_AZ_Initial.png){kind=small}
_AZ_Initial.png){kind=small}
WHAT DO I DO WHEN MY MEDIGAP PLAN HAS A RATE INCREASE?
Updated: Sep 12
YOU WERE JUST INFORMED THAT YOUR MEDICARE SUPPLEMENT/MEDIGAP PLAN IS INCREASING YOUR PREMIUM
Insurance premiums increase and rarely decrease. This fact can be frustrating and concerning. However, remember you have options. In this article, we will explore these options, assess their practicality, and outline steps you can take to manage your healthcare costs in retirement.
UNDERSTANDING MEDICARE INSURANCE
Health insurance helps manage risk. You pay an insurance company to help protect against catastrophic losses. When it comes to retirement healthcare, individuals face crucial decisions upon leaving Employer Group Health Plans. The options available include:
Enrolling in Original Medicare
Pairing Original Medicare with a Medigap plan
Choosing a Medicare Advantage plan
Exploring ACA/Obamacare options
Considering a Ministry "Share" plan
ORIGINAL MEDICARE
Original Medicare covers 80% of approved healthcare services but does not cover routine dental, vision, or hearing care. This program allows you to visit any doctor or hospital that accepts Medicare in the U.S. However, the 20% you are responsible for can add up, especially with serious health issues. For example, surgeries or treatments can drive costs above $100,000, prompting most beneficiaries to purchase a Medigap policy to reduce their financial exposure.
MEDIGAP OR MEDICARE SUPPLEMENT PLANS
A variety of Medicare Supplement plans exist—eleven to be exact. While many are similar, they vary in coverage levels. Medigap Plan F was once the most popular, but has now become the third most chosen plan since the changes that took effect on January 1, 2020. Those born before this date can purchase Plan F. Today, Plan G, Plan N, and the High Deductible Plan G are among the most favored options.
All three cover the items Medicare doesn't after you meet the annual Medicare Part B deductible, which is set at $257. After you pay the deductible, all your healthcare costs in the U.S. will be covered.
MEDICARE ADVANTAGE PLANS
Medicare Advantage, also known as Medicare Part C, is another option available through private insurance companies rather than the government. Two primary types are HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) plans. HMOs generally provide lower out-of-pocket maximums, while PPOs offer more flexibility but at a higher cost.
IMPORTANT FACTS ABOUT MEDICARE ADVANTAGE
Here are several factors to consider about Medicare Advantage plans:
High co-pays and co-insurance apply.
Coverage usually only extends within your resident county.
Skilled nursing care is limited, typically to 20 days.
Emergency and urgent care are available outside your network.
Expect costs of approximately $375 per day for a hospital stay of up to seven days.
Chemotherapy and radiation typically carry a 20% coinsurance.
Plans often require several second opinions for covered procedures.
Many renowned hospitals, such as the Mayo Clinic, may not be covered by Medicare Advantage.
ACA/OBAMACARE PLANS
You can access ACA/Obamacare plans through state marketplaces. While they can be an option for those considering Medicare, they often come with high premiums and unfavorable deductibles.
MINISTRY SHARE PLANS
Various Share Ministries offer plans for members aged 65 and older. However, most people prefer more comprehensive coverage from Original Medicare or Medicare Advantage.
FACTORS CONTRIBUTING TO MEDIGAP RATE INCREASES
Several factors drive Medigap rate increases. Insurers must account for overall healthcare costs, inflation, and even market forces. By law, they cannot raise premiums based on an individual's claims, but can increase rates for everyone under the same plan across the state.
ADDITIONAL FACTORS INFLUENCING MEDIGAP PREMIUMS
Many beneficiaries don't realize some companies offer declining discounts. Initially, when you enroll in a Medigap plan at age 65, you may receive a significant discount. However, this discount typically decreases by 1-2% annually. By year ten, many find their rates have increased without these discounts.
Additionally, many couples fail to explore different rates when one spouse becomes eligible for Medicare. Compare options at least every two years.
KEEPING YOUR MEDIGAP PREMIUMS LOW
Your premium serves as the baseline for potential future rate increases. To mitigate these increases, compare rates every 2-3 years with an independent broker. About 80% of beneficiaries can pass underwriting, making it easier to switch plans if needed.
DO YOU NEED TO CHOOSE A SPECIFIC INSURANCE COMPANY?
It may not matter as much as you think. Here are some key considerations:
All carriers must pay their share for any claim that Medicare covers.
Choose the lowest-priced company to save money over time.
If a Medigap company were to go out of business, Medicare would intervene, allowing you six months to find a new plan without answering any medical questions.
Limited gym membership options might affect your choice of company.
EVALUATING MEDIGAP INSURANCE COMPANIES
When comparing companies, consider:
Their longevity in the market
Historical rate increases
Available discounts
Loss ratios
Whether they have declining discounts like AARP and CIGNA
MY TOP TEN MEDIGAP COMPANIES TO CONSIDER
Medico/Wellabe
Mutual of Omaha
Cigna
ACE Medicare Supplement
Medical Mutual Protect (Medical Mutual Of Ohio)
Humana
AARP/UHC
Anthem
Aetna
10. BCBS
In summary, it’s essential to understand your options when your Medigap plan increases in rate. Stay informed about your plans and always be willing to shop around. This proactive approach can help you save significantly on your healthcare costs.
---
For additional information, visit Medicare.gov.
