One of the key factors in determining which Medicare supplement policy is right for you is the monthly contribution, especially if you have a limited budget. The monthly premium depends on the type of Medigap plan you select (Plan A, B, C, etc.) and the company where you buy it.
There are10 different kinds of Medigap plans which states can offer. The services are standardized for each type of plan, that is, the services are the same regardless of where you live. The exceptions are Massachusetts, Minnesota and Wisconsin, which offer different standardized benefits.
Bear in mind that monthly premiums are set by individual Medigap insurance companies, so the cost varies from one company to another. For example, if you buy a Medigap A plan, a plan A from one company may cost more than another plan A, even if both plans offer the same benefits.
How insurers determine the prices of Medigap plans
One reason why prices are so different is that each insurance company decides how they choose to set premiums for Medigap policies. There are three ways in which a company can qualify or evaluate its Medigap policies:
Community rated: this is also known as “no age rating” as no matter how old you are, the plans cost the same. Due to inflation or other factors, premiums may increase but not according to age.
Issue-age-rated: Also known as “entry-age-rated” because the premium depends on your age at the time of purchase. When you buy your policy, you will be charged the same amount as other people have in your plan. In the case of guidelines with an issue rating, people have lower premiums if they join the plan later. Premiums may increase due to inflation or other factors, but not according to their age.
Attained- age-rated: for this plan, the cost of the premiums is based on your age when you enroll in the plan. These plans are more favorable, especially for younger buyers, but the amount of the premium automatically increases with age. Premiums can also increase due to inflation and other factors.
When reconciling plans, always ask how an insurance company rates their policies, since this factor can affect the amount you pay now and in the future.
The biggest impact on the amount you pay for a Medicare supplement plan, and if the insurer accepts it, is enrollment. Your Medigap open enrollment period is the best time to enroll in a Medicare supplement. It begins automatically when you are at least 65 years of age and enrolled in Medicare Part B.
Regardless of pre-existing conditions or disabilities, you have the guaranteed-issue right to enroll in a Medigap plan. Insurers cannot refuse you coverage if you have health problems or are charged a higher premium.
After this time, it may be difficult to join or change Medigap plans. If you have health problems, Medigap insurers may charge a higher rate, need medical insurance underwriting, or refuse coverage.