Medicare: When to Sign Up, What to Sign Up for
ROBERT POWELL, TheStreet, FEB 1, 2023
"Medigap benefits levels are prescribed by law, and yet there are tremendous variations in price amongst plans offering the same benefits." Dr. Katy Votava
If you're turning 65 this year, you'll likely need to join some 64 million other Americans and enroll in Medicare at some point.
Generally, you're first eligible to sign up for Part A and Part B, starting three months before you turn 65 and ending three months after the month you turn 65, according to Medicare.gov.
But the bigger question is not when but what to sign up for.
According to Kaiser Family Foundation: Medicare beneficiaries can choose to get their Medicare benefits (Part A and Part B) through:
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- The traditional Medicare program, or
- They can enroll in a Medicare Advantage plan, such as a Medicare HMO or PPO. Medicare Advantage plans provide all benefits covered by Medicare Parts A and B, often provide supplemental benefits, such as dental and vision, and typically offer the Part D prescription drug benefit.
Many traditional Medicare beneficiaries also rely on other sources of coverage to supplement their Medicare benefits. Supplemental insurance coverage (Medigap) typically covers some or all of Medicare Part A and Part B cost-sharing requirements and, in some instances, provides benefits not otherwise covered by Medicare.
Beneficiaries can also enroll in a Part D plan for prescription drug coverage, either a stand-alone program to supplement traditional Medicare or a Medicare Advantage plan that covers drugs.
In 2018, nine in 10 people with Medicare either had traditional Medicare and some supplemental coverage (51%), including Medigap, employer-sponsored insurance, and Medicaid, or were enrolled in Medicare Advantage (39%), according to a 2021 Kaiser Family Foundation report.
Or viewed another way, Medigap provided supplemental coverage to two in 10 (21%) Medicare beneficiaries overall, or 34% of those in traditional Medicare (roughly 11 million beneficiaries) in 2018, according to Kaiser Family Foundation.
Beneficiaries can also enroll in a Part D plan for prescription drug coverage, either a stand-alone program to supplement traditional Medicare or a Medicare Advantage plan that covers drugs.
How to Pick a Medigap Plan
Picking a Medigap plan can be overwhelming. According to MedicareInteractive.org: "Insurance companies may offer up to 10 different Medigap policies labeled A, B, C, D, F, G, K, L, M and N. (Policies in Wisconsin, Massachusetts, and Minnesota have different names.) Each lettered policy is standardized. This means that all policies labeled with the same letter have the same benefits, no matter which company provides them or their price.
But even though the benefits might be the same from plan to plan, the prices are unlikely to be so. According to a new report published by the American Association for Medicare Supplement Insurance, noted the following, finding the best Medigap 2023 prices depends on where you live, and it can pay to comparison shop.
For instance, in New York, the lowest monthly rate for Medigap Plan G (the most popular plan after Plan F) is $278, and the highest for identical coverage is $476, according to Jesse Slome, the author of the report.
And in Iowa, by contrast, the lowest monthly rate for Medigap Plan G is $79, while the most expensive is $192. (Below are each state's lowest Medicare Supplement Plan G rates.)
According to Humana, Plan G includes all the benefits of Medicare Supplement Plans A, B, and C, except for the Medicare Part B deductible. It's a good fit for people who want some coverage for hospitalization but are willing to pay the Medicare Part B deductible on their own. Compare what all the Medigap plans cover and what they cost.
Katy Votava, president of Goodcare.com and author of Making the Most of Medicare: A Guide for Baby Boomers, says Plan G is a "good" option for most who want a Medigap supplement plan. "As the (American Association for Medicare Supplement Insurance) report notes, there is a wide variety of prices for the same plan level," she said. "Medigap benefits are prescribed by law, and yet there are tremendous variations in price amongst plans offering the same benefits.
Underwriting Categories
According to Votava, Medigap plans use one of three underwriting styles: issue-aged, attained-age, and community rated. "Issue-aged underwriting is based on the age a person is when they enroll in a policy," she noted. Attained-age underwriting is based on a person's age each year in the plan. Community-rated underwriting means everyone is charged the same premium, regardless of age. Each underwriting method influences premiums to some degree."
She noted that variations in underwriting methods do not account for wide differences in Medigap premiums." It is common to see plans with the same underwriting style offered by different companies but with substantially dissimilar premiums," said Votava.
Ultimately, Medigap insurance is an economically inefficient marketplace. "Consumers don't know how to shop for the product leading to wide price variations for the same product," she said. "And given the wide variation in monthly premiums, that's all the more reason for consumers to shop for a solid company that offers the lowest price."
Another tip: Ask your healthcare providers which Medigap insurance companies will process the paperwork. "That way, they will get the most out of the coverage," she said.
According to the American Association for Medicare Supplement Insurance, here are some more tips about finding the best Medigap insurance coverage.
- Rates (premiums) are based on where you live.
- There can be as many as 20 different insurers offering coverage.
- No one insurance company always has the lowest cost.
- Neither is one insurer consistently the most expensive.
- Insurers can offer discounts (up to 14% or more).
- They can charge added premium fees (not shown below).
- Insurance agents may represent only one or two plans.
- Some agents (brokers) will represent more insurance companies.
- Asking about the history of rate increases is essential.
For a woman turning age 65, Medigap Plan G:
State ZIP Code Lowest Premium Alabama 35223 $119.75 Alaska 99516 109.95 Arizona 85253 98.66 Arkansas 72038 121.50 California 94027 111.05 Colorado 80025 101.40 Connecticut 06870 195.39 Delaware 19707 112.87 Florida 33109 230.97 Georgia 30327 100.95 Hawaii 96821 122.11 Idaho 83821 160.75 Illinois 60043 97.87 Indiana 46290 89.74 Iowa 50061 78.65 Kansas 67559 102.30 Kentucky 40025 93.21 Louisiana 71401 92.16 Maine 04110 195.09 Maryland 20812 116.85 Massachusetts 02468 210.32 Michigan 48190 112.00 Mississippi 39110 84.31 Missouri 63073 144.99 Montana 59242 101.90 Nebraska 68514 83.02 Nevada 89411 98.90 New Hampshire 03750 133.42 New Jersey 07078 122.45 New Mexico 88126 85.56 New York 10282 278.25 North Carolina 27519 86.24 North Dakota 58339 96.77 Ohio 45174 95.45 Oklahoma 73151 91.77 Oregon 97125 119.57 Pennsylvania 19437 112.05 Rhode Island 02815 108.96 South Carolina 29915 84.29 South Dakota 57427 92.59 Tennessee 38139 90.23 Texas 77010 100.01 Utah 84018 95.80 Vermont 05067 145.36 Virginia 20219 101.04 Washington 98039 184.00 West Virginia 26036 93.37 Wyoming 82711 98.58 Rates are not shown for Minnesota or Wisconsin with different types of plans.
The American Association for Medicare Supplement Insurance selected ZIP codes with the highest incomes for each state. There's no reason the association picked this as the criteria. It just seemed fair and equal.
