Choosing A Medigap Policy
It’s important to properly understand how medigap policy works. A medigap plan is health insurance sold by private companies that supplement out of pocket costs imposed by Original Medicare. They literarily fill the gap left by Medicare. That is why it is commonly referred to as Medicare Supplement plan or medigap plan.
The center for Medicare and Medicaid services (CMS) has standardized these plans in order to make them consumer friendly. They are often referred to as “Plan” followed by a letter. Decide which benefit you want and decide which of the medigap plans A-N meet your needs. Each plan covers a variety of services that Medicare does not cover completely. Drug coverage is not included in your medigap plans because of the Part D prescription drug coverage.
Each policy covers only one person. For married couples, each spouse must purchase a separate medigap policy. Medigap policy cannot be revoked or cancelled by the insurance company as long as the beneficiary still pays the monthly premium.
Types of coverage that are not Medigap policies
- Medicare Advantage Plans (Part C), like an HMO, PPO, or
- Private Fee‑for‑Service Plan
- Medicare Prescription Drug Plans (Part D)
- Employer or union plans, including the Federal Employees Health
- Benefits Program (FEHBP)
- Veterans’ benefits
- Long‑term care insurance policies
- Indian Health Service, Tribal, and Urban Indian Health plans
- Qualified Health Plans sold in the Health Insurance Marketplace
When’s the best time to buy a Medigap policy?
The best time to buy a Medigap policy is during your Medigap Open Enrollment Period. This period lasts for 6 months and begins on the first day of the month in which you’re either 65 or older and enrolled in Medicare Part B. Some states have additional Open Enrollment Periods including those for people under 65. During this period, an insurance company can’t use medical underwriting.
You should consider medigap policies from different providers (the types of plans offered in each state can differ). Pricing may also vary. Insurance companies can base premiums in one of these three ways
- Community rated, which implies that premiums aren’t based on age.
- Issue-age rated, where premiums remain steady and generally lower if you first buy the policy at a younger age.
- Attained-age rated, where premiums are lower when you first buy the policy, but will rise as you grow older. (This is the way most insurance companies price their plans).
These are some other things to keep in mind when choosing a policy:
- All companies offer automatic filing of claims with Medicare can save you time and effort. Don’t let anyone use this as a selling point for their company.
- It is a good idea to purchase your policy from a financially sound company.
- The only difference between plans provided by companies is the cost.
- Contact Nevada insurance department to know if the insurance company has any complaint files against it.
- Make sure your agent is independent and won’t push “their” company.
Ensure you understand the pricing structure of the policy you are going for. A policy that cost you less today could be more expensive down the road as there are certain variables that can affect premiums. Also ensure you understand how the policy works, what it covers and changes that might occur in the future.
Planning for health expenses in retirement can be daunting, so consider working with a professional who can help you review your options and determine which policy fits best for your personal goals and financial status. We are here to help. For more information about Medigap, contact us today.
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