Senior Health Insurance
Get the Best Price for Your Medigap Plan
If you have read through our earlier pages, such as our Medicare vs. Medigap and our “Available Plans” pages, it’s time to learn how to get the best price. Follow the steps below and you will be ready to win the Medigap pricing game.
Step 1: Understand that Medigap Policies are Standardized.
There are currently 12 Medigap policies for sale and these are named for the letters of the alphabet “A” through “L.” After June 1st, 2010, 4 plans will be discontinued (E,H,I and J) and two will be added (M and N) for a new total of 10 plans.
It’s important to understand that every “A” plan across the country is exactly the same as every other “A” plan. Every “B” plan is also standardized, and so on. That means that, even though one insurance provider may quote you a different price than another, if they are both quoting prices for plans of the same letter, those plans are essentially the same.
Step 2: Know the Difference Between Medigap and Medicare Advantage Plans.
Medigap plans are insurance policies sold by private insurers that were designed specifically to fill in the gaps left by Medicare. Medigap plans may help you pay for some of your Medicare deductibles and coinsurance. These plans also offer additional medical benefits that Medicare does not cover at all. As with any insurance policy, you pay a premium for Medigap plans.
On the other hand, Medicare Advantage Plans are a way to receive Medicare benefits through a private insurer. You also pay a premium for these plans and you may elect ones that offer additional benefits.
In order to enroll in a Medicare Advantage Plan, you must first enroll in Medicare Parts A and B. Then you pay an additional premium for the Medicare Advantage plan in order to receive additional benefits, which can include prescription drug coverage if you elect it. In joining such a plan, your Medicare benefits and the additional benefits you elected are all wrapped up into one health plan, and you receive these benefits using one card.
If you join a Medicare Advantage Plan, your Medigap policy won’t work. In fact, some unscrupulous insurance agents were selling unsuspecting seniors useless duplicate policies, so Congress made it illegal to sell a Medigap policy to anyone who already has a Medicare Advantage Plan. So, if you already have a Medigap policy and plan to enroll in a Medicare Advantage Plan, it doesn’t make much sense to keep Medigap.
Step 3: Educate Yourself on How Policies are Priced - and Choose Wisely.
Companies set prices in different ways, and it pays to understand these differences because they can have a very big impact on the cost of your policy over time. In most states, Medigap policies are priced in one of three ways: “attained age,” “issue age,” or “community rated.”
Attained age policies are priced based on the subscriber’s current age and the premiums change over time. These can appear to be the least expensive, especially for those applying on or near their 65th birthday. However, these can turn out to be the most expensive in the long run, as the premiums tend to increase steadily every three to five years. Ask an 80-year-old subscriber and they’ll tell you these policies can get really costly, really quickly.
Issue age policies are priced based on the subscriber’s age when they apply, and they only change over time based on health care inflation, not based on age.
Community rated policies are priced based on the subscriber’s location, meaning that everyone in that area gets the same price, regardless of age. Like the issue age policies, once you buy, premiums do not rise simply because you have gotten older.
Over the long run, choosing an issue age or community rated policy tends to be less expensive, even though their premiums may be higher in the short term. The advantage of these types of policies is that their premiums should not get prohibitively expensive as you get older.
Step 4: Don’t Worry Too Much About Service.
Typically, if you pay less for an insurance policy, you’d expect to get sub-par service, but we hear from the Medicare Rights Center that Medigap service is consistently good because the formula is very straightforward. If Medicare pays 80%, Medigap kicks in 20%. Because of this sort of simplicity, there is not much room for haggling and therefore not much room for huge gaps in service.
Tip 5: Take Advantage of Your Window.
There is a specific window of opportunity for signing up for a Medigap policy, which is the first six months after signing up for Medicare. During this window, you have what is called “guaranteed issuance,” which means that insurers cannot deny you coverage based on pre-existing conditions or expensive prescription drugs that you may need. Also, if you sign up for a plan but find another plan at a better price and you’re still in that magical window, you can make the switch. After that it gets much harder.
Now that you know how to get the best price on a policy, you are ready to a quote. To do so, visit our quote engine and enter your zip code in the box at the top of the page. (The rest of the info is optional.) Then hit the “Next Step” box at the bottom of the page and you’ll see a list of Medigap plans available for sale in your area.
If you would prefer to get personalized help in selecting the right Medigap plan for you, visit our new senior health insurance site called Senior65.com which has medigap audio overviews and easy quotes. You can also contact a licensed Medicoverage agent. We’re here to help.