·
If you’re approaching your 65th birthday, start thinking about
your Medicare eligibility and whether you would like to sign up for
supplemental coverage, known as Medigap.
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Medigap covers expenses that Medicare won’t address, including
co-payments, deductibles and health-care costs incurred during travel abroad.
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Not all Medigap plans are the same, so choose wisely.
Published
2:22 PM ET Thu, 20 Sept 2018 Updated 7:17 PM ET Thu, 20 Sept 2018CNBC.com
If you're about to turn
65, put your birthday party planning on hold: It's time to start shopping for
insurance that will supplement your Medicare coverage.
Medigap,
a type of health insurance coverage, fills out the areas where your Medicare
policy falls short, including deductibles, copayments and coinsurance. Some of
these policies cover extras, such as health-care expenses during travel abroad.
You would purchase
Medigap to supplement Medicare A and B, which cover hospital and doctor's
visits. Medigap plans are distinguished by letter (A, B, C, D, F, G, K, L, M
and N) and each plan offers different benefits.
If you purchase a
Medicare Advantage plan instead, you are not eligible for Medigap.
You have six months from
when you first sign up for Medicare to buy a Medigap policy and do so without
the insurance company pulling up your health-care record and possibly levying
higher premiums due to your medical history.
This is known as the
guaranteed issue period.
"Most people have only one period in
which they're guaranteed issue for Medigap. Look at it as a long-term policy
for your time in Medicare."-Gretchen Jacobson,
associate director, program on Medicare policy at the Kaiser Family Foundation
Federal law also includes
guaranteed renewability on Medigap policies, meaning that as long as you pay
your premiums, the insurer can't cancel your
coverage.
If your group coverage at
work has ended and you're past age 65, you can sign up for
Medicare Part B as part of a special enrollment period. At that
point, you can also sign up for supplemental coverage.
Because the sign-up
window for Medigap is so time-sensitive, those who are turning 65 need to start
thinking about which plan is right for them.
"As you're
approaching eligibility, do you want to go with Medicare Advantage or a
supplemental plan?" said Steve Vernon, an actuary and president of
Rest-of-Life Communications.
"Later on, you might
not pass medical underwriting, and you might be excluded," he said.
Here's what you need to
know about shopping for Medigap coverage.
A variety of plans
Click the image below to
view the different attributes of Medigap plans.
Though the benefits
themselves are largely standardized from one plan to the other, insurance
companies set the rates for coverage. The difference between the cheapest and
most costly plan can be steep.
For instance, in New York
City, there's a 143 percent difference in premiums between the cheapest and
most costly Plan F rate, according to the American Association for Medicare
Supplement Insurance.
Prices can also vary from
one state to the next. Click the image below for more details.
Whether any one plan is
right for you will depend on your needs.
For example, Medicare
Part B has an annual deductible of $183 per year, after which you must pay 20
percent of the Medicare-approved amount for your doctor services.
If you have Medigap C or
F, these plans will cover your deductible. These two are the most popular
Medigap plans, according to the Kaiser Family Foundation.
Note that Medigap C and F
will no longer be available to new enrollees starting on January 1, 2020, as
plans will no longer be permitted to cover Medicare B deductibles. However, if
you're already covered by one of those plans by that date, you can keep it.
Other plans cover
"excess charges" — the amount a doctor can legally charge that's
higher than the Medicare-approved amount. Medigap plans F and G will cover that
expense.
Premium differences
Premiums only tell part
of the story. A plan that's cheap now isn't necessarily guaranteed to stay that
way.
"Don't just look at
what the premium is now, but how it may rise over time, since most people tend
to hold onto their Medigap plans for many years," said Gretchen Jacobson,
associate director, program on Medicare policy at the Kaiser Family Foundation.
Insurance companies
determine premiums using one of three different rating systems. Community
rating doesn't allow premiums to be based on the applicant's age or health
status.
"As you're approaching eligibility, do
you want to go with Medicare Advantage or a supplemental plan? Later on, you
might not pass medical underwriting, and you might be excluded."-Steve
Vernon, actuary and president of Rest-of-Life Communications
Issue-age rating allows premiums
to vary based on your age when you buy the policy, but your premiums can't rise
automatically just based on age. Finally, attained-age rating determines your
premiums based on your age at purchase and prices will rise as you get older.
States determine which
premium rating systems are allowed.
"Policies may start
with the same premiums, but rise differently over time," said Jacobson.
"Attained-age rated plans may see larger premium increases than the
community-rated plans."
Do your homework
Start doing your research
before you blow out the candles on your birthday cake. Here are a few questions
to ask yourself.
What is the state
law? Your local State Health
Insurance Assistance Program can help you with questions about
Medicare and Medigap. This is where you can find more about the different
pricing practices and consumer protections in your locale.
What do I get for my
premiums? Your monthly bill tells only part of the story. Know what you're
getting in the way of deductibles, foreign travel health-care needs and
coinsurance.
What services do I
currently use, and what will I keep using? Be sure that your plan
meets your present needs and what you may require in the future.
"Most people have
only one period in which they're guaranteed issue for Medigap," said
Jacobson. "Look at it as a long-term policy for your time in
Medicare."
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