May 19, 2011
Medicare Supplement Premiums
Consumers sometimes make the incorrect assumption that since Medicare Supplement (a.k.a. Medigap) plans are standardized in most states, the premiums for the plans are standardized as well. This is incorrect and, as you'll learn in this article, there are a host of issues to consider when evaluating the premium of a Medigap plan. With this information, you can become a more informed shopper for Medicare Supplement insurance.
Medigap Premiums
Medigap plans typically charge a monthly premium for their insurance coverage. When comparing monthly premiums, you should ALWAYS make certain that you are comparing monthly premiums for the same plan type. In 47 of the United States, there are ten standardized Medigap plans: A, B, C, D, F, G, K, L, M, and N. Massachusetts, Minnesota, and Wisconsin each have their own state-specific Medigap plans.
After limiting your premium comparisons to the same plan, you should request plan quotes for your specific circumstances. Your age, smoking status (i.e. smoker or non-smoker), and gender can affect the monthly premium quoted to you as well as medical underwriting.
A Medigap plan typically employs one of three pricing methods: age-attained, issue age, and community rated. An age-attained plan increases the monthly premium every year based on the new age you attain (i.e. you've become a year older). An issue-age plan uses your age when you enroll in the plan as the age consideration for your premium amount but does not increase the monthly premium because you age (however, a plan can increase monthly premiums based on other factors). A community rated plan does not base pricing on your current age or increase the monthly premium because you get older. Like age-attained and issue-age pricing models, community-rated plans can still increase the monthly premium based on other factors. Knowing a plan's pricing model is an important factor in determining what plan is the best long-term choice for you. Interestingly enough, age-attained plans are not necessarily the cheapest in the first year of coverage. You may be able to find an issue-age or community rated plan for less money and not face annual increases in monthly premiums due to aging.
Medical Underwriting
Unlike Medicare Advantage plans, Medicare Supplement plans can employ medical underwriting to determine whether to accept your enrollment application and to determine the monthly premium they would charge for coverage. Medical underwriting is the evaluation of your past and present health status and medical claims. Depending on your medical history, you might be denied coverage or offered a higher rate for coverage. However, if you apply for Medigap coverage within six months of enrolling in Medicare Part B, an insurer cannot use medical underwriting to evaluate your enrollment application. This period of six is known as Open Enrollment.
Alongside Open Enrollment, there are also a list of approved circumstances under which a Medicare Supplement provider must sell you insurance. These Medigap guaranteed issue rights include some of the following trigger conditions:
- Your Medicare Advantage plan notified you of plan discontinuation in your region
- You have Medicare Parts A & B and your employer or union health plan notifies you of pending discontinuation
Compare Medicare Supplement Plans
Our web site provides a free Medigap plan comparison tool so you can compare premiums for a selected Medigap plan type based on the age, gender, and smoking status assumptions you specify.
