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Supplemental Insurance to Medicare

Supplemental insurance to Medicare comes in many forms, but it ultimately has one purpose, and that is to ensure that more seniors can afford their medical coverage. Since Original Medicare can only cover 80 percent of an approved cost, finding the best supplemental coverage to Medicare closes the gaps so seniors don't have to pay the difference out-of-pocket. Seniors typically have two options for bridging the gaps in their medical coverage. Medicare Advantage plan like HMOs or PPOs replace their original coverage by offering a single plan within a private network. Under these plans you must see medical providers who are members of the network, and in many cases you must get a referral to see a specialist.

Supplemental insurance to Medicare is simply a private policy that works in conjunction with your original insurance. All medical providers that accept Medicare must therefore also accept your supplemental policy. Since supplemental insurance "fills the gaps" in your original insurance, it is often called Medigap. Seniors can choose from 10 standardized Medigap policies, labeled Plan A through Plan N. Since each plan is standardized, Medigap providers can charge different rates for the same lettered plan, but the benefits must be identical. So even if Plan C at one company is more expensive than Plan C at another, it cannot cover more expenses or offer more services.

How Medigap Companies Determine Rates

There are many reasons that rates can differ among Medigap insurance companies, even when plans with identical coverage. A company's size and reputation might play a role, and also the company's customer service policy. If you are more likely to get the answers you need when you need them, you might consider paying a higher premium for that service. A big reason rates for supplemental insurance to Medicare can vary is the age-rate policy of each company. Supplemental insurance providers can choose one of three ways to determine a senior's rate depending on their age. The first method, community-rated, charges the same premium to everyone who has the same plan, regardless of their age. The second, or the issue-age-rated, uses the age you are when you purchase the policy to determine your rate. The final method, or the attained-age-rated, determines the premium that seniors pay on their age, so every year their policy goes up slightly with inflation.

Understanding how providers of supplemental insurance to Medicare determine rates can make the idea of varying premiums for identical policies easier to understand. A few other factors can also determine your rate. These can include how soon you purchase your policy after enrolling in Medicare, whether or not you are changing Medigap policies and what kind of policy you purchase. If you enroll in supplemental insurance to Medicare within six months of purchasing both Parts A and B, you do not need to undergo medical underwriting.

If you miss this six month window, called Open Enrollment, your premium for supplemental insurance to Medicare can depend on many more factors, including your medical history, preexisting conditions, lifestyle and even your gender. For example, smokers often have higher premiums than nonsmokers, and men have higher premiums on average than women. Some companies even charge varying rates to seniors in different zip codes. Investigating companies in your area can help you find one that offers the greatest value for you.

Choosing the Right Supplemental Policy

A big part of your research into supplemental insurance to Medicare should include thorough research into each plan. All companies must offer Medigap Plan A, the most basic policy. Plan A includes coinsurance for Medicare Parts A and B, as well as the first three pints of blood needed in a given year. This is a good policy for people who have a strong nest egg but prefer a low monthly premium. Since the supplemental insurance offered with Plan A does not cover many expenses that other policies do, people who choose this plan should have the savings to shoulder out-of-pocket costs in case of emergency.

The most comprehensive policy is Plan F, which covers all the benefits of Plan A plus deductible coverage, hospice care, nursing facility care coinsurance, Part B excess charges and foreign travel emergency coverage. Plan F has the highest average monthly premiums, but the comprehensive coverage makes it one of the most popular policies of all supplemental insurance to Medicare. If you want the comprehensive coverage of Plan F with a lower premium,you can also consider a high deductible version, which offers all the coverage of the original policy after a $2,000 annual deductible. This policy, like Plan A, is a good option for people who have a strong level of savings. Researching all options for supplemental insurance to Medicare before you make a decision can help you make sure you select the right one for you.


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