When it comes to shopping for health insurance, Americans are used to be confused. With so many variations of coverage available, even a Rhodes Scholar could be found scratching their heads trying to determine which plan to chose. For Seniors, there is good news – Medigap insurance is an exception to that rule. To simplify your options, the government allows insurers to offer only certain plans – 12 “standardized” plans lettered A through L.
Each Plan A has the same coverage, no matter which insurer offers it, each Plan B has the same coverage, and so on. Given this fact, it makes sense to shop for a policy based on premiums. The perfect time for you to shop is when you are turning 65 – you can’t be rejected for a Medigap plan or charged a higher rate if you buy the policy within six months of signing up for Medicare Part B.
When picking a plan, see which provides the best coverage for your illnesses. But after you’ve chosen one, you can shop based on price. Because the plan must have the same coverage from insurer to insurer, you won’t get anything extra for paying an additional premium. The most popular choice is Medigap Plan F, which tends to have the best balance of coverage and price, paying many of the Medicare deductibles and co-payments for doctor’s visits and hospital stays.
One key question you may want to ask, however, is how the insurer changes its rates over time. Some offer attained-age policies, which means that prices increase because of health-care inflation and because you get older. Others are issue-age policies, which means that prices increase only because medical costs rise, not because you’re getting older. Issue-age policies generally don’t cost much more than attained-age policies, even though you’re likely to see lower rate increases through time.
You’ll also want to shop for a Medicare prescription-drug plan to cover your medications. These plans aren’t standardized, but they’re easy to compare with the Medicare Prescription Drug Plan Finder. Type in your medications and dosages, and you’ll see how much your premiums plus out-of-pocket costs will run under each policy over the year.
Another option is a Medicare Advantage plan, which is a private plan you can enroll in instead having to sign up separately for Medicare, a Medigap policy and a Part D prescription-drug policy. If you decide to stick with traditional Medicare, you have numerous choices to fill the gaps in coverage. Medigap policies come in nine standardized versions. The price and coverage generally increase as you move through the alphabet from the basic Plan A through the more comprehensive Plan J. Plans K and L offer lower premiums for those that need to keep their premiums as low as possible, but cover just 50 or 75% of expenses not covered by Medicare, until you reach your annual out of pocket limit.