A 2016 study showed that 90% of people who are on Medicare with a Medigap policy are paying more than the market rate for their plan. In other words, 9 out of 10 people are paying extra for the same thing either without realizing it or without caring about paying the extra premium dollars. Simply put, there is no valid reason for you to give the insurance company more than you have to.
So, most people are paying too much in Medigap premiums. And, Medigap plans (also called Medicare Supplement plans) are Federally-standardized. That is, the coverage with the plans is the exact same from company to company. However, there can be a large variation in Medigap premiums for these plans, and it is crucial to be aware of what you are paying to avoid paying too much (I understand the plans and just want to check rates by email).
Now, no one, especially someone on a fixed income, willingly throws money away. But the reasons why people pay too much in Medigap premiums fall into five categories.
The “Set It and Forget It” Mistake
Anyone remember the Ronco kitchen appliances? In their infomercials, Ron Popeil famously said “set it and forget it”. That may work when you are cooking chicken, but it is not a prudent strategy for Medigap policies. What happens when you “forget it” is that the rate keeps going up while the benefits stay the same.
If you care about your money, you must review your Medigap premiums at least every other year. Incidentally, most agents also use the “set it and forget it” strategy, so if your agent is not proactively contacting you to make sure you have the best deal, you have to do it yourself or get a new/better agent.
The Plan F Mistake
Plan F is the most common and comprehensive plan. It pays everything that Medicare Parts A & B do not cover at the doctor and hospital. It is the easiest plan to explain, purchase and understand. For that reason, over 40% of people that have a Medigap plan have this plan.
However, Plan G, the next step down from Plan F, is almost always a better deal. The only difference is the coverage of the $183/year Part B deductible, and premium differences are usually at least $20/month ($240/year). Moreover, Plan F is ending in 2020 and Plan G is historically more stable over time. (Why is Plan G a better deal)
Just like momma always said, if your friends jumped in the fire, would you? You don’t have to make the same mistake many people do. Plan G or Plan N are clearly better “deals” in most cases, and you should consider and pursue those alternatives to Plan F.
The Name Brand Mistake
It’s easy to fall into this trap. The big names in the Medigap world do the most advertising, send you the most direct mail, have the most insured people and most name recognition. However, often, they are also the most expensive while offering the same benefits, same plans, working the same way, and paying claims through the same Medicare “crossover” system. There is literally no benefit of being with a “big name” company if prices are lower with a different company.
You, of course, want to be with a reputable company that has a track record of stability, but any broker worth anything can give you that information and ensure that your choice is one that will hold its value, relative to the marketplace, over time.
The Household Mistake
In recent years, the household discounts that Medigap companies offer are expanding rapidly. Now, many companies are offering as much as 12% discount for spouses insured with the same company. And, moreover, some companies now offer the discount just for being married – your spouse does not even have to be Medicare age or have a plan with that company.
Do you and your spouse have the same company/plan? Are you sure you are getting a household discount? Check on it and don’t leave your money on the insurance companies’ table.
The “See N0 Evil” Mistake
This one gets a little personal. We talk to hundreds of Medicare beneficiaries a week, and it is amazing how many do not know what they pay (or to whom they pay) for their Medigap premiums. If you have had the same plan for several years and don’t know what you pay, it is a good idea to check your bank statements (if you are having your premium drafted automatically). The premiums have likely escalated to the point that there are many less expensive, same coverage, options. Just because you are not aware of what your premiums are does not mean you aren’t paying them!
So what should you do if you fall into one of these five scenarios? First and foremost, it’s not too late. Fortunately, you can change Medigap plans at any time, contrary to popular misconception (how to compare Medigap plans). There is not an annual enrollment period for changing plans.
Whether it is with us or with someone else, it is a very wise idea to re-evaluate your plan/company at least every other year to make sure you have the best Medigap premiums available. New companies come on the market every month and rates change every month, so if you haven’t checked lately, now is the time to do so.
If you have any questions bout this information or want a Medicare Supplement comparison, you can contact us online or call us at 877.506.3378.
Medicare-Supplement-Comparison.com has been in business for 10 years and has helped thousands of Medicare beneficiaries to compare their rates and choose a plan. See and hear what our clients have to say and contact us to see if you can save some money.