Although Medigap plans are standardized across the country, the Medigap cost structure is not. There can be wide differences in the prices for the same coverage plan. This is because each insurance company decides on the pricing structures for its various policies.
Generally these are the main categories of policies:
1. Attained-age policies: With these policies, the premiums start out at a much lower price compared to the other two. However, their cost increases every three to five years – sometimes even faster. In later years it may turn out to be far more expensive than the other options. Also, you may find it more challenging to switch policies later due to the increasing monthly premiums.
2. Issue-age policies: Here the price of the premium depends on your age at the time of purchase. The lower your age, the lower the premium Medigap cost. This policy is not subject to increases with age of the policyholder.
3. Community-related policies: It is similar to the Issue-age policy in that the cost is the same for all members of a particular community, regardless of age. Also, the premiums do not increase as you get older.
Issue-age and Community-related policies start out at higher premiums than Attained-age policy but the long-term advantage is that they don’t experience price increases due to age.
There are other factors that also impact the Medigap cost. Healthcare inflation is one example. Inflation is almost inevitable and it impacts all categories of insurance policies. Other factors that influence the premium costs include the results of your medical underwriting, geographic location and any discounts offered. Additionally, enrolling for a policy during the six month open enrollment can be more cost effective because you have more choices available to you, and the insurance provider cannot deny you coverage based on health issues or tack on an additional charge.
In order to get the best plan, it is advisable that you shop around and do some research on the options available. Firstly, determine what level of coverage you want. Your state insurance office can give you a list of insurance premium prices. Alternatively, you can browse through the personal plan finder on Medicare’s Web pages or purchase a copy of Weiss Ratings Supplement Insurance ‘Shoppers’ Guide.
Secondly, make sure you understand each insurance company’s pricing structure. Remember that superior plans provide more benefits but your Medigap cost will also be higher. Also, you should compare the initial cost versus the long-term costs. Generally it is recommended that you opt for an Issue-age or Community-related policy. It may be more expensive initially, but at least you can lock in the premium so that it won’t increase with your age.
With regards to the Issue-age or Community-related policies, it is better to go with their lowest-priced package as you may not always get value for money with the higher priced ones.
As of this year (2013) the writer’s cost for a Plan F Medigap policy was $145. Plan F is good coverage and should protect your savings if you should have a long term illness.
If researching on your own is a little daunting, seek the assistance of an insurance agent who is familiar with different insurers and their products. You may be surprised how much you can save on your Medigap premiums by switching plans.
Most healthcare beneficiaries may be aware that they may be entitled to Medicare services. However, Medicare may only cover about 75-80% of these expenses. Thus, there is a large gap left that has to be filled if these beneficiaries are to get the proper medical services that they deserve at a price they can afford. This gap is filled by Medigap services. Medigap services are a form of medical insurance offered by privately owned insurance companies. While the general Medigap plan may be standardized across all Medigap companies, the premium cost is not. Therefore, one has to understand how each Medigap plan could affect the health services they feel they are going to need.
The Medigap cost structure is individually determined by the insurance company offering the Medigap services. Thus, one may find a situation whereby the Medigap price structure for the same plan or policy differs from one Medigap company to the other.
When considering the Medigap premium structure, one has to analyze the costs against the actual policy being offered. There are three main policies offered by Medigap companies. These are the attained age policy, the issue age policy and the community related policy.
The first policy, the attained age policy features premiums that are generally lower than the other two. One main disadvantage of this policy is the difficulty one faces when trying to change policies once one has already subscribed to it. Moreover, the premiums tend to increase monthly making the overall cost quite expensive in the long run.
The second policy is the issue age policy. This policy’s premium is determined based on one’s age at the time of issuance. The lower one’s age, the lower the premium cost. Its main advantage is that the monthly premiums do not increase as seen with the first policy.
The community related policies generally have a higher premium cost than the first policy. However, it differs from the Attained age policy in that the monthly Medigap cost in no way increases as one ages.
These three policies are the most important factors taken into consideration when which Medicare supplement policy to purchase. However, there are some other minor factors that play an important role in determining the cost as well. One such factor that has come to the limelight recently is inflation. All insurance policies factor in the inflation rate when calculating the overall cost. One’s geographical location, as well as any discounts offered may affect the overall cost of the plan.
Consider performing some research on general Medigap plans offered by various insurance companies before settling on any one company. First, determine which level of coverage you would like to get. Second, search through Medicare’s Website to find a plan suited for you. Next, compare the different Medigap cost structures offered by insurance companies.