Medicare.com eNewsletter

Enter your e-mail address below to receive the latest news about Medicare coverage and plans

If you have, as a Medicare recipient who uses Original Medicare, decided to purchase a supplemental health insurance, there are a number of things to consider. What the coverage offers is obviously your first concern but aside from that, the most important part of determining which Medigap insurance plan is right for you are costs. Medigap supplement rates can vary from insurance plan to insurance plan and from provider to provider.

These insurance plans are designed to help with Medicare costs, or more accurately, medical expenses Medicare does not cover. Private medical insurance costs are determined by the insurance plans offered, any extras related to those insurance plans and where you live.

Medicare Part A usually doesn’t have a premium you need to pay. Most people paid Medicare taxes while they worked and therefore have premium-free Part A. People who do not qualify for premium-free Part A may be able to pay a premium under certain circumstances.

• 65 or older, enrolling in Part B and meet citizenship requirements.
• Under 65 disable and premium-free Part A coverage stopped due to your return to work (disabled people under 65 can continue to get premium-free Part A for eight and a half years after returning to work).

Coverage for Part A premiums for those who do not qualify for premium-free Part A are not covered by any standard Medigap policy. You can, of course, ask your provider if there is any such coverage available.

When you buy Part A you need to have Part B and pay premiums for both. Those with limited income may be able to get state assistance. Most people pay a standard Part B premium (if you have to pay more due to your income Social Security will contact you. Also, if you sign up for Part B late you will have to pay a late enrollment penalty. Such a penalty is an ongoing amount added to your monthly premium. Remember, Part C and Medigap Policies do not work together. You cannot buy a Medigap policy if you have a Medicare Advantage plan.

Here are a few cost issues that might be worth looking into:

• Married couples should ask their provider if there are discounts if both spouses sign up.
• Are there any other discounts?
• Are there Medicare SELECT plans. These insurance plans are a type of Medigap insurance plan that require the use of certain hospitals/doctors. They can save you money but are not offered anywhere.
• Find out if there are high deductible insurance plans in your area. Premiums are lower for such insurance plans but you will wind up having to pay the first $2,000 (at least) out of your own pocket.

One area where a new Medigap policy will definitely not help with costs is prescription drug coverage. New Medigap policies with prescription coverage cannot be sold. You can keep one you have but be sure that insurance plan actually saves you money compared to other available insurance plans. It may not.

Medicare drug coverage, either from Original Medicare or a Medicare Advantage Plan, can be more cost effective. You should also be aware that if you have a Medigap policy that covers drugs you cannot use it and a Medicare Part D insurance plan (or an Advantage plan) at the same time. You should know how your Medigap policy relates to your other Medicare coverage and if you are really saving money using it. Generally speaking Medicare prescription drug coverage is what is most cost effective. This coverage usually saves money on drug copayments you make when you have a Medigap insurance plan. Medicare prescription drugs insurance plans also are likely to provide better coverage when you need more drugs.

Most of the Medicare prescription insurance plans will cover most of your drug costs. In general, this is not the case with Medigap coverage. It is true, however, that different people will find different insurance plans useful. Your age and medical conditions should inform what insurance plan you choose. And, when it comes to prescription drugs Medigap Insurance plans are less likely to meet your needs, especially if, over time, you need more prescriptions.

Then there are late penalties if you do not choose to join an insurance plan (Part D or Advantage) when you first become eligible. Usually the penalty comes into play if you do not have creditable prescription drug coverage. Whatever you decide to do be sure you have creditable coverage for the required month of time.

Be sure to compare costs before deciding to keep or get rid of a Medigap policy. Compare the coverage with Medicare insurance plans for drug coverage offered in your area. As noted you are not required to get rid of a Medigap insurance plan you have so long as you pay the premium but you should look to see if the benefits meet your needs.

Note that you often do not have the right to change Medigap policies excepting within the 6 month open enrollment period (there are exceptions). Some states do allow you to change policies outside the period but insurers are not required to sell policies outside the period. Before deciding, be sure the costs of the insurance plan works for you.

Also note that how a company sets its rates is important in what you pay. The three ways are:

• Community-rated (aka no-age rated). Age doesn’t matter or affect your cost. The rate is determined by area and may go up but never due to age.
• Issue-age-rated. Age does matter and charges are lower when you buy at a younger age. You are charged the same people in your community who are the same age. Premiums, again, do not go up due to age but the younger you buy, the cheaper the deal.
• Attained-age-rated. Such insurance plans are cheaper when you first purchase one but the price goes up as you age. They may also go up for other reasons.