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Medicare Supplement Insurance Plan

A Medicare supplement insurance plan might be one of the most beneficial policies you can purchase for peace of mind regarding both your health and your pocketbook. If you have enrolled in Medicare or plan to once you retire, you might not be receiving all the coverage you need from original Medicare alone. Since Medicare only covers 80 percent of services offered, you could face coinsurance, deductibles, excess charges and other fees related to your health care. A Medicare supplement insurance plan "fills the gaps" in your original coverage to give you a complete and more affordable insurance plan.

Advantages of Supplement Insurance

A Medicare supplement insurance plan, also called Medigap, gives you additional coverage to ensure that your health needs are covered no matter what medical emergencies might arise, all without forcing you to dip into your retirement account. One benefit of Medigap over other supplement policies like Medicare Advantage plans, which include HMOs and PPOs, is the ability to choose your own doctors and make independent decisions regarding your health care. Unlike an HMO, your supplement insurance provider can never mandate that you get a referral before seeing a specialist. Moreover, all companies that accept Medicare must accept your Medicare supplement insurance plan.

Another advantage of Medigap is the variety of plans available to fit every budget and health need. With 10 Medigap plans to choose from, labeled Plan A through Plan N, you can opt for basic Medicare insurance supplement coverage at a low monthly premium or a comprehensive plan with higher fees and more services. The most popular policy, Plan F, covers your deductibles, excess charges and foreign travel insurance. All Medigap plans are standardized, so you don't have to worry about variety within the policies themselves. That is to say, even if you see a particular policy at a higher rate, it legally can't offer any more benefits than a less expensive option.

Determine Your Medigap Rate

One important factor that determines your premium for your Medicare supplement insurance plan is your age. Your Medigap provider can choose one of three pricing methods to deal with age. The first is to charge everyone within a particular policy the same rate. Under this method, you will pay the same monthly premium for your policy at age 75 as you did at age 65, adjusted for inflation. Under the second method, called the issue-age-rated method, a provider charges higher rates to older applicants, but applicants get to keep their rate for life. So if you buy your policy at age 65, you will keep your rate adjusted for inflation as long as you keep your policy. If you had bought the policy at age 70, your rate would have been higher, but you would have kept that rate even as you aged. In the final pricing structure, called the attained-age-rated method, a company charges a low rate for young applicants and raises the rate slightly as they get older while pacing with inflation. Like the issue-age-related method, older applicants are charged higher premiums.

Another significant factor that can affect your rate when you enroll in a Medicare supplement insurance plan is your timing. To secure the lowest rates and avoid medical underwriting, you should purchase your policy during Open Enrollment, a period which extends for six months after you first enroll in Medicare Parts A and B. During Open Enrollment you must be allowed to purchase the policy of your choice. A company also cannot legally charge you more for your policy because of a preexisting condition.

If you must apply through medical underwriting, either because you let your Open Enrollment period expire or because you want to switch your policy, you might be subject to higher rates because of your medical history. You can avoid medical underwriting by switching your policy when you have guaranteed issue rights. Your state insurance office can fully explain guaranteed issue and other rights involving the purchase of a Medicare supplement insurance plan. Unfortunately, there are a few factors that can affect your supplement insurance rate that you might not be able to control. One is your gender; women typically enjoy lower rates for a Medicare supplement insurance plan than men. The second is your zip code. Companies offering supplement coverage can charge higher rates for the same policy to different zip codes within their state.

No matter what kind of Medicare supplement insurance plan you choose, be sure to research all your options for supplement coverage, including local companies, their rates and policies that are available. Be aware of your Open Enrollment period and your guaranteed issue rights for the lowest coverage based on your unique health concerns. Researching policies online is one of the best ways to arm yourself with all the knowledge you need before you buy a Medigap policy.


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