Rising medical costs have made it extremely challenging for seniors to find decent but affordable healthcare services. Even insurance programs such as Medicare comprise coinsurance, copayments, and deductibles that can leave a huge dent in one’s bank account. One solution to this financial crisis is Medicare supplement plans.

Medicare supplement plans (Medigap) are an additional form of health insurance that can be availed from private providers to cover fees that are not included in the Original Medicare plan such as deductibles, co-payments, and international medical insurance.

Factors affecting Medigap policies
The costs of a Medicare supplement plan varies across providers and locations. Therefore, before you purchase a Medigap policy, it is imperative to understand the multiple factors that affect premiums, deductibles, and co-insurance. Read further to know more.

Type of Medicare supplement plan chosen
As mentioned earlier, Medicare supplement plans are managed by private insurance companies and not federal agencies. With the exception of three states including Massachusetts, Minnesota, and Wisconsin, all the remaining 47 states offer ten standardized Medigap policies. All these standardized plans come with some common benefits such as –

• Coinsurance and coverage for Medicare Part A
• Coinsurance and copayments for Medicare Part B
• Coinsurance and copayments associated with hospice services
• Blood transfusions (first 3 pints)

Apart from the basic benefits, some Medigap plans may also grant additional benefits. For instance, Plan G covers 100% coinsurance for skilled nursing facilities which comes under the Original Medicare plan, along with the full Part A deductible, and 80% of emergency care costs during international trips. Moreover, it also covers Part B excess charges. Since Medigap Plan G provides better coverage, it is likely to be more expensive than other Medicare supplement plans.

Insurance provider
The premiums aren’t uniform across insurance companies, so ensure that you compare the rates before enrolling in a Medigap plan. Some insurance providers might offer discounted premiums for individuals who don’t smoke. Depending on the pricing structure they follow, the total cost of premiums may rise with time.

• Issue-age-rated – In this pricing structure, the provider will base the premiums according to your age. In other words, premiums will be cheaper for individuals aged 65 than ones aged 70. However, age is only considered when you apply for the policy. Later, if your premium costs rise it is because of factors such as inflation or higher healthcare fees, not age.
• Attained-age-rated – Unlike issue-age-rated, this type of pricing structure bases your premiums on current age, but these increase as your age progresses. These could come across as relatively pricier and more inconsistent than other plans.
• Community-rated – Unlike the pricing structures mentioned above, the community-rated plan determines its premiums according to the region. Therefore, everyone pays the same premium amount regardless of his or her age. Premiums in the future might be influenced due to estimated changes in healthcare costs or uncontrollable factors such as inflation.

Application period
The best time to apply for a Medigap plan is during the 6-month window that commences in the first month of Medicare Part B enrollment. This period is known as the Medicare supplement plan open enrollment where you can’t be denied coverage or charged higher premiums due to a pre-existing condition. However, you might have to deal with waiting periods due to the concerned ailment.

If you apply any time after this period, you will be mandated to undergo medical underwriting, a process where the provider closely analyzes the health of the applicant. This process automatically grants the insurer some leverage to reject your application, increase monthly premiums, or delay coverage.

Medigap policies are relatively more affordable in the following states –

• Iowa
• Oregon
• Hawaii
• New Mexico
• Missouri
• Maine
• Idaho
• North Dakota
• Montana
• North Carolina

Medigap policies are the most expensive in the following states –

• Massachusetts
• Connecticut
• New York
• New Jersey
• Nevada
• Illinois
• California
• Florida
• Rhode Island
• Michigan

Popular insurance providers for Medicare supplement plans
The following companies are considered to be the most popular providers offering Medigap policies for the year 2018.

• Aetna
• Anthem
• Blue Cross and Blue Shield
• Cigna
• Continental Life
• Humana
• Manhattan Life
• Mutual of Omaha
• Transamerica
• United American
• UnitedHealthcare Medicare Solutions
• United of Omaha

Before you pick any of these providers for Medicare supplement plans, check their A. M. Best rating. Likewise, also glance through consumer reviews online to get a better understanding of the way they structure their premiums and provide customer support. If you have shortlisted a few providers, call them up for consultation to get a better perspective about how they set premium prices.