If you are on Original Medicare, it pays only 80% of covered services. A Medicare Supplement Policy, Medigap, helps pay some of the costs Original Medicare doesn’t cover, such as deductibles, copayments and coinsurance.
Medigap policies are sold by independent insurance companies, but all may only offer standardized plans in accordance with federal and state laws. The plans available in most states are labeled A-D, F-G and K-N. A Plan D in New York offers the same benefits as a Plan D in Hawaii. All of the plans in each state offer basic benefits, but the more expensive ones offer additional benefits. Plan F is the most comprehensive and the costliest. The rates for each plan vary by zip code. See this site for more details.
The premiums for a specific plan in your area may vary by as much as 100% among Medigap insurers, so it is essential to review and compare companies.
Your first step is to decide what standardized plan best suits you in terms of coverage and cost. The best time to buy a Medigap policy is the 6-month open enrollment period that starts the month you turn 65 and enroll in Medicare Part B. During this period Medigap companies must sell you a policy regardless of your health status and your premium will be the same as someone in perfect health.
Access this site to identify companies in your zip code that offer Medigap policies. Then, contact each company and ask the following questions:
What is your initial premium?
How much will my premium increase each year I age?
When was the last time your company increased premiums for non-age-related factors (inflation or other reasons) and what was the increase?
How often does your company implement non-age-related increases?
Note: Your premium increase each year is based on a combination of age- and non-age-related increases. Beware of companies that offer an open enrollment discount. One large insurer that does informs enrollees each year that their discount is decreasing rather than admitting the premium is increasing. Although the initial premium may be low, between the company’s annual age increase and annual non-age-related increase, enrollee rates are higher than other companies after just a few years.
The most common reasons for enrolling with a Medigap insurer after the 6-month Open Enrollment Period are switching from Medicare Advantage to Original Medicare and being dissatisfied with your current company.
After the Open Enrollment Period, your initial premiums will be higher, and the companies will require the submission of a health history. Obamacare pre-existing conditions regulations don’t apply to Medigap insurers. Medigap insurers typically reject individuals with serious pre-existing conditions.
Note: If you have a pre-existing condition, do not complete the health history over the phone. Instead, ask for the health history form and enrollment application to be sent to you. Each company has a unique health history form. It is wise to review forms from different companies you are considering to identify whether your specific condition would be a concern.
Individuals with a current Medigap plan in California and Oregon have a special advantage for changing plans. You don’t have to submit a health history if you apply for your new plan within 30 days prior to and 30 days after your birthday.
Do you feel comfortable with the Medicare Supplement Policy? Have you had to shop for Medigap? How do you evaluate the different policies that are available? Please join the conversation and share your experience with Medicare.