Medicare Supplement Insurance
Medicare supplement insurance is becoming a very popular insurance product meant to cover the difference between eventual Medicare benefits and medical expenses. These products are also known by another name, Medigap, which combines Medicare with the word “gap,” or the difference between coverage. Nearly one in five Medicare recipients now have some kind of Medicare supplement insurance coverage.
Due to the growth of the industry, the Centers for Medicare and Medicaid Services (CMS) have divided the types of medicare supplement insurance into twelve main divisions and categories. These plans are labeled A-L, and are standard from company to company, much like the different types of homeowners insurance. Standardization, however, can vary by state, as some states have further restricted the sale of this very popular insurance. Also, this standardization came into effect in 1992, and for the years prior, the sale of Medicare supplement insurance was not standard.
Policies sold before the 2006 cutoff date of January 1 could offer prescription drug coverage in varying amounts, depending on the policy, however after that date, Medicare supplement insurance policies do not, and cannot, offer such coverage.
Qualifying for Medicare Supplement Insurance
To qualify for Medicare supplement insurance, a person must first be a Medicare A or B participant. For the first six months following Medicare subscription (after turning 65 years old), Medicare supplement insurance is sold with guaranteed acceptance. As such, most seek insurance during this period, as they cannot be turned down, and there are medical screenings prior to acceptance.
After this term, otherwise known as “open enrollment” insurance companies can first require medical screenings.
One major benefits of Medicare supplement insurance is automatic, and unquestioned renewal. That is, anyone can maintain coverage, and will not be discontinued unless they stop paying for their supplement insurance. Thus, anyone desiring the option to keep their insurance can do so without the fear of losing their valuable insurance.
Differences in Pricing
Difference in price from one issuer to another are almost always the result of three different types of policies. These include issue age policies, attained age pricing, or the community rating of the policy.
Issue Age Policies
Medicare supplement insurance shoppers can lock in their monthly premiums, choosing to pay a higher rate early on in retirement which remains flat for the rest of their life. This is an exceptional benefit, since retirees usually have more cash available early in their retirement and can afford slightly higher prices earlier if it means lower rates in the future.
Attained Age Pricing
This is the most popular type of pricing, and is generally the default insurance premium offered by an insurance company. With this type of policy, your premium will rise with each incremental step in age. Also important is the increase in medical prices from year to year.
A community rating price structure allows for an insurance company to quote the same rate for each person per plan, in a certain geographical area. There is no consideration for the person's age, sex, or health considerations (such as tobacco use). For healthier and younger individuals, this option means higher premiums than might otherwise be found with an attained age policy. However, for older applicants, a community rating plan may provide for lower monthly premiums.
Medicare Supplement Insurance is NOT Medicare Advantage
There are very distinct differences between Medicare Advantage and Medicare Supplement Insurance policies. These policies are not to be used in tandem, and policy holders must choose one or the other, or neither.
Compared to Medicare supplement, Medicare Advantage performs much like a managed care option, and may or may not partner with your current health provider. Likewise, the plan may cover certain prescriptions and medical expenditures while failing to cover others. Supplement insurance, if purchased after 2006, does not cover pharmaceuticals and is generally lower in cost, though prices vary from state to state, and option to option. Before purchasing either policy, compare the pros and cons of each to your own personal needs, and absolutely check to ensure your current medical provider accepts either form of insurance.