Costs of Medigap Policies
The cost of Medigap policies can vary widely. There can be big differences
in premiums that insurance companies charge for exactly the same coverage. As
you shop for a Medigap policy, be sure you are comparing the same Medigap policy
(for example, compare a Plan A from one company with Plan A from another
company).
Each insurance company sets its own premiums. It is important to ask how an
insurance company prices Medigap policies. How they set the price affects how
much you pay now and in the future. Medigap policies can be priced or "rated" in
three ways.
| Community-rated (also called No-Age-Rated) | The same monthly premium is charged
to everyone who has the Medigap policy, regardless of age. | Premiums are the same no matter how
old you are. Premiums may go up because of inflation and other factors. |
Mr. Smith is 65. He buys a Medigap
policy and pays a $165 monthly premium.
Mrs. Perez is 72. She buys the same Medigap policy as Mr. Smith. She also
pays a $165 monthly premium because with this type of policy, everyone pays the
same price, regardless of age.
|
| Issue-Age-Rated Policies |
The premium is based on the age you are when you buy (are "issued") the
Medigap policy.
|
Premiums are lower for younger buyers and won’t change as you get older.
Premiums may go up because of inflation and other factors.
|
Mr. Han is 65. He buys a Medigap policy and pays a $145 monthly premium.
Mrs. Wright is 72. She buys the same Medigap policy as Mr. Han. Since she is
older at the time she buys it, her monthly premium is $175.
|
|
Attained-Age-Rated Policies
|
The premium is based on your current age (the age you have "attained") so
your premium goes up as you get older.
|
Premiums are low for younger buyers, but go up as you get older and can
eventually become the most expensive. Premiums may also go up because of
inflation and other factors.
|
Mrs. Anderson is age 65. She pays a $120 monthly premium. Her premium will
go up every year.
- At age 66, her premium goes up to
$126
- At age 67, her premium goes up to
$132
- At age 72, her premium goes up to
$165
Mr. Dodd is age 72. He buys the same Medigap policy as Mrs. Anderson. He
pays a $165 monthly premium. His premium is higher than Mrs. Anderson’s because
it is based on his current age. Mr. Dodd’s premium will go up every year.
- At age 73, his premium goes up to
$171
- At age 74, his premium goes up to
$177
|
-
By Discounts: Insurance
companies may offer discounts to females, non-smokers, and/or married people.
-
By Medical Underwriting: The cost of your Medigap policy may also depend on whether the insurance company does any of the following:
- Offers discounts (such as discounts for women, non-smokers, or people who are married; discounts for paying yearly; discounts for paying your premiums using electronic funds transfer; or discounts for multiple policies).
- Uses medical underwriting, or applies a different premium when you don’t have a guaranteed issue right, or aren’t in a Medigap open enrollment period.
- Sells Medicare SELECT policies that may require you to use certain providers. If you buy this type of Medigap policy, your premium may be less.
- Offers a "high-deductible option" for Medigap Plan F. If you buy Medigap Plan F with a high-deductible option, you must pay the first $2,070 (in 2012) of deductibles, copayments, and coinsurance not paid by Medicare before the Medigap policy pays anything. You must also pay a separate deductible ($250 per year) for foreign travel emergency services.
- If you bought your Medigap Plan J before January 1, 2006, and it still covers prescription drugs, you would also pay a separate deductible ($250 per year) for prescription drugs covered by the Medigap policy.
-
If you buy a high-deductible
option: Insurance companies may offer a "high-deductible option" on Medigap
Plan F. If you choose this option, you must pay the first $2,070 (the
deductible in 2012) in Medigap-covered costs before the Medigap policy pays
anything. This amount can change each year. High-deductible policies often have
lower premiums, but if you need a lot of Medicare-covered health care services,
supplies, and equipment, your out-of-pocket costs will be higher, and you may
not be able to change to another Medigap policy. In addition to the $2,070 (in
2012) deductible that you must pay for the high-deductible option for Plan F,
you must also pay deductibles for
- Foreign travel emergency ($250 per year for Plan F).
-
If you buy a Medicare SELECT
policy: Medicare SELECT is a type of Medigap policy sold by some insurance
companies in some states. If you buy a Medicare SELECT policy, you are buying
one of the 10 standardized Medigap Plans A through N. Medicare SELECT policies
require you to use specific hospitals and, in some cases, specific doctors to
get full insurance benefits (except in an emergency). Generally, Medicare SELECT
policies cost less than other Medigap policies. If you have a Medicare SELECT
policy and you don’t use a Medicare SELECT hospital or doctor for non-emergency
services, your costs will be higher. You will have to pay some or all of what
Medicare doesn’t pay. Medicare will pay its share of approved charges no matter
which hospital or doctor you choose.