By: Kevin Nystrom
The senior health plan landscape can be split into two main categories: Medicare and Medigap. All seniors age 65 and older are eligible for Medicare, but because Medicare doesn’t cover all of the services that many seniors need, Medigap (also called Medicare Supplemental Insurance) exists to fill in the gaps. Following are the main points to consider when researching senior health plans.
Keys to the four parts of Medicare
Part A: After turning 65, seniors are eligible for premium-free Medicare part A as long as they paid enough taxes into Medicare while working; a good gauge is if you’re eligible to get Social Security, then you’re likely eligible for premium-free Medicare part A. But part A only covers hospital services such as inpatient care in hospitals and skilled nursing facilities.
Part B: More general medical services such as doctor’s visits and outpatient care are covered by Part B, but it comes with a standard premium of $96.40 per month. This premium is more for seniors with above average incomes.
Part C: Also called The Medicare Advantage Program, Part C offers seniors more robust insurance plans that are sold by private insurers. The benefits include those from Parts A and B, as well as other benefits such as dental and vision. It also often includes Part D coverage (more below). Some Part C plans require policy holders to pay a separate premium in addition to the premium for Part B.
Part D: The final part of Medicare helps offset the cost of prescription drugs. To enroll, seniors with Medicare choose a separate Medicare-approved plan offered by a private insurer, or select a Part C plan that includes Part D coverage.
Keys to Medigap Senior Health Plans
Similar to Part C of Medicare, Medigap plans are offered by private insurers, and they provide more robust coverage than parts A and B of Medicare. While the premiums for Medigap plans are usually more than those for Part C Medicare Advantage plans, the copayments and deductibles are usually less.
Tip: Because Medigap plans and Medicare Advantage plans are both designed to fill the gaps left by regular Medicare coverage, you should NOT consider purchasing both.
Like the parts of Medicare, Medigap plans are identified by the letters of the alphabet. There are 10 different Medigap plans: A through D, F, G, and K through N. Additionally, the benefits for all Medigap plans are standardized, so all same-lettered plans include the same benefits. This makes it easy to compare plans sold by different insurance companies because the only difference is often cost.
It’s also important keep in mind how Medigap plans are rated, which effects how the costs rise over time. There are three ratings: (1) Issue-Age-Rated, in which the premiums are set based on your age at the time of purchase, (2) Community-Rated, in which the premiums are the same for everyone in a defined community, and (3) Attained-Age-Rated, in which the premiums change to reflect your age as you get older. Of the three, only Attained-Age-Rated plans have premiums that rise as you get older. Thus, it is recommended that you find a Medigap plan that is either Issue-Age-Rated or Community-Rated.
Once you’ve processed the above, it’s a good idea to research senior health plan quotes in your area.
