2014 Medicare and Medigap Updates
Like any other supplemental medical insurance plan, Medigap rates – or in general, the plan premium price – is one of the most crucial factors to consider before purchasing a supplemental policy. In a perfect world, we’d all love to get as much coverage as possible for the least price; unfortunately, the real world of medical insurance policies does not work in this manner. If you are on a budget or if you are conscious about maximizing your medical insurance spending to get the most out of it, you are bound to inevitably take a good long look at Medigap rates before coming to the best decision.
The problem is that when you comparatively look at Medigap plans and their corresponding rates, you are likely to be left scratching your head because there doesn’t seem to be any method to the madness. A company may be offering Plan A policies $20 per month cheaper than the next company. Prices of the same plan by the same company can even be drastically different from state to state. It’s also worthwhile to ask if choosing the cheaper plan leads to some level of consequence later on, such as a less-than-appealing level of service or abnormally long waiting times on claims.
So how do you make sense of all these details?
The first consideration you have to remember is that different insurance companies often use different pricing schemes as a marketing strategy for attracting new policy holders. The pricing schemes determine the prevailing Medigap rates that companies are offering.
•Community-rated policies - These are policies where the premium price is uniform with all policy holders regardless of age. More established insurance companies often employ this pricing method because it is very effective in attracting new policy holders owing to their lower Medigap rates. Companies recoup their expenses because of the higher number of clients that sign up for these insurance plans.
•Age-attained rated policies - The Medigap rates for these plans change year-to-year because the calculation depends on the age of the policy holder. As you age, the price of the plan goes up. The starting rate is often lower in earlier years but is regularly increased year-to-year.
•Issue-age rated policies - Issue-age rated policies have the Medigap rates pegged based on the age of the policy holder when the plan was issued and do not change from year to year. This means that you will have a lower pricing plan if you buy the plan at 65 years old versus buying it when you are 70. This pricing method is used to encourage retirees to buy Medigap plans as soon as they are able and not wait until they are older before they consider getting a supplemental insurance policy.
Other factors that influence Medigap rates include the state where the plan is being administered, the nature of the company selling the policy, and the prevailing market conditions within a local area. For all these, it is best that you research about how Medigap is being administered in your local area as well as the reputation of the companies offering Medigap plans so you have a complete picture of your options when assessing your plan choices.
As a final note, the best approach to comparing Medigap rates is to use internet websites that compile different plans in your location. From here, you can narrow down your shortlist based on which insurance companies you are most comfortable dealing with. You can then talk to a company representative from your shortlist so you can assess the pros and cons of each before coming into a final decision. However, always remember that these plans are government regulated and each plan will give you the exact same coverage regardless of the cost or company. In other words Plan A with company A will give the same coverage as Plan A with company B. For this reason it is usually more economical to get the lowest rate you can find