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When you turn 65 and become eligible for Medicare, you’ll need to make another important decision.
You can choose to enroll in a Medicare Advantage (MA) plan. About one-third of Medicare enrollees choose an MA plan. In some states, such as California, they are readily available. However, there are some MA options in other states.
One of the other more popular options is a Medicare Supplement plan. These are sometimes referred to as Medigap plans and we will use the two terms interchangeably. About 15 million Americans currently have a Medigap plan that provides 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 at the best cost. In fact, the information shared can help you save significant money. It’s always good.
But saving money today isn’t the only reason to read the tips shared here. They may even save you heartache in the future. That’s because when you choose a Medigap plan now, it can be an irreversible choice that limits your future.
Tip #1: Don’t overpay. Why pay twice for the same plan?
Medigap insurance prices vary greatly. Rates are generally established by the county and it is common for one company to charge twice as much as another.
According to the 2020 Medicare Insurance Price Index from the American Association for Medicare Supplement Insurance, a 65-year-old woman in Chicago could pay as much as $92 per month or as much as $234 monthly for the same coverage. The price index reports the lowest and highest prices for Medigap Plan G for some 100 cities nationwide.
No one company always offered the lowest cost. And, according to the value index, no company has consistently been the most expensive. In fact, in some cases, the company with 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: Shop around 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 actual experience on which to base their rates. Others may offer a low premium as a way of getting the initial sale.
This sometimes leads to above-average rate increases in future years. For this reason, you’ll want to compare both current costs as well as price stability.
Tip #3: Discounts Can Add Up
Today, many Medigap insurance carriers offer spousal and/or household discounts. Not everyone does. However, the discount can range from five to 14 percent. The savings can add up to hundreds of dollars a year. And since you’re likely to live another 10 or 20 years, you’re talking about real money – so don’t ignore it.
Tip #4: Take Advantage of the Savings and Points
Some insurers will give you a discount when you set up automatic payments. Some offer discounts when you pay annually. Some will let you pay with a credit card. You can see the direction we are going.
Let’s say your monthly Medicare Supplement insurance premium is $300. Starting at age 65 and paying for 20 years that equals $72,000 in premiums. Doubly this if you are married. A credit card that offers a 2 percent discount means you’ll save about $3,000. If your credit card offers airline points, you’ve earned some nice credits.
Tip #5: The Easy Way to Comparison Shop
You may have sometimes heard the saying that if you act as your own lawyer or doctor you have a fool for a client. Choosing the right Medicare plan can be confusing.
There’s nothing wrong with calling any of the dozens of 800-numbers competing for your attention and business. But, often they may only represent one company or may have a particular preference.
For this reason, it usually pays to do a local search and compare your picks and recommendations. Medicare Insurance Agent, Some will focus only on Medicare Supplements, but today many offer a wider range of options, including Medicare Advantage.
It’s good to have an unbiased agent in your pocket for when you have questions. A national directory of Medicare insurance agents lists approximately 1,000 specialists by zip code. Admission is free and, perhaps best of all, it is completely private. You get to see their information without entering any information.
A great resource for the latest information is the website of the American Association for Medicare Supplement Insurance. that’s where you’ll find 2020 Medicare Insurance Price Index and access to the well agent directory.
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