2014 Medicare and Medigap Updates
Medigap premium is the monthly charge that you pay a private health care provider to cover you as a Medicare supplement policy. Unlike Medicare, where the majority of your fees were deducted during the working period of your life, Medigap premium payments will not begin until you retire and sign up for Medicare.
Not everyone actually needs Medigap. Retirees with a solid advanced Medicare Plan almost always skip the need to sign up for Medigap. However, since Medicare only pays around 80% of medical bills, retirees who feel they may have recurring medical problems and a lifetime prescription for maintenance drugs will most likely need Medigap as a means to foot their monthly medical expenses. To do this, one must choose from a wide selection of policies that provide varying levels of coverage. Consequently, the Medigap premium prices differ based on the plan, the location, and the specific pricing method used by your chosen company to calculate what their particular Medigap premium price is going to be.
Insurance companies have three methods they use to calculate Medigap premiums. They are: community rated, age rated, and age-attained rated.
· Community rated pricing methods do not take age into account. Companies calculate premium prices based on other prevailing data such as location, smoking status and others and applies this to all applicants of a specific plan regardless of their age.
· Age rated, conversely, refers to Medigap premium that is calculated based on age. An age 65 applicant will pay a lower premium than an age 68 applicant.
·Age-attained rated plans have Medigap premiums that vary per year as the applicant ages. The premiums increase as a policy owner grows older.
These plans are applied to 10 different Medigap policies. They are named Plans A, B, C, D, F, G, K, L, M and N. Each plan varies in coverage but plans of the same name provide the same coverage regardless of the company offering the policy. This simplifies the task of selecting the provider by choosing those which offer lower Medigap premium for a specific policy in a specific location.
As an example, say you want to purchase Plan F in Montana. You find a company that offers it for $1,144 per year. It’s most likely that by requesting for more quotes, you will find a second company that will offer the same plan at $1,100 per year and yet another that will offer it at $1,080. These are the same plans, in the same state, by different companies using different methods for Medigap premium pricing calculations.
So if you are looking for the best Medigap plans, try to find as many Medigap premium quotes from as many reputable companies as possible. This will increase your chances of finding a low-priced, high value policy that suits your supplemental health care needs. That means that you get to keep more of your pension without compromising your healthcare and medical needs for the rest of your life. And in that regard, Medigap is definitely a valuable tool that can help remain healthy and cared for all the time.