Medicare supplemental insurance supplements Medicare insurance. It takes up the slack, so to speak. It is actually a policy sold by private insurance companies to Medicare recipients. Because these plans fill in the gap in coverage of health care costs, they are referred to as Medigap policies.
Medicare is a federally funded insurance program for persons age sixty-five and older. It is also available to persons with certain disabilities. To qualify, one must be an American citizen. Legal residents living in the United States for five consecutive years may also qualify if other criteria are met.
How much does Medicare cost? There are several factors involved that determines the cost of the Medicare supplement insurance. The most important consideration is the specific type of plan that you would like to sign up for. This is because the difference in coverage significantly affects the final premium that you will need to pay on a monthly basis.
Other factors that impact price include the pricing method used by the offering provider, the state where you are located, your age when applying, as well as other medical and personal risk factors that can add more to your premium. To understand the factors that influence the cost of Medicare supplement insurance, sometimes known as Medigap, let us look at each factor in more detail.
You are probably already familiar with the way Medicare supplemental plans are structured. As of 2019, there are essentially 10 different plans to choose from. The coverage for each plan is closely regulated by federal laws so that all Medigap Plan A offers to contain exactly the same scope. The simplest plan is Plan A consisting of the most basic coverage items while Plan F offers more comprehensive plans. There are also special plans beyond Plan F and up to Plan N which contains deductibles according to percentages.
Naturally, the more extensive coverage offered by a specific plan, the higher the premium price will be. For this reason, it’s easy to see that Plan F offers will significantly cost more than Plan A.
The Pricing of the Plans
After the coverage, the pricing method that companies use to evaluate their plans is the biggest determinant for the cost of Medicare supplemental insurance. Attained-age rating is a pricing method where the premium you pay starts low but gradually increases as your age increases. In Issue-Age rating, the premium price is based on your age when the policy was first issued and will gradually increase but only due to inflation but not your advancing age. In Community-age rating, the cost of the policy will be the same regardless of age and normally does not vary yearly. This is often a blanket pricing strategy that companies use to sell policies at a discount.
Demographic factors can also significantly affect the cost of Medicare supplement insurance. We already talked about how your age affects the Medigap cost that you will pay. Other factors that influence pricing include the proposed effective date of the policy, your gender, and even your lifestyle such as your tobacco habits. You can check out more information at www.lamedicare.com .
For the effective date, this is critical because state-approved price increases can drastically increase the premium price without prior notice. That means if a rate increase took effect shortly before your plan commenced, then you pay the higher rate instead of the previous lower rate. Gender is also a factor with males typically paying higher rates than females. This can add as much as $15-$20. Smoking can also increase your premium price due to the inherent risks that accompany smokers.
Take note of these factors when evaluating the cost of Medicare supplement insurance so you can find ways to get the lowest price possible for a plan that you prefer. During these tough times, a few dollars of saving on your Medigap cost can go a long way towards helping you improve your way of living on a daily basis.