Updated
August 6, 2019 Philip
Moeller
Author, Get What's
Yours books on Social Security. Medicare, and, upcoming, Health Care; blogger
for PBS NewsHour; founder http://Insure.com .
When you sign up for
Medicare you have a choice between Original Medicare (Parts A & B) and a
Medicare Advantage plan. If you go with Original Medicare, you’ll likely want a
private Medicare Supplement policy as well, and with 10 standardized policies
available, shopping for one can be daunting.
In this week’s
column, Phil Moeller, the author of Get What’s Yours
for Medicare: Maximize Your Coverage, Minimize Your Costs and
co-author of the updated edition of How to Get What’s
Yours: The Revised Secrets to Maxing Out Your Social Security,
advises a reader confused by the choices.
Got a question of
your own about Medicare or Social Security? Send it to askphil@considerable.com.
Why would I pay a
higher premium for a Medicare Supplement plan?
Renee: I am leaning toward
original Medicare with a Medigap letter G policy. I am confused about the
different ways that insurance companies price these policies. I have 59 choices
for what are called “Attained Age” rated policies, two choices for “Issue Age,”
and only one choice for “No age.”
Regarding the
Attained Age policies, if all these G plans are identical, why would anyone pay
a monthly premium of $229.41 at the high end rather than $90.42 at the cheapest
end? Yet that is the price range of these plans in my state.
Even a Medicare counselor at a nearby public agency had no idea.
How do I choose if
there are no rating systems for original Medicare? Do you have any suggestions
or resources? I do have your book Get What’s Yours for Medicare.
Phil Moeller: By way of background
for those who need it, Medicare Supplement plans (also known as Medigap plans)
help pay for claims for covered medical services that are not fully paid for by
Parts A and B of Medicare (“Original” Medicare). Different letter plans provide
varying degrees of help.
Medigap plans,
however, do not cover unpaid expenses in Part D drug plans. Medicare Advantage
plans have their own out-of-pocket ceilings for medical expenses. As a result,
people with Advantage plans do not need Medigap and, in fact, are not allowed
to purchase one.
The letter G plan
that Renee is considering provides complete protection. With the exception of
the annual deductible for Part B, which covers doctors, outpatient services,
and durable medical equipment, letter G holders will have no out-of-pocket
expenses for covered medical care beyond their premiums.
Now, onto Renee’s
questions! The identical coverage requirement for each different letter plan is
a federal rule, but the actual policies are sold and regulated at the state
level, and insurers are free to set their own rates.
The annual Medigap
guide from the Centers for Medicare & Medicaid Services (CMS) prominently
states, “Cost is usually the only difference between Medigap policies with the
same letter sold by different insurance companies.” Buying the least expensive
plan thus is usually the best idea. However, this decision can be affected by
which type of pricing approach a policy is offering.
Here are the CMS
guide’s explanations for these three approaches:
·
Community-rated (also called “no-age-rated”): Generally, the same
premium is charged to everyone who has the Medigap policy, regardless of age or
gender. Your premium isn’t based on your age. Premiums may go up because of
inflation and other factors but not because of your age.
·
Issue-age-rated (also called “entry age-rated”): The premium is based
on the age you are when you buy (are “issued”) the Medigap policy. Premiums are
lower for people who buy at a younger age and won’t change as you get older.
Premiums may go up because of inflation and other factors but not because of
your age.
·
Attained-age-rated: The premium is based on your current
age (the age you’ve “attained”), so your premium goes up as you get older.
Premiums are low for younger buyers but go up as you get older. They may be the
least expensive at first, but they can eventually become the most expensive.
Premiums may also go up because of inflation and other factors.
As Renee learned, it
can be hard to find community-rated Medigap plans, although that’s where I’d
start.
It’s also possible
that an insurance company’s customer service performance could be so poor that
its policies should be avoided even if they’re the cheapest. Most state
insurance departments are not aggressive about monitoring consumer service
records, but checking with your state department is another step I’d suggest
before buying a Medigap plan.
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