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April 19, 2016

Supplemental Medicare

Supplemental Medicare

Basically, there are twelve (12) standard Supplemental Medicare insurance plans which are also sometimes referred to as Medigap pans. A letter (A to L) is used to designate a specific standard plan, with Plan A being the least costly and having the fewest variants. On the other hand, plan J has the biggest number and undoubtedly the most expensive.

Not all 12 plan types are available in all the American states. And some of the states such as Wisconsin, Minnesota, and Massachusetts do not follow the standard naming convention used by the majority, and have their own. The basic features and general classifications, however, are similar, albeit with different names.

The benefits are the same for various plans within a given Medicare supplement category, although insurance agents may claim otherwise in their sales pitches. But the premiums may vary substantially, which can very well be the deciding factor for most buyers. But when is the right time to buy the policy?

Generally, the best time to acquire a supplemental Medicare insurance coverage is within the first semester of your enrollment in Part B of Medicare. This is because the first six months is the only period when insurance companies are required to accept applicants regardless of their preexisting medical conditions.

With regards to premiums for Medigap plans, there are three basic things you need to know:

1. Every New Year, adjustments are made to Medicare benefits to keep in step with inflation. Since supplemental plan benefits are linked to those of Medicare’s, the premiums may also change on an annual basis.

2. A higher premium for the same type of plan does not offer any added value. After all, the benefits (except for some variations, maybe) and the filing requirements for claims are the same.

3. In setting up Medigap policy premiums, three basic methods are used.

• Attained Age – Specifically for individuals who just reached 65 years of age, this turns out the lowest premiums initially. Premiums often increase as a person grows older which could happen yearly, or after every 3 to 5 years. These are on top of the price increases resulting from Medicare’s inflationary benefit adjustments. The highest premium levels come usually
when the beneficiaries are already past their 80’s – the particular time of their life when they can least afford to pay for premiums.

• Community-Rated – Pricing is dependent on the geographic area where all eligible residents are required to pay the same amount of premium without considering the age.

• Issue Age – Premiums do not increase with the advancement in age as they are based on the price at the time of acquisition. But just like policies computed based on the attained age, these policies will bear price changes as a result of Medicare adjustments due to inflationary factors.

After selecting the appropriate plan (A to L), the best option is to complement it with the lowest-priced community-rated or issue age supplemental Medicare policy. Although these policies may be a bit pricier in the beginning, they will not increase much every year as you grow older.

An article by Nicholas Jarden

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