Is the Lowest Costing Option Always the Best One?

With Medigap Plans, Is the Lowest Costing Option Always the Best One?

Medicare Supplement plans (also known as Medigap plans) are offered by private insurers and fill many of the coverage gaps in Original Medicare. There are several plan types, all identified by a letter, but the most popular are Plans G and N. These two plans compromise the vast majority of new Medicare eligibles who elected to enroll in a Medigap plan since January of 2020.

Medicare Supplement plans of the same type which are offered by different insurers, may have significantly varying rates while providing the same basic benefits and levels of coverage.  For example, a plan G that costs $140 per month with a lesser-known carrier is the same coverage as a Plan G for $172 per month with a widely-known carrier.  Premiums can vary so dramatically between carriers for the same plan, because of market conditions, risk tolerance, claims ratio, management and marketing decisions, etc…

As such, wouldn’t it seem to reason that it’s always best to choose the company with the lowest rate available? NOT SO FAST…. Medicare supplement plans have rate increases every year and some insurers raise their rates higher and faster than others. That means that a carrier with the lowest costing Plan G for 65 year old’s today might be on the high side at age 71.

Although it is possible to shop for different carriers for lower rates as often as one wants, (in fact most my time is spent on helping clients find lower rates for the same coverage), there is a risk that a medical condition will arise which “locks” the beneficiary into their current plan. That’s because after the short initial enrollment period ends, Medigap applicants will have to answer health questions on the application and certain preexisting conditions may become a disqualifier for coverage.

For that reason, it makes sense for someone considering a Medigap policy, to factor in a carrier’s history of rate stability, their financial strength and their customer service record as well as their rates. Finding that balance is what we help our clients do. Please contact me for more information.

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