When you turn 65 and are eligible for Medicare, you will have another important decision to make.
You may want to choose to join a Medicare Advantage (MA) plan. About a third of Medicare enrollees choose an MA plan. In some states like California, they are readily available. However, in other states, there are few MA options.
One of the other most popular options is a Medicare supplement plan. These are sometimes known as Medigap plans, and we’ll use these two terms interchangeably. Approximately 15 million Americans currently have a Medigap plan that offers complete freedom to see any medical professional who accepts Medicare.
We’ll focus on several important facts about Medigap insurance that can help you get the best coverage for the best cost. In fact, sharing information can help you save a significant amount of money. That’s always good.
But saving money today is not the only reason to read the tips shared here. They can also save you headaches in the future. That’s because when you choose a Medigap plan option now, it may be an irrevocable choice that limits your future.
TIP #1: Don’t overpay. Why pay double for the same plan?
Medigap insurance prices vary significantly. Rates are generally set by county and it is common to find one company charging twice as much as another.
According to the 2020 Medicare Insurance Price Index from the American Association of Medicare Supplement Insurance, a 65-year-old Chicago woman could pay as little as $92 a month or as much as $234 a month for identical coverage. The price index reports the lowest and highest prices for Medigap Plan G for about 100 cities across the country.
No company always offered the lowest cost. And no company was consistently the most expensive according to the price index. In fact, in some cases, the company that had the lowest cost for men did not have the lowest cost for women. Frustrating? Not really, it just means asking the ‘right’ questions.
TIP #2: Look for rate stability
Insurers can and do raise rates. A policy that looks cheap today may be expensive tomorrow.
Some insurance companies are new to the Medigap business and may not have real experience to base their rates on. Others may offer lower premiums as a way to get more initial sales.
This sometimes causes above-average rate increases in future years. For that reason, you’ll want to compare both current costs and price stability.
TIP #3: Discounts can add up
Today, many Medigap insurance companies offer discounts for spouses and/or families. Not everyone does. However, discounts can range from five to 14 percent. The savings can add up to hundreds of dollars a year. And since he’s likely to live another 10 or 20 years, he’s talking about real money, so don’t let this slide.
TIP #4: Take advantage of Savings and Points
Some insurers will give you a discount when you set up automatic payments. Some will offer discounts when you pay annually. Some will allow you to charge payments to a credit card. You can see where we’re headed.
Let’s say your monthly Medicare supplement insurance premium is $300. Starting at age 65 and paying for 20 years, that works out to $72,000 in premiums. If you’re married, double that. A credit card that offers two percent cash back means you’ll save nearly $3,000. If your credit card awards airline points, you’ve earned some nice credits.
Tip #5: The easy way to compare prices
You sometimes hear the saying that if you act like your own lawyer or doctor, then you have a sucker for a client. Choosing the right Medicare plan can be confusing.
There’s nothing wrong with calling any of the dozens of 800 numbers that compete for your attention and business. But often they may only represent one company or have a particular preference.
For that reason, it’s often worth comparing your options and recommendations by finding a local Medicare insurance agent. Some will only focus on the Medicare Supplement, but today many offer comprehensive options that include Medicare Advantage.
It’s nice to have an impartial agent in your pocket when you have questions. A national directory of Medicare insurance agents lists about 1,000 specialists by zip code. Access is available for free and, perhaps best of all, completely private. You can view your information without having to enter any information.
A great resource for the latest information is the website of the American Association of Medicare Supplement Insurance. That’s where you’ll find the 2020 Medicare Insurance Price Index and access to the agent directory.
