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Five Tips for Buying Supplemental Medicare Insurance

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When you turn 65 and become eligible for Medicare, you will have to make another important decision.

You can choose to enroll in a Medicare Advantage (MA) plan. About a third of Medicare enrollees choose an MA plan. In some states like California they are readily available. However, in other states there are few MA options.

One of the other most popular options is a Medicare supplement plan. These are sometimes referred to as Medigap plans and we will use these two terms interchangeably. About 15 million Americans currently have a Medigap plan that provides complete freedom to see any medical professional who accepts Medicare.

We’ll focus on several important facts about Medigap insurance that can help you get the best coverage at the best cost. In fact, the information shared can help you save a lot of money. It’s always good.

But saving money today isn’t the only reason to read the tips shared here. They can also save you heartache in the future. Indeed, when you choose a Medigap plan option now, it could be an irrevocable choice limiting your future.

TIP #1: Don’t overpay. Why pay double for the same package?

Medigap insurance prices vary widely. Rates are usually set by county and it is common to find one company charging twice as much as another.

According to the American Association for Medicare Supplement Insurance’s 2020 Medicare Price Index, a 65-year-old woman in Chicago could pay as little as $92 per month or as much as $234 per month for a identical coverage. The Price Index reports the lowest and highest prices for Medigap Plan G for some 100 cities across the country.

No company has always offered the lowest cost. And no company was consistently the most expensive according to the price index. In fact, in some cases, the company that had the lowest cost for men did not have the lowest cost for women. Frustrating? Not really, it just means asking the “right” questions.

TIP #2: Buy for price stability

Insurers can and do raise rates. A policy that seems cheap today may be expensive tomorrow.

Some insurance companies are new to the Medigap industry and may not have real experience on which to base their rates. Others may offer lower premiums in order to get more initial sales.

This sometimes results in above-average rate increases in future years. For this reason, you will want to compare current costs as well as price stability.

TIP #3: Discounts can add up

Today, many Medigap insurance companies offer spousal and/or household discounts. Not all do. However, discounts can range from 5 to 14%. The savings can reach hundreds of dollars per year. And since you’ll probably live another 10 or 20 years, you’re talking about real money – so don’t pass it up.

TIP #4: Get savings and points

Some insurers will give you a discount when you set up automatic payments. Some offer discounts when you pay annually. Some will allow you to charge payments to a credit card. You can see where we are going.

Let’s say your monthly Medicare Supplement insurance premium is $300. Starting at age 65 and paying for 20 years, that equates to $72,000 in premium. If you are married, double that. A credit card that offers a 2% discount means you’ll save nearly $3,000. If your credit card grants airline points, you will have earned some nice credits.

Tip #5: The easy way to compare prices

You sometimes hear the saying that if you act like your own lawyer or doctor, you have a fool for a client. Choosing the right health insurance plan can be confusing.

There’s nothing wrong with calling one of the dozens of 800 numbers vying for your attention and your business. But, often, they may only represent one company or have a particular preference.

For this reason, it’s usually beneficial to compare your choices and recommendations by researching a health insurance agent. Some will focus only on the Medicare supplement, but today many offer comprehensive options, including Medicare Advantage.

It’s nice to have an unbiased agent in your back pocket when you have questions. A national directory of Medicare insurance agents lists some 1,000 specialists by zip code. Access is available for free and, perhaps best of all, is completely private. You get to see their information without having to enter any information.

A great resource for the latest information is the American Association for Medicare Supplement Insurance website. This is where you will find the 2020 Health Insurance Price Index and access the agent directory.

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