Cost of Medigap
2014 Medicare and Medigap Updates
Cost of Medigap
Have you ever considered taking on a Medigap policy? If you have not, then perhaps you should consider looking into it. Medicare, the national health insurer kicks in once you turn 65. However, there are a number of costs that are not covered under Medicare. Medigap polices are supplement health insurance plans that you buy from private insurance companies to help cover these gaps. Some of the health care costs covered by Medigap policies include co-payments, deductibles and health care if you travel outside the United States. You will also find that Medicare plans do not cover long-term care such as vision care, dental care or stays in nursing facilities. These can be covered under selected Medigap plans.
If you use health services not covered under the original Medicare, you will find that you save more money than you pay to cover the cost of Medigap policies in the long run. Before you choose to take up a Medigap plan or Medicare supplement insurance plan, it should be noted that such policies are only available to individuals who are beneficiaries of Medicare Parts A and Part B. If you have a Medicare Advantage plan, you cannot get a Medigap plan nor do you need one.
The cost of Medigap plans vary based on the type of plan, the insurance company you buy the plan from and the amount of benefits each plan carries. Plans are standardized, meaning the benefits of each standard plan are always the same regardless of the company you choose to buy the plan from. However, the premiums imposed on the different plans do vary from one company to the next. It should be noted that in some states such as Massachusetts, Minnesota and Wisconsin, the standard Medigap policies are different from those offered in the other states.
Since each insurance company sets its own premiums for its plans, you need to be sure how the company prices its policies. There are three different pricing methods through which the cost of Medigap policy premiums may be determined. These are community-related pricing, attained-age pricing and issued age pricing. Community-rated plans have the same monthly premium charged to everyone who has that Medigap policy; the individual’s age is not a concern with this type of pricing. With this type or plan, the premiums only change due to external factors such as inflation and underwriting charges.
Issued-age Medigap plans have premiums that are determined based on the age of the individual when they are buying the policy. As such, the premiums tend to be lower for younger buyers and don’t change as one gets older. The premiums for the plan will only change because of inflation and other factors such as underwriting charges.
Attained age plans have premiums based on the individual’s current age. In this case, the premiums tend to go up as one gets older. These type of plans tend to be the most expensive in the long run.
It is important to remember that when choosing a Medigap plan, one should compare the cost of Medigap plans based on their respective benefits as well as the way the different insurance companies determine their premiums.