Can I afford it?
It’s hard to know the answer before you know the cost, but if you have little savings and virtually every dollar of your monthly income already is accounted for, there is another question to ask: Am I eligible for other coverage that costs less?
Medicare Savings Programs, Extra Help for prescription drug coverage, Veterans Administration benefits and Medicaid, which is a Federal program administered at the state level, are among the most heavily-used programs available to people with low incomes. A list of health coverage options that help pay for Medicare costs can be found in Guide to Health Insurance for People with Medicare (see Resources below).
What are my health costs?
Review how much you have spent each year on health care over the past five years. If you weren’t insured, include your best estimate for costs you might have foregone. Figuring your real costs isn’t easy, especially if an employer’s insurance program has picked up much of the tab. Try to project future costs, too. Do you think you might need knee-replacement surgery in a few years? Have you recently been diagnosed with high blood pressure? Do you have early diabetes symptoms? Will you need a colonoscopy soon? Be sure to include any costs that might be covered by Medigap plans, such as Medicare deductibles, blood, and Part A and Part B costs that will be your responsibility.
Should I get Medigap if I have a Medicare Advantage Plan?
No. A Medicare Advantage Plan (MAP) generally provides all Medicare-related health care coverage, including prescriptions. The four MAP options generally carry extra benefits and have lower copayments than the Original Medicare Plan. However, you likely will have limited choices in the doctors you can see or the hospitals you can use for services. To find out more and to compare MAP options, check out the Medicare Personal Plan Finder (see Resources below) at the government’s Medicare website.
What Medigap plans best fit my needs?
First, review the benefits offered in Plans A-L in detail at the Medicare website, medicare.gov. You may decide one or more plans deserve a closer look. Then, check out the Medicare Personal Plan Finder (see Resources below). It does an excellent job of screening your needs with the various plans available. That includes telling you which companies provide Medigap policies in your state. Choose carefully. Once you buy a Medigap plan, the insurance company must keep renewing it, but in most cases, Federal law doesn’t give you the right to switch Medigap policies outside your six-month open enrollment period unless you qualify under designated special circumstances. Some states have more generous rules, and some companies might allow you to switch policies, but assume your Medigap decision is a long-term proposition.
Will my premiums rise?
Absolutely. All companies hike premiums to keep pace with rising health-care costs. Some companies charge more for smokers, and some offer discounts for a variety of health-related reasons. Be sure you understand how each company rates, or prices, its policies before deciding which buy. A policy that’s cheaper at age 65 might be more costly in the long run if the policy is strictly age-rated. That means the premium automatically increases as you get older, and that’s the most common Medigap policy sold. Some policies are issue-age-rated, which means the price increases are due to factors besides your age, such as inflation. A third method, community rating, means that everyone living in your area is charged the same rate regardless of age. Under this rating, younger persons might pay more, but older persons probably would pay less than under other rating systems. Issue-age-related or community-rated policies might be the best buy in the long run, but before making a final decision, check with the companies for a history of premium increases over the last five years. That doesn’t mean the company will follow the same trajectory in the future, but knowing its pricing pattern can provide cautionary information before you commit to a policy.
Are there issues to decide besides cost?
Check with your state insurance department for the number of complaints filed against the company you choose. Ask for a comparison with other companies that offer the same plan. Make sure your preferred company has an arrangement with Medicare so that Medigap claims are filed automatically. That will save you time and removes the risk of your failing to file a claim during a period when you’re recovering from illness or injury.
Can I afford it?
So, we’re back to the original question. Especially if you have limited savings, it’s worth trying to work Medigap insurance into your budget rather than risk depleting your resources because of medical bills. Medicaid provides an ultimate medical expense safety net, but it also has what might be perceived to be strict income limits and spending rules.