PUBLISHED MON, JUN 15 20203:04 PM EDT Sarah O’Brien@SARAHTGOBRIEN
KEY
POINTS
·
These supplemental
policies are sold by private insurance companies and either fully or partially
some cover cost-sharing aspects of Medicare Part A (hospital coverage) and Part
B (outpatient care).
·
One thing that feeds
into the premium cost is how the insurer “rates” its Medigap policies.
·
Some insurers will
offer discounts for two policies in the same household.
So you’ve enrolled in Medicare and have
determined that a supplement plan — aka, “Medigap” — is an appropriate add-on
for you.
There may be more decisions to make.
While Medigap policies are standardized
regardless of which insurance company sells them and where you live, the
premiums can vary from insurer to insurer and among locations. And, experts
say, this makes it important to understand the differences you may see when
evaluating your options.
You’d want to know “a carrier’s premium rating
system, its claims history and how good its customer service department is,”
said Elizabeth Gavino, founder of Lewin & Gavino in New York and an
independent broker and general agent for Medicare plans.
“I don’t recommend choosing a carrier solely
based on premium,” Gavino said.
Roughly 62.3 million people — the majority of
whom are age 65 or older — are enrolled in Medicare. About one-third of
beneficiaries choose to get their Part A (hospital coverage) and Part B
(outpatient care) benefits through an Advantage Plan (Part C). Those plans
offer out-of-pocket maximums and often include dental and vision coverage or
other benefits. They also typically provide Part D prescription drug
coverage.
The other two-thirds of recipients choose to go
with original Medicare — Parts A and B — and, typically, pair it with a
standalone Part D prescription plan. In that situation, unless you have some
type of other coverage (i.e., employer-sponsored insurance or you get extra
coverage from Medicaid), the option for mitigating your out-of-pocket costs is
a Medigap policy.
These supplemental policies, which are sold by
private insurers, either fully or partially some cover cost-sharing aspects of
Parts A and B, including copays and coinsurance. They, too, limit what you’ll
pay out of pocket each year.
When you first enroll in Part B, you generally
get six months to purchase a Medigap policy without an insurance company nosing
through your health history and deciding whether to insure you. After that,
depending on the specifics of your situation and the state you live in, you may
have to go through medical underwriting.
“Know what your state law says,” said David
Lipschutz, associate director at the Center for Medicare Advocacy.
While a number of companies offer Medigap
insurance, they can only offer policies from a list of about 10 standardized
plans. Each is simply assigned a letter: A, B, C, D, F, G, K, L, M and N.
Some states also offer high-deductible versions of Plan F and G. (There also
are Medicare Select plans,
which are Medigap plans that are network-based and are available in some
places.)
This Medigap standardization means that, say,
Plan A at one insurance company is the same as Plan A at another. However, not
every plan is available in all states. They also do not cover any costs
associated with Part D prescription drug coverage (unless, perhaps, the policy
was issued prior to 2006).
I don’t recommend
choosing a carrier solely based on premium.
Elizabeth Gavino FOUNDER
OF LEWIN & GAVINO
The plans differ on what is covered. The Centers
for Medicare and Medicaid Services has a chart on its website that
shows the differences. You also can use the agency’s search tool to find
available plans in your ZIP code. (Be aware that Plans C and F aren’t available
to people who are newly eligible for Medicare as of 2020.)
The reasons to go with a Medigap plan differ
from person to person, Gavino said. For example, someone’s doctors (or other
preferred providers) may not participate in a locally available Advantage Plan,
or, with some Medigap plans, the person likes to know with certainty what their
costs will be.
One difference in premiums can come from how they are “rated.” If
you know this, it may help you anticipate what may or may not happen to your
premium down the road. Some insurers’ Medigap policies are “community-rated,”
which means everyone who buys a particular one pays the same rate regardless of
their age.
Others are based on “attained age,” which means
the rate you get at purchase is based on your age and will increase as you get
older. Still others use “issue age”: The rate won’t change as you age, but it’s
based on your age at the time you purchase the policy (so younger folks may pay
less).
Premiums also may go up from year to year due to
other factors, such as inflation and insurer increases.
The American Association for Medicare Supplement
Insurance recently looked at the highest- and lowest-cost Plan G
policies in various markets — and the differences can be stark.
For instance, it found that in one Dallas ZIP code, the lowest cost was $99 per
month for a 65-year-old female and the highest was $381 monthly for that same
consumer.
The association offers tips, as well: If you
work with an agent, ask how many insurance companies they work with (or are
“appointed with”). They may not recommend a particular insurer’s policies if
they don’t get a commission to do so.
Also ask if there’s a household discount. Many
insurers offer this, the association said, and it can mean savings of 3% to
14%.
You also can call your State Health
Insurance Assistance Program, or SHIP, to see if it can give you
free help choosing a policy.
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