Ask Kim
What to Look for in a Medigap Policy
See which plan provides the best coverage then shop based on price.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
June 11, 2009
I will be 65 soon and have decided on a medigap policy that costs $120 per month. I read your 3 Things to Avoid When Trying to Cut Health Costs column a few weeks ago, which suggests not focusing too much on premiums when picking a health-insurance policy. You wrote that a policy with lower premiums could have higher out-of-pocket costs throughout the year. Does Medicare supplemental insurance fall into the "don't focus on premiums" category? All of my prescription drugs are generic, but I have several chronic illnesses.
Medigap insurance is an exception to that rule: It makes sense to look for a policy based on premiums. And this the perfect time for you to shop -- you can't be rejected for a medigap policy or charged a higher rate if you buy the policy within six months of signing up for Medicare Part B.
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The ABCs of Picking a Medigap Policy | ||
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Your Medicare Owner's Manual | ||
To simplify your options, the government allows insurers to offer only certain plans -- nine standardized versions lettered A through G and K and L (Plans H, I and J, which included prescription-drug coverage, stopped being sold when the Medicare prescription-drug plan was introduced). Each Plan A has the same coverage, no matter which insurer offers it, each Plan B has the same coverage, and so on. The most popular choice is Plan F, which tends to have the best balance of coverage and price, paying many of the Medicare deductibles and co-payments for doctor's visits and hospital stays. (For a list of what each plan covers, see the Medicare Rights Center Web site, especially its Medigap Plan Comparison Chart.)
When picking a plan, see which provides the best coverage for your illnesses. But after you've chosen one, you can shop based on price. Because the plan must have the same coverage from insurer to insurer, you won't get much extra for any additional premium. You can usually compare prices at your state insurance department's Web site -- find a link to your state's regulator at our Insurance Center.
One key question to ask, though, is how the insurer changes its rates over time. Some offer attained-age policies, which means that prices increase because of health-care inflation and because you get older. Others are issue-age policies, which means that prices increase only because medical costs rise, not because you're getting older. Issue-age policies generally don't cost much more than attained-age policies, even though you're likely to see lower rate increases through time.
You'll also want to shop for a Medicare prescription-drug plan to cover your medications. These plans aren't standardized, but they're easy to compare with the Medicare Prescription Drug Plan Finder. Type in your medications and dosages, and you'll see how much your premiums plus out-of-pocket costs will run under each policy over the year.
Another option is a Medicare Advantage plan, which is a private plan you can sign up for instead having to sign up separately for Medicare, a medigap policy and a Part D prescription-drug policy. For more information about Advantage plans, see the Medicare Options Compare tool at the Medicare Web site and the Medicare plan information at MedicareNewsWatch.com.
For more information about both types of plans, see The ABCs of Picking a Medigap Policy and Your Medicare Owner's Manual.
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Reader Comments (2)
Posted by: LadyP at 06/13/2009 07:36:11 PM
As someone who deals with Medicare Part D on a daily basis. When signing up ask if the plan covers Tier 1 generics when your in the coverage gap. Also ask if there is a deductible. Don't be afraid to ask the insurance company/Medicare/ or Social Security if you qualify for low income subsidy its worth the try you never know. Usually the "Enhanced" plans are the ones that have no deductible and cover at least the Tier 1 generics. Honestly the premium may be a few dollars more but it will be well worth it when you have reached your coverage gap and now have to pay full contract cash price for your medication. $4,000 is a lot of money especially if you are low income.
Posted by: FreddyT at 06/15/2009 02:44:30 PM
With Medicare advantage care costing the gov. more then regular Medicare some companies will either be dropping Medicare advantage or increasing the price of the plan.I myself with several chronic illnesses with steady visits to the doctor and visits to the hospital. Kimberly is right. Plan F with a medigap policy that I have had for 6 years other then monthly payments I have not paid one penny out of pocket. Something to consider for the future.