Five tips for buying Medicare supplement insurance

When you turn 65 and qualify for Medicare, you have one more important decision to make.

You may want to choose to enroll in a Medicare Advantage (MA) plan. About one-third of Medicare enrollees choose an MA plan. In some states, such as California, they are readily available. However, in other states, there are few MA options.

One of the other more popular options is a Medicare Supplement plan. These are sometimes referred to as Medigap plans and we will use these two terms interchangeably. About 15 million Americans are currently on a Medigap plan that offers complete freedom to see any medical professional who accepts Medicare.

We’ll focus on some key facts about Medigap insurance that can help you get the best coverage for the best price. The information shared can even help you save significant money. That’s always good.

But saving money today isn’t the only reason to read the tips shared here. They can also save you heartache in the future. That’s because when you choose a Medigap plan option now, it could be an irrevocable choice that limits your future.

TIP #1: Don’t pay too much. Why pay twice for the same plan?

Medigap insurance prices vary considerably. Rates are generally set by county, and it’s common for one company to charge twice as much as another.

According to the American Association for Medicare Supplement Insurance’s 2020 Medicare Insurance Price Index, a 65-year-old woman from Chicago could pay as little as $92 per month or as much as $234 per month for identical coverage. The Price Index reports the lowest and highest prices for Medigap Plan G for some 100 cities across the country.

No company always offered the lowest costs. And according to the Price Index, no company was consistently the most expensive. In some cases, the company with the lowest costs for men did not have the lowest costs for women. Frustrating? Not really, it just means asking the ‘right’ questions.

TIP #2: Shop for price stability

Insurers can and do raise rates. A policy that seems cheap today may be expensive tomorrow.

Some insurance companies are new to the Medigap business and may not have real experience on which to base their rates. Others may offer lower premiums as a way to get more initial sales.

This will sometimes lead to above-average rate increases in the coming years. For that reason, you want to compare both current costs and price stability.

TIP #3: Discounts can add up

Today, many Medigap insurance companies offer discounts for spouses and/or households. Not all. However, the discounts can range from five to as much as 14 percent. The savings can amount to hundreds of euros per year. And since you’ll probably live another 10 or 20 years, you’re talking real money – so don’t pass this up.

TIP #4: Take advantage of savings and points

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With some insurers you get a discount if you set up direct debits. Some offer discounts if you pay annually. Some allow you to charge the payments from a credit card. You can see where we’re going.

Let’s say your monthly Medicare Supplement insurance premium is $300. Starting at age 65 and paying for 20 years, that adds up to $72,000 in premium. If you’re married, double that. A credit card that offers a two percent discount means you save nearly $3,000. If your credit card awards airline points, you’ve earned some nice credits.

Tip #5: The easy way to compare

You sometimes hear the saying that when you act as your own lawyer or doctor, you have a fool for a client. Choosing the right Medicare plan can be confusing.

There’s nothing wrong with calling one of the dozens of 800 numbers vying for your attention and business. But often they only represent one company or have a particular preference.

For that reason, it generally pays to compare your choices and recommendations by finding a local Medicare insurance agent. Some will only focus on Medicare Supplement, but today many offer comprehensive options, including Medicare Advantage.

It’s nice to have an unbiased agent in your back pocket if you have any questions. A national directory of Medicare insurance agents lists some 1,000 specialists by zip code. Access is available for free and, perhaps best of all, is completely private. You will be shown their data without having to enter any data.

A great resource for the latest information is the American Association for Medicare Supplement Insurance website. There you will find the 2020 Medicare Insurance Price Index and access to the agent directory.