Reviewing and understanding your supplemental insurance options can be overwhelming when you are new to Medicare. There are several options to choose from and it’s hard to know which plans with which provider will be most suitable for the long haul.
In the following article, we provide tips and advice to help you navigate this somewhat complicated product category. With this knowledge, and our experience, you can form an educated plan of attack in order to find the supplemental plan that best fits your needs. (Note: Medicare supplements are sometimes referred to as Medigap plans and we will use these two terms interchangeably.)
For the purposes of this post, we’ll assume you have decided to enroll in a Medicare supplement over an Advantage plan. By rule you can’t have both – so you’ll want to decide which policy fits you best. Most of our clients prefer that Medicare supplements have no network restrictions and little out-of-pocket exposure, but one size does not fit all.
That’s not to say one is better than the other, they are just different. Advantage plans can be less expensive and usually include Part D drug coverage rolled into one bundle. We offer both types of policies and can help you compare and contrast them if you’re unsure which you prefer.
When starting this process, you first want to know that Medicare supplements are very much a cookie-cutter type of product. Plan F from company A has to cover the exact same benefits as a Plan F from company B – while also providing the exact same network.
Insurance providers cannot monkey around with the benefit design. These policies simply piggyback off of Original Medicare and help fill in the leftover gaps depending on the level of coverage you choose. There’s no wiggle room for the insurance companies to deny claims. If you encounter a Medicare approved expense, your supplement will cover its designated gaps.
And with almost all Medicare supplements (the rarely purchased Select Plans being the only exception) there are no networks to worry about. You will have the same network of hospitals and doctors with Aetna as you would with Anthem BCBS, United Healthcare, Mutual of Omaha or any other provider you may or may not have heard of.
Medicare is your primary insurance and your permanent network. If your doctor or hospital accepts Medicare, then they will accept any traditional supplement you present them. You are never shopping networks with a supplement like you would with an Advantage plan.
At present, there are ten different Medigap plans sold today – Plans A-N.
|Medicare Supplement Plan:||A||B||C||D||F||G||K||L||M||N|
|Part A Hospital Coinsurance||✔||✔||✔||✔||✔||✔||✔||✔||✔||✔|
|Lifetime Reserve Days||✔||✔||✔||✔||✔||✔||✔||✔||✔||✔|
|365 More Hospital Days||✔||✔||✔||✔||✔||✔||✔||✔||✔||✔|
|Parts A and B Blood||✔||✔||✔||✔||✔||✔||50%||75%||✔||✔|
|Part B Coinsurance||✔||✔||✔||✔||✔||✔||50%||75%||✔||✔*|
|Part A Hospice Coinsurance||✔||✔||✔||✔||✔||✔||50%||75%||✔||✔|
|Skilled Nursing Coinsurance||✔||✔||✔||✔||50%||75%||✔||✔|
|Part A Deductible ($1,288)
|Part B Deductible ($166)
|Part B Excess Charges||✔||✔|
|Foreign Travel Emergency||✔||✔||✔||✔||✔||✔||✔|
Key: A ✔ means the benefit on the left is covered. For example, Plan F checks all boxes and fills in all gaps in Medicare Parts A & B. The * denotes that Plan N has office copays.
You can see from the above that some plans are very similar. Plans F and C are very similar as are Plans G and D. In our experience, Plans F, G and N are the most commonly purchased policies. We see very little demand for Plans A, B, K, L and M as they are not as comprehensive.
It’s important to note that Plans C, F and N also come in “Select” versions which require network use for routine care. We don’t see much demand for Select plans either. Finally, there is also a High Deductible Plan F option that requires the insured to cover a $2,180 deductible before the supplement will pay its share.
Plan F is the most popular Medigap plan at present capturing an estimated 4 out of every 10 buyers. The reason: It’s the most comprehensive plan available. However, new legislation passed in 2015 states that beginning in 2020, no Medicare supplement plans can cover the Part B deductible. This means Plans F and C will no longer be for sale, but if you’ve enrolled previously, then you can keep your existing plan.
In our opinion, it’s important to consider policies other than Plan F. We’ve written extensively about the value Plan G provides in terms of cost, benefits and renewal history. In many cases, the lower monthly premiums Plan G provides more than make up for the small Part B deductible it does not cover.
And Plan G (as well as Plan N) are not Guaranteed Issue plans. This simply means they are more exclusive in their enrollment and do not have to accept as many applicants as Plan F. Therefore Plan G tends to have a healthier pool of applicants causing the premiums to rise more slowly. Our agency is regularly updated with rate increases and we see Plan F increasing more quickly than Plan G in many instances.
The temptation is to buy the cheapest Medicare supplement in the letter you prefer most. It pays to take it a step further. You’ll want to know how long said insurance company has been offering that line of supplements and their renewal history.
Many providers release new lines of supplements under a slightly different name every few years so as to offer lower premiums. This sometimes causes above-average rate increases for those stuck in the old, no-longer-for-sale line of business. You should ask your agent about the age of the supplement as well as the yearly renewal history.
In most cases, agents have access to about 4-5 year of rate increases. We can tell you which plans with which companies have been most stable. These Medigap plans may not be the least expensive, but they can save you money going forward if their rates are more stable. In other words, pay a little more now so you pay less later.
We see a lot of demand for Issue Age Medicare supplement insurance plans over Attained Age coverage. Most of the time, it’s because these policies are misunderstood. Issue Age plans will usually increase in price each year just like Attained age plans, but not because you are a year older.
And most of the time, Issue Age plans are more expensive to begin with. Well, if the more expensive Issue Age plan passes along an 8% annual increase compared to, say a 4% increase with the Attained Age plan – it’s pretty clear which one is better.
Community rated plans offer the same rates to everyone no matter their gender or location. If I’m a female living in Pittsburg, why would I want to pay the same rate as a male in Philadelphia? The answer is you wouldn’t. Again, talk to your agent about rate increases before settling on a rating class.
You sometimes hear the saying, that if you are your own lawyer, doctor, accountant, etc – then you have a fool for a client. The same could be said for insurance broker. You don’t know what you don’t know and that lack of information can lead to poor decisions. Many of our clients have first spoken to friends, family and neighbors and come to us with a lot of conflicting and wildly inaccurate information.
Don’t miss out on important information, use an independent agent. Know that it does not, by law, cost you any additional money to place your business with us. By rule, we offer the same rates as if you called the insurance company yourself. But those of us who are independent can quote you the direct rates with several carriers at one time.
We can also talk about the experiences of our clients with various carriers, their rate increases and reputations, as well as other nuanced items like premium discounts and the like. Don’t go it alone. You are not saving any money and likely missing out on valuable information an agent can provide now – and in the future. Medicare changes yearly and sometimes significantly. It’s nice to have an unbiased agent in your back-pocket when you have questions.
Many carriers offer spousal and/or household discounts on their supplemental plans. In some cases, you don’t have to be married (just living with someone) to qualify for a premium reduction. Savings will vary between companies and by state regulations, but can be as much as 12% in some areas.
It’s important to bring your household makeup to the attention of your agent. Maybe you have a spouse who will be Medicare eligible in a few months, or maybe you live with an adult child, sibling or significant other. These factors will help agents make recommendations so you can maximize your savings.
In most cases, the least expensive way to pay is monthly (via automatic bank draft) or annually by check. If you choose to pay quarterly or semi-annually, your rates can be higher. And many companies will not bill you monthly – they’ll want to draft automatically in order to avoid higher administrative costs. We recommend that our clients consider bank draft – it’s safe, secure and reliable. It will also help to prevent policy cancellations if you are travelling or your invoice is lost in the mail. Most insurance companies offer several payment options, however.
Sometime our clients choose the same Part D prescription drug provider as the one offering their Medigap plan. Don’t do this without first comparing all drug plans for the prescriptions you take. There is no bundled savings by using the same provider and in many cases you’ll be paying more than you need to.
We help our clients compare their Part D plans at Medicare.gov. It’s a good website to see who offers you the most savings at the pharmacy (or mail order option) of your choice. Part D Rx plans can differ by wide margins, so it’s important to shop these plan independently of your Medicare supplement.
We are an independent Medicare supplement brokerage and have been working in this market for several years. Using our knowledge and experience, you can find the supplemental coverage that best suits your needs and budget. You will also have us as a resource in the future when you want to discuss changes to your insurance plans.
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Category: Medicare Advantage, Medicare SupplementsLast updated on November 15th, 2016