2014 Medicare and Medigap Updates
When looking at options for supplemental medical insurance, one has to spend a good deal of time looking at Medigap cost. Medigap is a very helpful addition to a retiree’s health plan, particularly if one expects an abundance of medical procedures and doctor visits. However, given the wide array of Medigap options and the associated cost for each, one should take as much time as necessary in order to pick the best plan in terms of actual health benefits and financial suitability.
The first thing to remember with Medigap cost is that Medigap plans are structured so that all insurance companies offer the same type of Medigap plans. For example, Medigap Plan A from Insurance Company A will offer the same benefits as Plan A from Insurance Company B. The main benefit of this system is that it simplifies the task of comparing one plan from another.
The final price for a company depends on a combination of the pricing scheme that they use, their perceived reputation in the market, the state where the plan is being offered, and the prevailing overall market for supplemental medical insurance policies. To shop for policies, it is important therefore that one is familiar with all these factors in order to find the most competitive prices for the plans under consideration.
The pricing scheme being used is one notable aspect of the Medigap market that is worth familiarizing. Companies use one of three schemes that help determine how much they sell their Medigap plans.
•Age-attained plans. In this plan, the premium price is based on the age of the plan-holder and progressively increases each year as the policy owner ages. In Year 0, a Plan C policy may cost $145 per month, $153/month in Year 1, $160/month in Year 2 and so on. Here, the plan price will be lower at the onset but one should expect incremental increases per year.
•Issue-age. In this Medigap cost scheme, companies base the premium price on the age of the policy holder when the plan is acquired and no subsequent increases in premium costs are to be expected. Taking the previous example; suppose Year 0 corresponds to an age of 65. If a policy holder buys the plan when he or she is 65 years old, the premium price is $145/month and will remain so for the duration of the plan’s life. If the same person buys the plan when he or she is 67, he premium price will already be $160/month and will remain as such for the duration of the plan. It is notable, however, that issue-age policies often cost higher in Year 0 than age-attained plans.
•Community-rated plans. The price for the premium does not change unless it changes for everyone and is the same for everyone regardless of age. This is often used by companies with a wide clientele because it is an excellent way to attract clients due to its lower average cost.
When comparing Medigap cost, it is best that one consults the local state health agency or use a website which compiles Medigap plan prices across the state. Casting a “bigger net” when researching various plans will provide the best opportunity for finding a cost effective Medicare supplement insurance policy to help a retiree with his or her medical needs.