The California Birthday Rule Explained
If you live in California and have been researching Medicare Supplement plans then you probably have heard of the “California Birthday Rule.” This rule is unique to CA and has to do with your Medicare Supplement plan. The CA Birthday Rule allows folks who currently have a Medicare Supplement plan to change companies, to a plan of equal or lesser benefit, each year, around their birthday, without having to answer any health questions.
In just about every other state (besides Oregon and Missouri), you can only change Medigap plans by answering health questions and getting approved in health underwriting. The main reason someone would want to change plans is to take advantage of lower rates. In CA there are over 20 different insurance companies offering the same Medicare Supplement plans. The only difference between them is the price.
For example;, John has a Medicare Supplement Plan F with UHC/AARP and his rate increased to $200 per month. John’s birthday is in July. We contact John to review his options (as we do each year with all our clients) with him and let him know Mutual Of Omaha is offering Plan F at $150 per month (exact same plan). Because John had a few heart stents put in last year he normally would not be able to change. However, using the CA Birthday Rule we can move John to the lower rate with Mutual Of Omaha around his birthday. We submit the application to Mutual Of Omaha and John is now saving $600 per year, compared to what he was paying before.
Because of this rule, it can make sense to start on Plan F in you live in CA. I am a big advocate for Plan G, as it saves you more money in the long run. However, in California, starting on Plan F allows you to move down to Plan G on your birthday the following year or at any point in the future.
- Has to be done around your birthday each year
- Can only move to a plan of equal or lesser benefit (F to F, F to G, G to N, etc)
- Most carriers require the application to be within 30 days, before or after the birthday.