Understanding Medicare Supplements or Medigap Policies
Medicare can be overwhelming because we all have different needs. The Seniors’ Health Insurance Information Program (SHIIP) can help you select the right Medigap policy for you.
There are eleven different Medigap polices with varying coverage ranges. If you are under the age of 65 and on Medicare due to disability, the only plans available are Plans A, C, or F. Once those Medicare recipients reach 65, they can purchase any of the eleven policies at a lower price without being denied.
The ideal time to apply would be the first six months after starting Part B of Medicare because the insurance companies cannot deny the policy or make the consumer answer any medical questions. Outside of this six-month window, it can be more difficult to be approved for a policy due to underwriting.
Medigap policy premiums generally go up each year, but how much depends on a few different variables. Economic inflation is the first variable, but whether a policy is an attained age, issue age, or no age policy is what determines how the premiums will rise. An attained age policy will generally have a lower starting rate, but its premiums will rise the fastest over time. This policy raises its premiums based on inflation as well as due to the policy holder getting older each year. The largest increases take place in these policies when the policy holder enters another age bracket.
Issue and no age policies only differ in the way they initially sign up the consumer. An issue age policy will look at the age of the consumer when they purchase the policy and lock their age in the associated premium bracket, which could lead to a lower starting premium depending on the consumer’s age. A no age policy doesn’t take the consumer’s age into account when purchasing the policy or when increasing premium rates. Whether the consumer is 65 or 85, the base rate is the same.
Issue age and no age policies are similar in that they only raise their premiums based on inflation and do not raise premiums due to aging. Even though these policies premiums start higher than attained age policies, issue and no age policies will end up being less expensive in the long run.
Choosing a Medigap policy isn’t the easiest decision to make, but understanding how the policies work can certainly make the decision easier. Consumers should also always remember that they can call SHIIP and speak to a Medicare counselor for unbiased information if they have any questions or concerns regarding their Medicare coverage.
SHIIP is a division of the Consumer Assistance Group of the North Carolina Department of Insurance that assists people with Medicare, Medicare Part D, Medicare supplement, Medicare Advantage and Long term care insurance questions. We also help citizens recognize and prevent Medicare billing errors and possible fraud and abuse through our NC Senior Medicare Patrol program.