The changes in Medicare are coming fast and furious. Some of these changes are at the federal level and are still in the works. However, if you have a Medicare Supplement Plan and live in Indiana, pay attention! One bill at the state level in Indiana was passed on March 25th, 2025. It is HB 1226 and is called the ‘Birthday Rule’. It will go into effect on January 1st, 2026 and as with all legislative changes, can have many ripple effects or as some of us in the industry like to call it ‘unintended consequences’ [to quote a friend of mine from NABIP Indy – National Association of Benefits and Insurance Professionals]. There are likely to be some short term wins for many people on Medicare Supplements, however, there could be some very negative long term effects on everyone. I’ll break it down for you here and share how it could impact you and your Medicare Supplement Plan.
The New Rule for Medicare Supplement Plans
Beginning in January, anyone on a Medicare Supplement or Medigap Plan in Indiana will be able to change to another same type Supplement Plan for a lower premium rate with no health underwriting during the 60 day period following their birthday. Why is this such a huge deal? Because as it stands now, you can be denied coverage on a new Supplement Plan if you have health problems. You would have to pass health screening or ‘underwriting’ to be approved on a new plan. If you have chronic medical conditions or expensive medications, you are essentially stuck in the Supplement Plan you have even as the plan premiums keep going up every year. Depending on what plan you have and what zip code you live in, those premiums can get very high. Currently, when those rates become unaffordable, people consider changing to an Advantage Plan with $0 monthly premium. It may be the only option to save money if someone has pre-existing health conditions. With the new rule, there are more options.
What Could Possibly Go Wrong?
This new rule sounds great, and I can tell you it will be a huge benefit to many of my clients struggling with their monthly premiums and dealing with chronic illnesses. I am cautiously optimistic but also am careful to look at all sides to be prepared for any potential fallout. Only nine other states have adopted this rule. In looking at the overall impact to the industry, the average premium rate increases in the other nine states went up even higher soon after the Birthday Rule was implemented. Why? Insurance companies are in business to make money. We have already seen premium rates go up more in 2024 and 2025 due to high utilization (more high cost claims for medical care) and also due to inflation. The cost of healthcare goes up with inflation just like the cost of all other goods and services. Now add the Birthday Rule! When you allow higher cost individuals to change plans to get lower premiums, it adds even more cost to insurance companies. How will they offset this added cost? You got it, raise premiums for everyone.
Short Term Gain, Long Term Pain
In the short term, many will benefit from the rule and save a lot of money on monthly premiums. Long term, premiums will likely increase for all, especially for those entering Medicare for the first time at their healthiest state. There is data to back this up. Recent ‘Birthday Rule’ adopters such as Idaho, Louisiana, Maryland and Nevada had premium rate increases averaging 9.9% in 2024, but so far in 2025 with their new Birthday Rule, rates have increased 13%. Another long term fallout is projected to be that it will put some small Carriers out of business. In other words, your Medicare Supplement company could go out of business or leave your market. When Nevada’s Birthday Rule was fresh, 34 Carriers were actively selling in the market. Today, the Nevada market has already been reduced to 25 actively selling Carriers. This can be disruptive for Beneficiaries who will have a certain window of time to get enrolled in a new Supplement Plan. As with any change, the benefits will be great form some, but everyone will have to share the added cost and complications.
Other Considerations
We do not know yet how the Carriers (insurance companies) plan to roll this out as far as your Agent involvement is concerned. Independent Agents are a valuable resource to help Medicare Beneficiaries navigate this turbulent environment. We help make sure our clients are on the best possible plan of coverage for the best possible price. However, one way the Carriers can keep costs down and deter plan changes is to keep the Agents out of it. In other words, they could decide not to pay commissions to the Agent for Birthday Rule plan changes. They could also make it a paper only application and not allow Agents to utilize all their tools to efficiently support the clients. These are tools such as electronic applications, pending application monitoring, agent portals, etc. This is all to be determined, and you can bet CDI will be following all the latest developments!
CDI is here to help you manage your healthcare costs and find the best options for your unique situation. We can meet in person or virtually. Reach out if you would like more information. Email carrie@cdi-cares.com or check out www.cdi-cares.com for a contact page and other helpful blogs.
Resources:
https://iga.in.gov/pdf-documents/124/2025/house/bills/HB1226/HB1226.04.COMS.pdf
