Choosing the Right Medicare Supplement Plan
If you’re a Medicare enrollee, October is your reenrollment month. Should you be considering a Medicare supplemental insurance?
Medicare supplement insurance plans (or Medigap policies) are sold by commercial insurance companies to help ease the financial burden of healthcare expenses like copayments, deductibles and coinsurance. But they won’t pick up the tab for services typically not covered by Medicare such as cosmetic procedures, weight loss surgery and acupuncture.
The best time to buy a Medigap plan is during the month you turn 65 and enroll in Medicare Part B. If you enroll then, you’re entitled to a six-month, temporary guaranteed issue policy, enabling you to buy a supplement plan without the risk of being turned down or charged extra for a pre-existing condition. If you are older than 65 and have pre-existing conditions, you can still purchase a policy during Medicare open enrollment, it just may cost more.
So, should you buy a supplement plan? It depends. If you have a high-deductible plan and many out-of-pocket expenses or want financial protection for rising healthcare costs you’ll probably bear as you age, they can be worth the investment. If you decide to shop for a plan, here’s what you need to know.
Learn Your Medicare ABCs
Begin by finding a plan that matches your needs. Take your personal health history, current health status and family medical history into consideration. You can choose from 10 plans: A, B, C, D, F, G, K, L, M and N. Each plan offers a different combination of benefits. But they’re standardized, which mean these plans can be used by any provider who accepts Medicare – they’re not tied to specific doctors, hospitals or clinics. And since plans are intended to simply reimburse you for out-of-pocket expenses, you usually don’t have to deal with preauthorizations, pending claims or denials.
Consider Medigap Plan Ratings
Once you’ve selected a plan, start comparing premiums. Before you make a final decision, it’s important to understand how premiums are calculated. This can help you narrow your plan options. Medigap plans fall into one of three rating categories:
Attained-age rated plans: Premiums are based on your current age and will continue rising as you mature. Generally, you can expect a rate increase every few years. These plans can be deceiving because they may start out as the least expensive option but over time become the most expensive. Inflation also can affect rates. Since most insurance companies offer attained-age plans, you should be able to find a plan with a reputable insurer.
Issue-age rated plans: Premiums are based on the age you enrolled in the plan. The younger you enroll, the lower your rates will be. In other words, if you enroll at age 65, you’ll pay less than if you enroll at 75. These plans don’t have age-related rate increases, but can rise because of inflation.
Community-rated plans: Some experts prefer these supplemental plans because premiums are based on the entire “community” of people enrolled in it and don’t rise as you mature. And these plans often discount their rates for younger enrollees to help control the costs of the entire community. Inflation is the usual cause of rate increases. Unfortunately, community-rated plans are hard to find. You may have to do some homework to find one.
Consult a Professional
When you’re ready to purchase a Medicare supplement, contact an insurance agent or broker. Unlike other Medicare products, you can’t enroll in a supplement plan online. What’s nice about working with an agent or broker is that they’re able to provide guidance without a fee, as most states don’t allow brokers to charge a commission for selling Medigap coverage.
Most importantly, work with your primary care doctor. They can help you consider some potential out-of-pocket expenses you may have.
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