subject: Find Deals In Medicare Supplemental Insurance (medigap) [print this page] If you're confused by the different prices of Medicare Supplement Insurance plans, you're not alone. Since Congress standardized Medigap plans, every Plan A, for instance, provides the same coverage.
While Massachusetts, Minnesota and Wisconsin maintained their own plan versions; Medigap plans were logically offered with increasing levels of coverage. Plan A included the least coverage, and Plan J had the most coverage.
Still, prices for the same plan vary widely. For the most popular Plan F, prices were found to range from $1,022 to $2,504 a year, and such discrepancies remain common. In 2001, the General Accounting Office investigated and found prices ranging from $467 to $1,202 for Plan A, and from $2,059 to $5,658 for Plan J.
Breaking the Medigap Plan Price Code
Don't despair! Each Medigap plan with the same letter has the same coverage. Decide which plan coverage works for you, and then look for the best price on that plan. According to the director of the Medicare Policy Project for the Kaiser Family Foundation, "The wide fluctuations in premiums have very little to do with the benefits."
Insurance companies set Medigap prices in different ways that explain how premiums will increase over time. In most states, Medigap plan pricing systems fall into three categories: attained-age, issue-age, or community-rated policies.
Attained-age policies typically offer the lowest premiums to start, but their premiums increase faster. You'll pay more as you get older.
The premiums for issue-age policies are based on your age when you buy the plan. The price won't increase just because you are getting older (although premiums will still increase for healthcare inflation), but 80-year-olds will find the plans more expensive to buy than 70-year-olds.
The founder of the Medicare Rights Center warns that, "As a general rule, the attained-age policies start out looking inexpensive but end up costing a whole lot more than the issue-age policies."
With community-rated policies, people in the same area pay the same price regardless of their age. As with issue-age policies, premiums will not increase just because you're getting older after your initial purchase. Until around age 68, AARP typically offers a discount of up to 20 percent on such policies.
Getting the Best Medigap Price over Time
Forget the clich that, "You get what you pay for." In this case, a lower-price doesn't equate to less service. Service rarely varies among Medigap insurance companies, which basically work automatically. If Medicare pays 80 percent of your bill, Medigap will pick up the other 20 percent.
Focus on what the Medigap plan will cost you over time, and remember that you'll have a hard time changing plans when you're older unless your health remains good. It's advisable to stick with plans that don't raise your premiums just because you're getting older. That means it's safer to choose community-rated or issue-age type policies even if the premiums start out a little higher.
More Ways to Get the Best Medigap Plan
If you sign up within the first six months after you enroll in Medicare part B, insurers can't raise your rate or deny coverage based on your health. After that open-enrollment period, you'll need to be in good health to change plans with two exceptions.
There are a few guaranteed-issue plans that you can get in spite of health problems, such as AARP policies that are not sold through agents. Otherwise, if you're in New York, all the plans are guaranteed-issue so it's easier to change plans. In that case, check out available plans annually to maintain the best coverage at the best price.
Be aware that a few companies still require you to submit paperwork yourself. Most companies handle that electronically to save you the trouble, which can be burdensome if you're in poor health.
While the coverage is identical, company standards do vary. Even though one company may not sell you a plan, another one may offer you a good rate. Independent agents can typically guide you to insurers more likely to accept particular health conditions. Be sure you never drop your existing coverage before the new policy is in effect.
by: Wiley Long
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