap policies actually work.

Let's clear up the confusion about Medigap cancellation and renewability rules so you can rest easier knowing your rights.

Your Guaranteed Renewable Protection

Here's the good news that put my client's mind at ease: Medigap policies sold in New Jersey are guaranteed renewable. This is federal law, and it means your insurance company cannot cancel your policy as long as you pay your premiums on time.

This protection remains in place regardless of:

• Your age
• Your health status or new diagnoses
• How many claims you file
• Changes in your medical conditions

The insurance company made a commitment when they accepted you as a policyholder. That commitment doesn't expire, and they can't back out simply because you've become a less profitable customer. This is fundamentally different from many other types of insurance, and it's one of the most valuable consumer protections in the Medicare world.

The Two Times a Company CAN Cancel Your Coverage

While your guaranteed renewable rights are strong, there are exactly two scenarios where a Medigap policy can be cancelled:

1. Non-payment of premiums. If you don't pay your monthly premium, the insurance company can terminate your coverage. Most companies provide a grace period (typically 30 days) and will send multiple notices before cancellation. If you're having trouble paying, contact your insurance company immediately—they may have options to help.

2. Material misrepresentation on your application. If you intentionally lied or provided false information when you applied for coverage, the company may have grounds to rescind the policy. This is rare and typically only applies during the first two years of coverage (the "contestability period"). After that window closes, the policy becomes even more secure.

Notably absent from this list: getting older, getting sicker, or filing claims. These common worries are not valid reasons for cancellation.

What About Premium Increases?

This is where confusion often creeps in. While your insurance company cannot cancel your Medigap policy, they can raise your premiums over time. Many people mistakenly interpret premium increases as the company trying to "force them out" of coverage.

Premium increases typically happen for several reasons:

• General inflation and rising healthcare costs
• The overall claims experience of everyone in your plan
• Your age (if you have an "attained-age" rated policy)

These increases must be applied to entire classes of policyholders—not targeted at you individually. The company cannot raise your rates because you personally filed too many claims or developed a specific health condition.

If your premiums increase significantly, you do have options. Depending on your situation, you might be able to shop for a different Medigap plan, though medical underwriting may apply outside of your initial enrollment periods.

Understanding Your Rights Means Peace of Mind

The guaranteed renewable nature of Medigap policies is one of their greatest strengths. Unlike Medicare Advantage plans, which can change their coverage areas or benefits annually, your Medigap policy provides stable, predictable coverage that cannot be pulled out from under you.

This doesn't mean you should never review your coverage—premium increases or changing needs might make it worth exploring your options. But you should review from a position of security, knowing your current coverage isn't going anywhere unless you choose to make a change.

If you're uncertain about your Medigap policy's terms, concerned about a premium increase, or wondering whether your coverage is as secure as it should be, don't rely on neighbor gossip or internet forums. These questions deserve accurate answers from someone who understands New Jersey's specific Medicare landscape.

Call New Jersey Medicare Advisory at 856-221-7051 to speak with a licensed advisor who can review your specific situation and help you understand your rights and options.