From Jean: I know you’re a big fan of Supplements, but mine keeps going up at least $15 to $20 every year. With my Part D prescription plan, I’m over $275 per month. Is there anything I can do?
You do have options and I’ll get more specific in a moment.
We’re counseling our own clients who are dealing with the same issue, most of whom are in their mid 80’s or older. You see, once you turn 68, most Supplement companies raise rates every year on the policy’s anniversary date. It’s minimal from age 68 to 80. But after that, they become significant. $15 to $20 increases are common and can add up quick.
But that isn’t the only rate hike people on Supplements will see. There’s another one we call “across the board.” Any Supplement company can make a request for a premium increase to The Pennsylvania Department of Insurance. If they can show that they’re in danger of not making a profit due to claims paid versus what they collected in premiums, they will almost assuredly be granted permission to do so. I got an email from a gentleman recently who received a letter informing him his rates were going up 25%.
My agency only does business with companies who have a history of keeping “across the board” increases to a minimum. The two Supplement companies we have the majority of our clients with, have never had a double-digit rate hike since I started doing business with them. In fact, our favorite company for those who live in Allegheny County hasn’t raised rates on Plan N in over 5 years and just once on plan G (5%).
So, the first thing someone like Jean or the gentleman who had a 25% increase can do is call us and see if a change to another company would help. A move from Plan F or C, to G or N can instantly save someone as much as $100 per month with negligible changes in benefits. But don’t wait for it to happen before you check and see if you’re with a company that has a reputation for higher increases. Chances are good that if you didn’t buy your plan from The Health Insurance Store, you’re either overpaying and/or with a company that will hasten the move across the $200/ month threshold. Please be advised that changing to another Supplement plan letter or company will require you pass medical underwriting.
Last week I advised two current clients whose premiums are now in the $250 range to move to a low-cost Advantage Plan HMO. I know what many of you who read all the columns are thinking. “But Aaron you always write about how Supplements ensure large medical bills are never an issue.” That is correct. Those on Supplements pay virtually no medical bills. However, those paying $250 per month in premium are spending $3,000 before ever going to a doctor. That’s only a few hundred less than what the Maximum Out of Pocket (MOOP), which represents the most one can be billed in a calendar year, is on some plans. As Supplement premiums approach, equal, or exceed plans’ MOOP, their value diminishes.
I don’t ever advise someone to choose an Advantage Plan over a Supplement solely based on this, but if you add in the monetary worth of ancillary benefits like dental, eyeglasses, hearing aids, and Over the Counter allowances, they start to make a whole lot of sense in cases like this. I recommended these clients I’m speaking of do the following. Open a new checking account. Deposit $125 of their savings every month and use it exclusively for co-pays or coinsurance they didn’t have with their Supplement. Take the other $125 and have fun. “Go party,” I joked with them. At the end of the year, if there’s any money left in the account, figure out exactly what was saved and do it all again in 2021.
The right plan must be chosen, however. We prefer those with lower hospitalization co-pays. This limits the chances of reaching a MOOP.
If you’re paying over $200 per month for a Supplement and would like to discuss if moving to an Advantage Plan may be appropriate, give us a call. Have a preliminary discussion with an agent because it isn’t the right move for everyone. Those who are currently receiving or may have a need for Chemo, Radiation, expensive drugs administered in an outpatient setting like Remicade, probably aren’t going to be candidates because it’s almost a certainty the MOOP will be reached. This is often not a good idea either for those who winter elsewhere and need unfettered access to doctors in both their winter and summer homes.
I don’t want anyone to be insurance poor. That’s not a good way to live. I have a saying. The best insurance in the world isn’t worth a nickel if you can’t pay for it.
If you would like to make an appointment to go over options in the final 38 days of Annual Election, which ends on December 7th give us a call. You don’t have to be a Pittsburgh area resident either. If coming to one of our offices isn’t convenient, we can mail you out materials and review them over the phone. Or better yet, interact online in what we call a “virtual appointment.” It’s almost like sitting across the desk from an agent.
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