Buying a Medigap Policy

medigap

Buying a Medigap (also called “Medicare Supplement Insurance”) policy is an important decision. You will first need to decide if a Medigap policy is the best way for you to supplement Original Medicare coverage. Then you will need to decide which Medigap policy to buy.

How Do Insurance Companies Set Prices for Medigap Policies?

Medigap/Medicare Supplemental insurance companies set their own monthly premiums. How they choose to set their prices can have an affect on how much you will pay now and in the future. You should consider all these factors before you buy the policy. There are 3 ways that a company can choose to base their charges on:

  • Community-rated: No matter how old you are, the policy costs the same. Premiums may go up due to inflation or other factors, but not due to age.
  • Issue-age-rated: The charges are related to your age at the time of purchase – which means when you buy your policy, you will be charged the same amount as others in your community who are the same age.
  • Attained-age-rated: The charges automatically go up in price as you age.

You can most likely count on the cost of your Medigap insurance going up each year after you buy it, because of inflation and rising health care costs. Some companies increase their rates faster than others.

Keep in mind that companies do not have to sell you a Medigap policy except during your Medigap open enrollment period, or during a different period if you are eligible under a specific circumstance.

How Do I Compare Medigap Costs?

The cost of buying a Medigap policies can vary widely. Different insurance companies may charge different amounts for exactly the same Medigap policy. Be sure to compare the same type of Medigap policy, and consider the type of pricing, before you buy one. For example, compare a Medigap Plan C from one insurance company with a Medigap Plan C from another insurance company. You can also find out which insurance companies sell Medigap policies in your area by visiting www.medicare.gov and selecting “Compare Health Plans and Medigap Policies in Your Area.”

The cost of your Medigap policy may also depend on whether the insurance company does the following:

  • Offers discounts (such as for non-smokers; married people who buy 2 policies; paying your premiums using electronic funds transfer, etc.).
  • Sells Medicare SELECT policies. Medicare SELECT is a type of Medigap policy that is sold in some states and may require you to use hospitals and, in some cases, doctors within its network. If you buy this type of Medigap policy, your premium may be less.
  • Offers a “high-deductible option” for Medigap Plans.

How Do I Choose a Plan?

Before you buy a policy, take your time to compare your options, and premiums. Insurance companies may not offer all of the Medigap policies. The following is a list of questions you should answer before you buy your plan:

  • How much can you afford to spend on monthly premiums for Medigap?
  • How does the plan’s premium compare to other plans for the same benefits?
  • What benefits do you really need? Don’t buy more benefits than you need, you can save money if you don’t buy coverage for benefits that you do not have trouble covering, for example Part B deductibles.
  • How hard is it to file claims? Can the doctor file for you?
  • Is there a waiting period to cover pre-existing conditions? If so, how long is it? And do you have any previous coverage that applies toward reducing the waiting period?

How Do I Buy a Plan?

  • Decide which benefits you want to buy, and then decide which of the Medigap Plans meet your needs. You should think about your current and future health care needs, because you might not be able to switch Medigap policies later.
  • Find out which insurance companies sell Medigap policies in your state. You can call your State Health Insurance Assistance Program, and ask if they have a “Medigap rate comparison shopping guide”.
  • Call some of the insurance companies that sell the Medigap policies and compare costs.
  • Buy the Medigap policy. Once you decide on the insurance company and the Medigap policy you want to buy, you need to fill out an application for your Medigap policy. Make sure that the insurance company gives you a clearly worded summary of your Medigap policy. Read it carefully. If you don’t understand it, ask questions.

Can I Buy a Medigap Policy if I Lose (or Drop) My Health Care Coverage?

It is best to apply for a Medigap policy before your current health coverage ends. You can buy a Medigap policy while you are still in your current health plan and choose when to start your Medigap coverage. This will prevent breaks in your health coverage.

If you do lose your health care, you may have a guaranteed issue right to buy a Medigap policy. Make sure you have the following:

  • A copy of any letters, notices, and/or claim denials as proof of coverage
  • All paperwork must have your name on it
  • The postmarked envelope these papers come in as proof of when it was mailed You may need to send a copy of some or all of these papers with your Medigap application when you buy a policy, in order to prove you have a guaranteed issue right