What to Look for in a Medigap Policy
See which plan provides the best coverage then shop based on price.
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.
| Row 0 - Cell 0 | The ABCs of Picking a Medigap Policy |
| Row 1 - Cell 0 | 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.)
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
-
The 7-Month Deadline That Sets Your Lifetime Medicare PremiumsUnderstanding Medicare enrollment is crucial, as missing deadlines can lead to permanent late enrollment penalties and gaps in coverage.
-
Retirees Living in Portugal: You Need a Post-NHR Tax StrategyWhen your 10-year Non-Habitual Resident tax break ends, you could see your tax rate soar. Take steps to plan for this change well before the NHR window closes.
-
Target-Date Fund Innovation: Built-In Income GuaranteesWith target-date funds falling short on income certainty, retirement plans should integrate guaranteed income solutions. Here is what participants can do.
-
Getting Out of an RMD Penaltyretirement When your brokerage firm miscalculates your required minimum distributions, you have recourse.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
It’s Not Too Late to Boost Retirement Savings for 2018
retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
-
How to Correct a Mistake on Your RMDs from IRAsretirement If you didn't take out the correct required minimum distribution because your brokerage firm made a mistake, the IRS may show some leniency.
-
Making the Most of a Health Savings Account Once You Turn Age 65
Making Your Money Last You’ll face a stiff penalty and taxes if you tap your health savings account for non-medical expenses before the age of 65. After that, the rules change.
-
Reporting Charitable IRA Distributions on Tax Returns Can Be Confusing
IRAs Taxpayers need to be careful when reporting charitable gifts from their IRA on their tax returns, or they may end up overpaying Uncle Sam.
-
Make the Most of the New Military Retirement Plan
retirement The government is offering a new retirement option so that service members who leave the military before qualifying for a pension can still receive some benefits.
-
How Changes in Income Affect Medicare Premiums
Medicare Medicare beneficiaries can see their premiums go up if their income rises, although for some that increase will be only temporary.
