Save Now and Pay Later — How Insurance Companies Tease with Introductory Rates
If you’re in your Medicare initial enrollment period, you have a variety of Medicare supplement plans to review from a multitude of insurance carriers, but there’s one big secret that I’m about to let you in on.
It’s tempting to choose the plan with the lowest premium. But you need to dig a little bit deeper to truly see where the savings can be found. It’s not uncommon for some carriers to offer teaser rates to get you to sign up. You won’t find out until the following year and year after that that their annual scheduled increases are above what a competitor’s annual rate increase may be.
Instant Savings Could Cost You in the Long Run
For example, carrier X may offer a lower first-year rate. But it may be customary to raise rates by 9% the next year and the year after that. Now let’s consider carrier Y. Carrier Y may offer a slightly higher initial rate, but their scheduled annual increases may only be 7%.
Although you may benefit from immediate savings with carrier X, by going with carrier Y for the long term and saving with only a 7% annual increase rather than a 9% increase, your premium savings could pile up tremendously.
Can I Change Plans When My Rates Go Up?
You would think the simple solution to this problem would be to just change plans. Well unfortunately, it’s not that simple – and the insurance carriers know it!
During your initial enrollment period, Medicare supplement plans are guarantee-issue. This means you can’t be denied coverage due to a pre-existing condition, and you can’t be charged higher premiums.
If you decide to change Medicare supplement plans after your initial enrollment period, you’re subject to medical underwriting. This means any pre-existing conditions can be held against you, and you can be charged higher premiums or denied coverage altogether. In that case, you’re stuck with the plan you initially signed up for – you know – the one with the 9% annual increase.
How Do I Avoid the Medicare Supplement Teaser Trap?
A professional advisor can provide information that you might not be able to find on your own. Based on their experience working with various carriers, they can assist you in finding a reputable carrier. At MediGap Advisors, we only work with carriers we find to be credible and trustworthy and that treat our clients right! You can view a list of our carriers on our Web page.