Continuing on with my series of Frequently Asked Questions about Medicare Supplements (see previous posts); a question we get asked from time to time is; why should a person do a side-by-side comparison of Medicare supplement plans?
Medicare supplement plans (or MediGap plans) A-N are standardized (except in states: MA, MN, WI), and the coverage associated with each individual MediGap plan is the
same regardless of the state you live in or the insurance company that provides the coverage. So, an F plan from one insurance company must – legally – provide the same coverage as an F plan provided by another insurance company.
So, if the coverage is the same you may wonder how you’re supposed to choose a plan. What criteria should you use to make your decision?
There are probably hundreds of reasons a person might choose one plan over another, but here is a short list:
- Your doctor takes the plan. We know from our research that most people will pay up to $100 more each month for an insurance policy if it means they can keep their doctor.
- You know, trust, and like the insurance company. Big name-brand companies tend to become big name-brand companies by doing a good job.
- The plan is more affordable. Sometimes when you’re comparing insurance policies, price becomes the most important factor. And, at least with the Sup plans you know you’re getting the same basic benefits, regardless of what you pay.
- Pricing models. Medical costs, inflation and innumerable other issues impact the cost of all Medicare Supplement plans. However, over time, the cost of a Medicare supplement also changes based on the pricing model used for that plan.
There are three types of pricing models that can account for some of the variation in Medicare Supplement plan costs. They’re: age-attained, community-rated, and issue-age.
- Age-attained plans base the monthly premium on your age. An age-attained plan may be very affordable when a person turns 65, but the premium will increase as they age.
- Community-rated plans offer the same premium rates for all enrollees. While the premiums may increase due to inflation, the premiums will not increase each year due to age.
- Issue-age plans determine the premium from the age at which the person was first enrolled in the company’s plan. The monthly premium may increase due to inflation and other factors, but will not increase because a person ages. While premiums do not increase each subsequent year after a person enrolls, a person who enrolls at age 75 will pay higher premiums than a person who enrolls at age 65.
There are pros and cons to each model, which is why it’s a good idea to talk to a licensed agent about any plan you’re considering.
Medicare has neither reviewed nor endorsed this information.
