Question: How many companies sell Supplements? Which companies and policies are the best?
Answer: There are almost too many to count but I do keep tabs on them all. However, I’m only interested in enrolling clients with companies who offer lower premiums at policy inception and also keep them affordable over time. I will discuss that in more detail below.
Supplements are also known as Medigap policies. Medigap is a perfect moniker as that’s what they’re designed to do, cover the “gaps” in Medicare.
Be advised. Those who are on HMO’s or PPO’s, known as Advantage Plans, do not have Supplements! The two are quite different and I never cease to be amazed by the number of people who think their HMO or PPO is a Medigap policy. Knowing the differences between Supplements and Advantage Plans is a vital piece of the puzzle for those on Medicare in my opinion. The first thing we do when sitting down with potential clients is ensure they understand how both work as well as their pros and cons.
Supplements are highly Federally regulated to protect consumers and can only be sold with policies labeled with letters A through N. There are literally only 11 available plans, soon to be nine in 2020 when C and F will be discontinued.
One of the beauties of Supplements is they’re all created equal and must cover the same conditions and services, pay the same amount for claims, and provide the same nationwide access to doctors and hospitals. COST IS THE ONLY DIFFERENCE BETWEEN MEDIGAP POLICIES WITH THE SAME LETTER SOLD BY DIFFERENT INSURANCE COMPANIES.
My agency and our agents almost exclusively recommend plans G and N with very few exceptions. So what company is the best? The one who has the lowest price that we have a good history with.
Let me explain. All Supplement companies will raise rates, most increasing them a few dollars every year once the policy holder turns 68. They can also raise them “across the board,” as I like to describe it, if they can show the PA Insurance Commission that they are in danger of not making a profit. I want to place clients with companies who historically have these “across the board” increases less frequently. We also pay attention to their track record of the size of those rate increases. We are skeptical of any company that’s had a 10% or more hike in the past. Being in business for over 11 years now, we have a very good idea of which companies to trust as well as avoid. We meet people almost daily who chose their Medigap policy based on the familiarity of a name or logo, only to end up over paying hundreds, even over $1,000 per year more in premiums for the exact same, or just slightly different coverage.
And when I say slight difference, I mean almost negligible. The most popular plan, mistakenly in my opinion, is F. The difference between plans F, G, and N is so slight in fact, paying the extra money for F makes zero financial sense. Those who chose F pay nothing out of pocket for Medicare covered services. However, a 65-year-old on average, will pay $360 more per year for F than G. Someone 75 or older might be paying as much as $1,200/year more. And the only thing the Supplement company covers for that extra money is the $185 annual Part B deductible! Those on Plan G pay that deductible themselves, but then pay nothing for the same covered services as those on F. Why would anyone want to pay between $300 to $1,200 to have $185 in medical bills covered? This is the reason F and C are being phased out next year. The Centers for Medicare and Medicaid has determined those two plans are a rip off, for a lack of a better way to put it.
The case for N as opposed to G can also be made by doing simple math. The difference in coverage between G and N is also very minimal. Those who have N pay the same $185 deductible, but unlike G, are responsible for a $20 co-payment at a PCP or specialist, and $50 at the Emergency Room. But that’s it. Premiums for a 65-year-old average $300 more per year for Plan G, and as much as $1,000 or more per year for those 75 to 80. What you’re doing with Plan G basically, is pre-paying for doctor visits, which you may never use. For the 65-year-old that’s 15 doctor visits per year. The 80-year-old would have to go to the doctor over 50 times in 12 months for G to make more financial sense than N! And services like rehab, allergy injections, etc., are not subject to that $20 co-pay.
If you didn’t buy your Supplement through The Health Insurance Store, you are likely on a plan that doesn’t offer fair value compared to the extra money you are paying or have a Supplement from a company that’s not competitive as far as premiums. The good news is Medigap policies can be changed at any time during the year. There are no election period restrictions. Anyone who has any other Medigap plan other than G or N can and should, in my opinion, change plans right now. We are talking about saving thousands of dollars per year potentially.
Be aware, in order to switch from one plan letter to another, even within the same company, you must be able to pass medical underwriting which generally consists of answering a series of questions regarding your recent medical history.