Medicare in California

Although Medicare is funded and run by the federal government, enrollees can choose whether they want to receive their benefits directly from the federal government via Original Medicare or enroll in a Medicare Advantage plan offered by a private insurer, if such plans are available in their area. There are pros and cons to Medicare Advantage and Original Medicare, and no single solution that works for everyone.

Although most counties in the United States do have Medicare Advantage plans available for purchase, Trinity County in northern California does not have any Medicare Advantage plans available for 2023. Of the 58 counties in California, Medicare Advantage plans are available in 57 of them as of 2023. Across those 57 counties, plan availability varies from just one or two plans in several rural counties to 67 plans in some parts of Los Angeles County.³

More than 3.3 million people are enrolled in Medicare Advantage in California (A little less than 50% of California’s Medicare beneficiaries). The 3.3 million people do not include people with private Part D or Medigap coverage to supplement Original Medicare).¹ Nationwide, Medicare Advantage enrollment had grown to about 48% of all beneficiaries nationwide by that point.¹⁰

Between late 2019 and early 2023, there was a 23% increase in Medicare Advantage enrollment in California – a total of 3,345,988 Californians enrolled as of March 2023.¹

Original Medicare does not limit out-of-pocket costs, so most enrollees maintain some form of supplemental coverage. In 2020, over 14 million Original Medicare beneficiaries were enrolled in supplemental coverage.⁵ Medigap plans (also known as Medicare supplement insurance plans) are designed to pay some or all of the out-of-pocket costs (deductibles and coinsurance) that Medicare beneficiaries would otherwise have to pay themselves.

There are 20 insurers in California that offer Medigap plans.⁴ And as of 2020, there were about 600,000 California residents with Medigap coverage.⁵

Although California has by far the nation’s largest Medicare population, there were five states (Florida, Illinois, Ohio, Pennsylvania, and Texas) where more people were enrolled in Medigap plans as of 2020.

Medigap plans are sold by private insurers, but the plans are standardized under federal rules, with ten different plan designs (differentiated by letters, A through N). The benefits offered by a particular plan (Plan C, Plan K, etc.) are the same regardless of which insurer is selling the plan. So plan comparisons are much easier for Medigap policies than for other types of health insurance; consumers can base their decision on premiums (and how premiums change over time) and less tangible factors like customer service, since the benefits themselves are uniform. All Medigap insurers must offer at least Plan A. And if they offer any other plans, they must offer at least Plan C or Plan F to enrollees who were already eligible for Medicare prior to 2020, and at least Plan D or Plan G to enrollees who become eligible for Medicare in 2020 or beyond.

California does not dictate how Medigap insurers can adjust premiums based on age, so most Medigap insurers in the state use attained-age rating, which means that premiums increase as a person gets older. There are a few insurers in California that use issue-age rating instead, with premiums based on the age the person was when they enrolled. Community rating (also known as “no age” rating) means that rates do not vary with age at all, but there are no Medigap insurers in California that use community rating (several states require community rating or issue-age rating, but California is not among them).

Unlike other private Medicare coverage (Medicare Advantage plans and Medicare Part D plans), federal rules do not provide an annual open enrollment window for Medigap plans. Instead, federal rules provide a one-time six-month window when Medigap coverage is guaranteed-issue. This window starts when a person is at least 65 and enrolled in Medicare Part B (you must be enrolled in both Part A and Part B to buy a Medigap plan).

However, California law has long given Medigap enrollees an annual window, following their birthday, when they can switch to any other Medigap plan with equal or lesser benefits, without medical underwriting. This window used to be 30 days long, but legislation enacted in 2019 extended it to 60 days, as of 2020. California is one of several states that have this type of “birthday rule” that allows Medigap enrollees an opportunity to make limited plan changes without underwriting.

People who aren’t yet 65 can enroll in Medicare if they have amyotrophic lateral sclerosis (ALS) or end-stage renal disease (ESRD), or if they’re disabled and have been receiving disability benefits for at least two years, and about 564,000 Medicare beneficiaries in California are under 65.¹  Federal rules do not guarantee access to Medigap plans for people who are under 65, but the majority of the states, including California, have stepped in to ensure at least some access to private Medigap plans for disabled enrollees under the age of 65 (federal legislation, including 2018’s H.R.6431, has been considered to expand access to Medigap plans to all Medicare beneficiaries, regardless of age, but the rules have thus far not changed).

For Medicare beneficiaries in California who are under age 65, Article 6 (Section 10192.11) of California’s insurance statute requires Medigap insurers in the state to offer at least plans A, B, D, and G (if offered by the company to any applicants; note that this used to be plans A, B, C, and F, but S.B.784 was enacted in 2019 to swap Plans C and F for Plans D and G, since Plans C and F are no longer available — nationwide — to newly-eligible Medicare beneficiaries as of 2020; the requirement to make plans C and F — if offered by the insurer — available is still applicable for disabled Medicare beneficiaries who became eligible for Medicare prior to 2020). The insurers must also offer either plan K or Plan L, if offered by the company, or Plan M or Plan N, if offered by the company. But none of these provisions apply to Medicare beneficiaries under age 65 who are eligible for Medicare due to having end-stage renal disease (kidney failure).

This is important, because prior to 2021, federal rules also allowed Medicare Advantage plans to reject new applicants with end-stage renal disease, unless the plan was a special needs plan specifically designed for ESRD patients (such plans were not available in most of the state, meaning that ESRD patients had no option to cap their out-of-pocket costs unless they had access to a supplemental employer-sponsored or retiree plan). But this changed as of 2021, under the 21st Century Cures Act. Starting with 2021 coverage, Medicare Advantage plans are guaranteed-issue for all Medicare beneficiaries, including those with ESRD.

California’s statute allows Medigap insurers to charge higher premiums for people under age 65. But coverage must be guaranteed-issue during the six months after a person enrolls in Medicare Part B (regardless of age) or the six months after a person is determined to be retroactively eligible for Medicare Part B. And insurers cannot pay differing broker commissions based on the age of the Medigap enrollee (ie, insurers are not allowed to use lower commissions to dissuade brokers from selling Medigap plans to people under age 65).

Although the Affordable Care Act eliminated pre-existing condition exclusions in most of the private health insurance market, those regulations don’t apply to Medigap plans. Medigap insurers can impose a pre-existing condition waiting period of up to six months, if you didn’t have at least six months of continuous coverage prior to your enrollment. And if you apply for a Medigap plan after your initial enrollment window closes (assuming you aren’t eligible for one of the limited guaranteed-issue rights), the insurer can look back at your medical history in determining whether to accept your application, and at what premium.

Original Medicare does not cover outpatient prescription drugs. More than half of Original Medicare beneficiaries have supplemental coverage via an employer-sponsored plan or Medicaid, and these plans often include prescription coverage. But Medicare enrollees without creditable drug coverage need to obtain Medicare Part D prescription coverage. Part D coverage can be purchased as a stand-alone plan, or as part of a Medicare Advantage plan that includes integrated Part D prescription drug coverage.

Insurers in California are offering 26 stand-alone Part D plans for sale in 2023,⁸ with premiums starting at $4.50/month.⁹ As of March 2023, there were more than 5.5 million Medicare beneficiaries in California with Part D prescription coverage.¹ Nearly 2.3 million had stand-alone Medicare Part D plans, while more than 3.2 million had Medicare Advantage plans with built-in Part D coverage.¹

Medicare Part D enrollment is available when a beneficiary is first eligible for Medicare, and also during the annual open enrollment period each fall, from October 15 to December 7.

Many Medicare beneficiaries receive financial assistance through Medicaid with the cost of Medicare premiums, prescription drug expenses, and services not covered by Medicare – such as long-term care.

Our guide to financial assistance for Medicare enrollees in California includes overviews of these benefits, including Medicare Savings Programs, long-term care coverage, and eligibility guidelines for assistance.

Need help with Medicare enrollment in California, or have questions about Medicare eligibility in California?

• HICAP, California’s Health Insurance Counseling and Advocacy Program, is a helpful resource. Access their website or call 1-800-434-0222.
• California’s Department of Insurance, which oversees Medigap plans in California, has a helpful summary of state rules and regulations related to Medigap plans, and a general guide to Medigap plans in California.
• HICAP and the California Department of Aging also have a helpful toolkit for avoiding Medicare fraud and abuse.
• The Medicare Rights Center website provides information geared to Medicare beneficiaries, caregivers, and professionals.