During the Medicare Open Enrollment Period (October 15 – December 7), you can change policies at will without worrying about being penalized. Medicare Supplement Insurance, sometimes called “Medigap,” is an exception, however. Changing your Medigap insurance can be complicated and expensive.
As you probably know, private insurance companies offer Medigap policies to fill in the gaps left by Original Medicare. Although shopping around for price is critical (as you’ll see below), there are other factors to consider.
Enroll at the Right Time
You will save yourself a lot of trouble if you purchase your Medigap policy during the special enrollment window. It is open for six months from the first day of the month when you enrolled in Medicare Part B. Therefore, if you registered on November 12, for example, you need to finalize your Medigap plan purchase by the end of April the following year.
When you buy your policy during this period, Guaranteed Issue Rights protect you. This stipulation means an insurer must sell you a Medigap policy and cannot raise the price you pay due to a pre-existing condition or your age. You can appeal to Medicare if an insurance company denies you these rights. If you buy a plan outside this opportunity, you will likely pay more, and an insurer has the right to reject you.
If you miss your initial opportunity to enroll in a Medicare Supplement plan, there are a couple of chances to benefit from Guaranteed Issue Rights.
- If you purchased a Medicare Advantage (MA) Plan when you were first eligible for Medicare, you can switch to Original Medicare within a year. Buy a Medigap plan during this period and you will have Guaranteed Issue Rights.
- If you have Original Medicare and Medigap, and you purchase an MA Plan during the OEP, you must drop your Medigap policy. However, you retain Guaranteed Issue Rights if you change your mind within a year and return to your old Medigap plan.
Remember, You Have a Trial Period
You are not tied to a Medigap policy as soon as you switch plans. There is a 30-day “free look period,” during which you can decide whether you want to keep the new plan. It is best to utilize this option and not cancel your previous coverage immediately.
Learn Your Insurer’s Underwriting Rules
Even with Guaranteed Issue Rights, it is likely that the cost of your policy will increase year after year. It is crucial to know how your insurer underwrites the policy as it could make a significant difference in the cost of your premium.
- Issue Rated: This is a good option for someone who has just purchased a Medigap plan and wants to keep it. Premiums are lower for younger beneficiaries and don’t increase due to age.
- Attained-Age Rated: This option will be very expensive for someone without Guaranteed Issue Rights. The premium depends on your age when you purchase the policy, and gets higher as you get older.
- Community Rated: Everyone pays the same price since the premium doesn’t increase as you age. These policies are typically the cheapest option for someone looking to switch.
All of the above policies will increase due to other factors, such as inflation.
Choose According to Price… Most of the Time
As Medigap plans are standardized, the benefits remain the same no matter which insurer you choose. As a result, there may be no good reason to pay double the cost when you won’t receive any additional benefits.
Additionally, Medigap plans go up in price annually. As mentioned above, the method of underwriting could severely affect your premium. You may choose a company because it offers a cheap Plan F this year, but the price could increase dramatically within the next few years, depending on your circumstances and location.
Don’t Dismiss Comprehensive Plans
Plan C and Plan F are the most expensive plans based on monthly premiums, but they could save you money in the long run. Consider your current health. If you have a chronic illness or are in generally poor health, a comprehensive plan could save you a significant sum.
If you regularly vacation abroad, choose a Medigap policy that includes foreign emergency care. Such policies have a separate $250 international travel care deductible and usually cover you for up to $50,000 in emergency care if used in the first 60 days of your trip.
Beware: Lack of Drug Coverage
Medigap policies don’t have prescription drug coverage, which you’ll have to purchase separately. They also don’t cover dental or hearing costs, so you should consider a Medicare Advantage plan if you require some (or all) of the above coverage.