Medicare Supplement Insurance Costs

There are only three options to consider when it comes to supplementing Original Medicare:

Purchase a Medicare Supplement Plan

Purchase a Medicare Advantage Plan

Do nothing and purchase no insurance coverage

The Cost of Medicare Supplement Insurance

Supplemental insurance prices will vary from state to state and zip code to zip code. There are several factors that will ultimately determine your monthly premiums and most Medigap rates will increase after one year.

However, the question most seniors want to ask themselves is, What is the cost if I don't purchase coverage?   Well, the crystal ball's in the shop;  we simply do not know. Consumers who are already in poor health will undoubtedly purchase a Medicare supplement right away when they are in open enrollment knowing they will face significant health care expenses not covered by Medicare.

But Medigap plans are like any other insurance. You purchase comprehensive coverage and hope that you don't need it. Really, the best insurance is the kind you don't use. You don't want to use your home, auto, life, or disability plan because that means something has likely gone wrong. However, you do want to know that you will be covered in the event that something does happen to you or your family.

So to answer the question yes, Medicare supplement insurance is worth the cost. There are several different plans to choose from and each provide a varying degree of reimbursement. In this way, you can know what your exact out-of-pocket exposure is each year. And with almost all supplements, you don't have to worry about referrals or network restrictions. This means that you can  use any doctor or hospital that accepts Medicare patients.

So you are also purchasing peace of mind with most Medicare supplement plans. You simply know that you can go where you want when you want to and will not have significant (or any) out-of-pocket expenses. You have paid into Medicare your entire working life, so why not reap the spoils of this coverage to the best of your ability.

Purchasing a Medicare Advantage Plan

Another option to supplement Medicare is to purchase an Advantage plan. You still have to pay your Part B premiums, but Advantage plans will insure you for what Medicare A and B covers as well as some of what they do not. Additionally, many plans will include rx coverage as part of the program while, by law, they must be sold separately from traditional Medicare supplements.

Medicare advantage plans are popular with some seniors simply based on price. If you live in Florida for example, supplemental plans can be quite expensive. However, it is important to realize that you get what you pay for. Advantage plans are usually less expensive for a couple of reasons.

The primary reason is that most Advantage plans have more out-of-pocket exposure to the insured. It is important to ask about your maximum out-of-pocket each year both in and out of network. And that brings up another point; Advantage plans rely on participating networks of doctors, hospitals, and medical facilities in order to offer lower monthly premiums.

This can be a problem if you need care outside of the network of if you spend a lot of time in multiple states. As an agent, the issue I see most is with consumers who have been told they need to visit a certain specialist (or facility) and that doctor does not accept their coverage because s/he is not in the network.

Additionally, the Centers for Medicare and Medicaid Services allows a one year free trial period for consumers who choose Advantage plans. After one year, medical underwriting will be necessary with most Medigap providers in order to enroll into a traditional Medicare supplement. Consumers can be denied coverage due to poor health if they wait longer than a year.

Thus, Advantage plans are not perfect and supplements are not always the best option for every senior either, but doing nothing at all can be by far the most risky and ill-advised option of all.

What if   You Choose Not to Purchase Insurance?

I don't recommend it. Why? Well, there are may reasons, but most of all because you cannot time your health. You may need coverage before you have a chance to buy it.

If we had that elusive crystal ball, we would buy insurance the day before we needed it and buy stocks the day before their breakout earnings reports, but we don't so we can't.

There are some consumers who will roll the proverbial dice and not purchase any insurance, but they need to know that it is very difficult to purchase a Medicare Supplement or Advantage plan if you are already in poor health.

That is to say that if you missed your open enrollment period, then you can be denied coverage. There is this misconception that the time period between November 15th and December 31st each year is Medicare open enrollment for supplemental coverage. This is not correct! 

This time of year (referred to as the annual election period or AEP) can be used to change Part D drug plans or to disenroll from an Advantage plan, but not to purchase new supplemental coverage on a guaranteed issue basis. This means you must be in reasonably good health in order to purchase most supplemental plans unless you are using your one year free trial period provided by CMS.

Timing your insurance purchase can be a foolhardy plan. Most people do not try and time any of their other insurances, so your health coverage should be thought of in the same way. You can avoid the insurance company  declining the application, monetary penalties, and mandatory delays simply by purchasing coverage when you were supposed to originally.

Call an agent and talk to them. Call us! The Medicare puzzle can be complex at first glance and it is a good idea to speak with experts who can provide you with insight so you can avoid issues now and in the future.

Medicare Supplement Insurance Costs