Medigap or Medicare Supplement policies fill in the holes that Original fee-for-service Medicare does not cover. A Medigap policy helps you pay your co-pays and co-insurance for Medicare Part A (hospital) and Part B (physician) services. It is the secondary payer after Medicare. Maryland and Virginia insurance regulators have consumer guides that can help you through the purchasing process.
Medigap policies don’t cover long-term care (like care in a nursing home), vision or dental care, hearing aids, eyeglasses, or private duty nursing. You are on your own for these expenses. If you have a Medicare Advantage plan, you do not need to buy a Medigap policy. Additionally, if you have retiree health benefits (such as a Federal Employee Health Benefits plan), you do not need a Medigap policy.
Tip 1: Identify Which Lettered Medigap Plan Meets Your Needs
Each Medigap policy must be clearly identified as “Medicare Supplement Insurance.” Insurers can sell you only a “standardized” policy identified by letters (Policy A through N). Each lettered policy offers the same benefits. Policy A offered by United Healthcare will be the same as Policy A offered by Humana.
Each lettered policy offers different benefits. Some policies help more with your co-insurance for hospitalizations (Part A charges) whereas others offer more help with your medical services co-pays (Part B charges). You can choose which lettered policy benefits you prefer. This link has a nice chart comparing the benefits offered by each lettered Medigap policy.
Medigap Policy A will cost the least because it is the least comprehensive. Medigap Policy F is the most comprehensive policy and will be the most expensive. Medigap policies C and G are the next most comprehensive, but they don’t pay all of the Part B excess charges.
Remember: not every insurer will offer every lettered policy, but they must offer at least A and either C or F (the least and most comprehensive policies).
If you can afford it, Medigap Policy F is the most popular plan.
Tip 2: Understand How Medigap Premiums are Set
It is good to shop for plans and compare premiums to get the lowest priced policy offered for your preferred lettered policy. Be mindful, however, of the ways in which premiums are calculated. There are three basic methods or “ratings.” The key to the “rating” method is whether and how your premium will change each year as you get older.
The three different premium types (Attained Age, Issue Age, Community) are explained below.
- “Attained Age” premiums are based on your age when you apply for the policy. Premiums will increase each year regardless of your age when you first enroll.
- “Issue Age” premiums are based upon your age at the time of purchase of the policy. Premiums do not increase due to increases in age. As a rule of thumb, Issue Age premiums will be more expensive than Attained Age premiums for younger policy holders.
- “Community” premiums will be the same for all ages in the same geographical area. The premium will change only if the average age of the policyholders in the area changes.
Tip 3: Compare Premium Prices for Policyholders 10 Years Older Than You
In Maryland, every insurer uses Attained Age ratings except for AARP/United Healthcare, which uses Community ratings. In Virginia, every insurer also uses Attained Age, except for two smaller carriers which use Issue Age ratings. There is no available public information for Medigap policies in the District of Columbia.
Because nearly every insurer uses Attained Age ratings, it is important to examine the prices insurers are currently charging for persons 10 and 15 years older than you. Comparing prices for persons at higher ages is essential to understand how your Attained Age premium could change as you age. You don’t necessarily want an inexpensive policy now only to have the premium skyrocket in a couple of years.
Both Maryland and Virginia have online resources that allow you to examine the premiums insurers are currently charging for each lettered Medigap policy by age group. Unfortunately, there is not an online resource available for residents of the District of Columbia. But DC residents can use the MD and VA guides to get a flavor for the probable prices offered in DC. Use this website to complain to the DC Department of Insurance about the lack of a consumer guide.
Tip 4: Use the Medicare website to Shop for Medigap Plans
Once you have familiarized yourself with the lettered Medigap plans and know the range of premiums available, use the official Medicare website to shop among plans in your area. This guide can also help you understand your Medigap policy.
Tip 5: Buy a Medigap Policy When You are First Eligible
The best time to buy a Medigap policy is during the six-month period that begins on the first day of the month in which you are both 65 or older AND enrolled in Medicare Part B. During this period (called the Medigap Open Enrollment Period), an insurer can’t deny you coverage because of pre-existing condition or charge you more than someone else similarly situated. The key is that you have to meet both conditions, both 65 or older AND enrolled in Medicare Part B. If you don’t buy during this period, the insurer is able to use medical underwriting to calculate your premium, which could make the premium more expensive.
So follow these five tips to help get the best Medigap policy for your budget.
No comments yet.