Thursday, November 2, 2017

How I Chose my Medigap Policy

Recently I received a letter from Highmark Blue Cross Blue Shield telling my that they were canceling the Medicare Supplement (Medigap) Plan I had been using. The letter informed me that I needed to acquire a new plan, or suffer permanent negative consequences.
So, I was faced with the unenviable prospect of having to find a new plan for myself and my wife. Here is how I went about choosing. 
First I outlined the steps I needed to take:
-        Step 1: Choose between staying with Original Medicare or switching to a  Medicare Advantage Plan.  
-        Step 2: Once I choose to stay with Original Medicare, find out what Medigap plans are available to me
-        Step 3: Chooe the best plan for me from amongst the array of available Medigap plans.
-        Step 4: Determine which insurance companies offer the best prices on the  Medigap plan I have chosen.
-        Step 5: Fill out and send in the application forms for the plan I chose.
Step1: Choosing between Original Medicare and Medicare Advantage
The first step was to decide wheter I wanted to get my basic Medicare through Original Medicare or through a Medicare Advanatge Plan. Each has its pros and cons. I decided to stay with Original Medicare for reasons that I have discussed in another article: Why I chose Original Medicare over a Medicare Advantage Plan
If you choose to go with Original Medicare (Parts A and B) you are going to run into “gaps” such as  deductibles and co-payments. A Medigap policy is private health insurance that helps supplement your Original Medicare coverage and fill some of those gaps. (Note that you don’t need a Medigap Supplement policy if you have gone the Medicare Advantage plan route. You only need a Medigap policy if you choose Original Medicare.)
The extent to which a Medigap policy will fill the gaps depends upon the policy you choose. Most consumers get to chose from a number of policies that are identified by letters A through N. Policies with the same letter offer the same cstandarized overage. A Medigap Plan G policy from one insurance company  will offer the same benefits as a Medigap Plan G policy from any other company. The policies do differ – but ony by pricing.
Note that Medigap policies typically do NOT cover many potentially significant health related expenses. These uncovered costs include long-term care, vision,  dental care, hearing aids, and eyeglasses. You will need other insurance if you want to cover those risks. You will also want to consider obtaining a Medicare Part D policy to provide coverage for prescription drugs. 
Step 2: Finding Which Medigap Plans are Available to you.
Medicare makes it relatively easy to find out which Medigap plans are being offered in your geographic area. Visit the Medigap Policy Search page on the Medicare website, here. Put in your zip code to be taken to a page where you can see a list of the standardized policies being offered in your zip code along with a range of prices.  
The listing of policy choices and companies can be pretty overwhelming. You can narrow down the choices by deciding which of the standardized plans you want to consider. When you know which plan you want click on “View Companies that offer Medigap Policy ___” for the plan of your choice. You will be taken to a list of the insurance companies offer ng that plan in your region. Unfortunately, the Medicare website does not list specific prices for the plans offered by the various companies.
Step 3: Choosing a Standardized Plan

Choosing between the numbered plans offered in your zip code can be  difficult. Each of the separately lettered plans offers a standardized list of benefits but to choose between the lettered plans, you need look at the benefits they offer and try to predict which benefits you will need in the future.

You also need to consider price (rate) stability – how much will the costs rise as you age. Plans can use 3 different pricing structures:
1.              Community-rated (also called “no-age-rated”, and “area rated”) – the same premium is charged to everyone in your area regardless of age;
2.              Issue-age-rated (also called “entry-age-rated”) – premiums are based on the age at which you purchased the policy.
3.              Attained-age-rated  - the premium is lower when you are younger and rises as you age.
More information on these pricing structures (ratings) is available in the Medicare brochure Choosing a Medigap Policy
Standard Plan F is the most comprehensive and is the most popular choice. 66% of Medigap purchasers choose Plan F according to (See, Medigap Plan F the most costly, yet popular). If you need help choosing between plans you can call your State Health Insurance Assistance Program (SHIP). These programs are available in every state. The telephone numbers are available here. The telephone number for the Pennsylvania program is 1-800-783-7067. This assistance is free and confidential. The state SHIP may refer you to a local branch of its operations.
I wanted comprehensive coverage so I considered Plans C, G and F. I ended up deciding that I wanted a community (area) rated Plan F. It has the broadest coverage and I felt that the added cost was worth it given my health and circumstances.
Plan G also has broad benefits although (unlike Plans C and F) it does not cover the Part B deductible. Plan C has broad coverage does not cover Medicare “excess charges” that some doctors legally charge in excess of the Medicare-approved amount. While my current doctors accept the Medicare approved amount as payment in full I’m not too sure about the future. (Note that a Medigap Plan C policy is very different from Medicare Part C – Medicare Advantage Plans).   
Step 4 Getting Prices - Contacting the Insurance Companies
The next step can be laborious. But it can save you a lot of money. The Medicare website does not list prices for specific Medigap policies. This means you need to contact the insurance companies that are offering the Plan you want and see what they are charging for it in your area.
As noted above you can find a list of insurance companies offering plans in your area on the Medicare website. Knowing the plan you want (and the rating structure you prefer) may help you narrow the field of competitors you need to consider. For example, you may decide that you want the most comprehensive coverage available by obtaining a Plan F Medicap policy. You can then narrow your calls to only those companies that offer Plan F policies in your locality. If you limit your choice to companies which offer a community rated Plan F, you can narrow the list of candidates even more.
You really should take the time to compare prices. The plans are standardized but the prices are not. There can be big differences in the prices offered by different companies for  the same standardized plan.
The Medicare website advises consumers to call the insurance companies to compare prices. That is certainly a reasonable way to proceed especially if only a few companies are offering plans that meet your requirements.
On the other hand, there may be a dozen or more companies offering the Plan you desire. Here is a possible work-around that might allow you to compare prices without calling each company separately. Your State Health Insurance Program (SHIP) or its local program may have a list of the prices being offered on policies in your region. Contact them for pricing information.  The SHIP telephone numbers are available here
Step 5: Signing Up
Now that you have chosen the plan and company you want, you need to follow through and sign up. Call the insurance company to find out what you need to do. You may be able to sign up online, or have a company representative assist you, or get the application forms by mail. Fortunately, filling out the paperwork is fairly simple and straightforward.
Don’t wait too long. If you miss your open enrollment perior or guaranteed renewal period, the policy may cost you substantially more, year after year.
A Final Word
Although Medigap polices are standardized, getting a policy is still pretty complicated. Don’t be shy about seeking help from the experts. Call your State Health Insurance program. You also can seek help from a reputable local insurance broker who sells Medigap policies. If you do, you may want to choose a broker who can offer policies from many companies rather than a captive agent whose choices may be limited. 
I’m not sure that I made the absolutely best possible choice in Medigap polcies. But I think I made a good choice. I hope this article will help you make a good choice too.
Other Resources:
Medicare has a helpful free publication on Choosing a Medigap Policy

No comments: