Medicare Supplement Plans, also called Medigap policies, are important ways to help reduce your overall out-of-pocket expenses generated by Original Medicare.
Medigap policies are sold by different companies and priced differently. The policies themselves are based on ten templates outlined by the federal government. While the private insurance companies must abide by the template, they can price the plan according to three pricing methods referred to as rating. The three ways companies rate their policies are community-rated, issue-age-rated, and attained-age-rated. Here, we will focus on attained-age-rated policies.
How Medigap Policies Work
Original Medicare, meaning Medicare Parts A and B, covers many inpatient and outpatient healthcare services. However, it does not cover 100% of these services, leaving beneficiaries to pay the remaining costs.
Medigap policies were created to help bridge these gaps. Medigap policies are policies sold by private insurers in order to cover those portions of healthcare that Original Medicare did not pay for. You enroll in a Medigap policy, pay a monthly premium, and are covered in the event that you incur out-of-pocket expenses.
The attained-age-rating method means that the policy is priced based on your age. The monthly premium will increase every year with every age you “attain”. The benefit of this type of plan is that it can be the least costly plan when you are younger. However, as you get older, this plan can quickly become the most expensive type of plan. Premiums generally go up every year due to inflation, so adding another factor that increases monthly premiums may make these plans cost-prohibitive for some.
Comparing Medigap policies can be confusing for many. Comparing the templates themselves plus the prices in your area can be downright frustrating. It is very important to choose the best supplement policy for you as these policies can save you a lot of money in the long term. If you have any questions about Medigap policies or would like to sit down with a specialist to discuss your options, contact Bobby Brock Insurance today.