Are you bewildered by the array of Medicare Advantage plans and Medicare Supplement insurance? Here are three ways to cut through the jargon and make it simpler to get the best value and the best protection from the gaps in Medicare’s coverage. First, let’s take a look at what you are risking by relying solely on Medicare.
Who Needs Medigap Insurance?
Before Medicare covers inpatient hospital care, you must meet its Part A deductible that’s already more than $1,000. Since that deductible is not charged annually, you could have to meet it more than once a year. It’s tied to a benefit period, which starts when you enter a hospital or skilled nursing care facility. A benefit period ends when there has been a break of 60 straight days since you were released from a hospital or nursing facility.
Say you’ve been home for about three months (90 days) when you need hospital care again. It won’t matter whether it’s for the same condition or not because you would be into a new benefit period. That triggers another deductible you’ll have to meet before Medicare will help pay for hospital bills.
Medicare also has an annual deductible on services from doctors and other non-hospital providers, but that Part B deductible is just $155 per year at this time. After you’ve met that deductible, will Medicare cover your doctor bills? It pays for 80 percent of a pre-determined amount. Regardless of what your doctor charges, Medicare sets its own limit for services.
In certain other situations, you might find yourself without any help from Medicare, too. For example, it doesn’t cover any emergency medical care when you vacation outside of the U.S. If you need extended hospitalization, you may exceed Medicare’s 100 percent coverage for the first 60 days. After that, you could be billed for hundreds of dollars.
What’s The Difference In Medicare Advantage And Medicare Supplement Plans?
Understanding the difference can help you find the best value among the plans that protect you from the holes in Medicare. Medicare Advantage plans are designed to replace Original Medicare. Like Medicare Supplement plans, they are from private insurance companies. That’s the only similarity between Advantage and Supplement plans, though. While Advantage plans replace Original Medicare (and offer additional benefits), Medicare Supplements work with Medicare to cover charges that Medicare excludes.
Medicare Advantage plans have received government subsidies, which have helped keep premiums low. That’s about to change. Because the government has been paying a lot more for Advantage plans than for Original Medicare, it’s cutting subsidies to the Advantage plans that perform poorly. Without those subsidies, premium prices are expected to rise rapidly. That makes Medigap plans a safer bet for keeping your premiums low over the long haul.
Can Premium Pricing Strategies Predict What A Medigap Plan Will Cost You?
The second way you can find the best value among these plans is to understand how to predict what your premiums will cost over time. Be sure to ask whether a plan is an attained age policy, an issue age policy or a community rated policy. With attained age plans, your premiums will increase as your age does. As you might suspect, issue age plans are based on your age at the time you apply. These policies don’t automatically increase premium prices as your age increases.
In contrast, community rated plans are independent of age. These plans are based on location and health care costs in the area. Everyone in the same geographic area is charged the same. Over time, these plans may be the best way to keep premiums low, but issue age plans come close. Attained age plans typically offer lower rates in the beginning, but that’s usually offset by the higher rates you’ll see in later years.
How Can Timing Keep Your Medigap Insurance Premiums Low?
Most health insurance companies employ medical underwriting to evaluate how likely you are to incur health care bills. The greater the risk, the higher your premiums. Medigap insurance usually takes this approach, too, except during a special period that only lasts for six months.
When you apply for any Medigap plan during your Medigap open enrollment, your health cannot be considered. This special period begins on the first day of the month in which you are at least 65 and enrolled in Medicare Part B. That’s the part of Medicare that covers non-hospital services and has a monthly premium. Open enrollment typically lasts for six months, but certain states may have additional periods that include people who are under 65.
During open enrollment, your right to buy Medigap insurance is guaranteed. Insurance companies cannot refuse to cover you based on your health. They can’t even charge you higher than normal rates or limit coverage for any pre-existing conditions. This third way to get the best value in Medicare Supplements can protect you from thousands of dollars in medical bills.
Use these three ways to sort through the many plans that work with Medicare. You’ll save on both insurance premiums and health care bills. That can protect your health and your retirement savings.