Each insurance company decides how it’ll set the price, or premium, for its Medigap policies. It’s important to ask how an insurance company prices its policies. The way they set the price affects how much you pay now and in the future. Medigap policies can be priced or “rated” in 3 ways:
Community- rated (also called “no-age rated”)
Issue Age-rated (also called “entry -age-rated”)
Community-rated : Generally the same premium is charged to everyone who has the Medigap policy, regardless of age or gender. Your premium isn’t based on your age. Premiums may go up because of inflation and other factors but not because of your age.
Issue-Age-rated: The premium is based on the age you are when you buy (are issued) the Medigap policy. Premium are lower for people who buy at a younger age and won’t change as you get older. Premiums may go up because of inflation and other factors but not because of your age.
Attained- Age- rated: The premium is based on your current age (the age you’ve “attained”) , so your premium goes up as you get older. Premiums are low for younger buyers but go up as you get older. They may be the least expensive at first, but they can eventually become the most expensive. Premiums may also go up because of inflation and other factors.
In the long run you will save the most money with Community-rated or Issue-Age-rated plans. Be sure to ask your agent or the carrier how they price their plans. An informed consumer leads to smart decisions especially when purchasing a Medigap policy.
When’s the best time to buy a Medigap policy? This period lasts for 6 months and begins on the first day of the month in which you’re both 65 or older and enrolled in Medicare Part B. Some states have additional Open Enrollment Periods including those for people under 65. During this period an insurance company can’t use medical underwriting. This means the insurance company can’t do any of these because of your health problems:
Refuse to sell you a plan.
Charge you more for a Medigap policy than they charge someone with no health problems.
Make you wait for coverage to start.
While the insurance company can’t make you wait for coverage to start, it may be able to make you wait for coverage related to a pre-existing condition. A pre-existing condition is a health problem you have before the date a new insurance policy starts. In some cases , the Medigap insurance company can refuse to cover your out-of-pocket costs for these pre-existing health problems for up to 6 months. This is called a “pre-existing condition waiting period”. After 6 months, the Medigap policy will cover the pre-existing condition. During the waiting period Original Medicare will cover the pre-existing conditions.
What’s a Medigap policy? A Medigap policy is private health insurance that helps supplement Original Medicare. This means it helps pay some of the health care costs that Original Medicare doesn’t cover (like copayments, coinsurance, and deductibles) These are “gaps” in Medicare coverage.
The different parts of Medicare: Medicare Part A (Hospital Insurance) helps cover Inpatient care in hospitals, Skilled nursing facility, hospice, and home health care.
Medicare Part B (Medical Insurance) helps cover-Services from doctors and other health care providers, hospital outpatient, durable medical equipment, and home health care. Preventive services to help maintain your health and to keep certain illnesses from getting worse.
Medicare Part C (Medicare Advantage) Includes all benefits and services covered under Part A & Part B, Run by Medicare approved private insurance companies, Usually includes Medicare prescription drug coverage (Part D) as part of the plan, May include extra benefits and services for an extra cost.
Medicare Part D (Medicare Prescription Drug Coverage), Helps cover the cost of outpatient prescription drugs, Run by Medicare-approved private insurance companies, May help lower your prescription drug costs and help protect against higher cost in the future
What’s Medicare? Medicare is health insurance for people 65 or older
People under 65 with certain disabilities
People of any age with End Stage Renal Disease (permanent kidney failure) requiring dialysis or a kidney transplant
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