Here was a Medicare beneficiary whose experience delivers lessons for many who are enrolled in Medicare supplement (Medigap) insurance policies. This beneficiary was needlessly spending hundreds of dollars annually by not comparing current insurance with alternatives.
This is not to shame the beneficiary, but instead to point out that spending an hour or so reviewing alternatives can save significant money. In this instance, more than $900 annually.
This is the story: This beneficiary had purchased a Medigap policy upon becoming Medicare eligible after two years receiving Social Security Disability benefits. Now about to turn 65, the beneficiary’s first question: May I keep my Medigap policy? (Yes.)
In an appointment with a Senior Health Insurance Benefits Assistance (SHIBA) volunteer counselor, this beneficiary’s review of Medigap premium costs found that he could save money in two ways.
First, the beneficiary’s current Medigap Plan F policy had a monthly premium of about $215. Eight other companies offered Plan F policies with lower monthly premiums, of which the least expensive was about $167 a month. Just changing insurance companies would reduce Medicare insurance costs by about $575 annually. (Within a plan Medigap designation, such as Plan F, the coverage is identical even though monthly premiums may vary by $100 or more).
But the insurance savings can get even richer.
This beneficiary had enrolled in Medigap Plan F several years ago because it was absolutely the best decision at the time. It’s still robust insurance, albeit needlessly costly.
Most Medicare beneficiaries with Medigap Plan F policies find that they can save money by moving to Plan G. The benefits are identical except that Plan G doesn’t pay the Medicare’s annual Part B deductible, which is $240 this year. But Plan G’s lower premiums usually more than compensate for the $240.
Let’s consider how making the change – Plan F to Plan G – would benefit this beneficiary.
As we saw, the beneficiary was paying about $215 a month in premiums. Even switching to Plan G with the same company would reduce monthly premiums by far more than the $240 additional cost. (Here, a cynic would point out that the insurance company didn’t suggest that.)
But suppose that the beneficiary not only switches to Plan G but also changes to the insurance company charging the lowest monthly premium — $139. Moving from the current $215 monthly premium to $139 would reap annual savings of more than $900.
To do that, most Medigap policyholders would use the Oregon birthday rule, which would guarantee that the insured would not be charged a premium surcharge for a pre-existing condition.
And where can one compare Medigap premium costs? Use the Medicare.gov website, first clicking on “Find health & drug plans,” then when prompted, selecting “Medigap policy.” To review benefits of various Medigap policy types see pages 38-39 of the Oregon Guide to Medicare Insurance Plans.
If you would like to make an appointment with a SHIBA volunteer Medicare counselor, or to ask a question to be answered here, please see below.
Jim Sellers of Salem is a certified Medicare counselor with the Senior Health Insurance Benefits Assistance (SHIBA) program. To ask a question to be answered in this column, e-mail [email protected]. To schedule a free SHIBA phone, Zoom or in-person appointment with a volunteer Medicare counselor, call 800-722-4134.
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