Steps to Buying a Medigap Policy

Most people in the Original Medicare Plan have some type of additional coverage to pay for care that Medicare doesn't fully cover. Buying a Medicare Supplemental (Medigap) Insurance policy is one way to cover Medicare's gaps. However, before you decide to buy a Medigap policy, you might want to first check into several other types of coverage that may cost less. If these options aren't for you, we give steps to help you select the Medigap policy that's right for you.

Here are some of the other health coverage options to explore:

• Medicare Savings Programs
• Extra Help for People with Limited Income and Resources
• Medicaid
• Retiree Health Insurance
• Prescription Drug Assistance Programs

FYI: A complete list of all the other health coverage options that help pay for Medicare costs can be found in the Guide to Health Insurance for People with Medicare.

Other Health Coverage

Medicare Savings Programs
Medicare Savings Programs help people with low incomes and limited resources pay for some of their Medicare costs. Some of these programs pay for some or all of Medicare B premiums. One program pays Medicare's deductibles and coinsurance.

A deductible is the amount you pay for your health care before Medicare begins to pay. Coinsurance is the amount you pay (usually a percentage) for your health care, after you pay the deductible.

Find out if you are able to sign up for any of these programs by calling your state medical assistance office. Many people qualify and don't know it. It's worth checking into.

Extra Help for People with Limited Income and Resources

Extra Help assists people with limited incomes and resources to pay for Medicare Prescription Drug Coverage. If you qualify, this program may help pay for most or all of your premiums and prescription drug costs.

Contact Medicare or your local Social Security Office to find out if you qualify for Extra Help.

Medicaid
Medicaid is a federal and state insurance program that helps people with low incomes and people who are disabled pay their health care costs. If you qualify for Medicaid and also have Medicare, almost all of your health costs are covered. You may also get extra benefits such as prescription drugs.

Medicaid rules vary from state to state. Check with your state medical assistance office to find out if you qualify for Medicaid.

If you find out you can get Medicaid, you don't need to buy a Medigap policy. If you already have a Medigap policy, you can suspend your policy (and not pay your premiums) for up to 24 months. If you lose Medicaid for some reason during these 24 months, you can get your Medigap policy back if:

• you tell your Medigap insurance company within 90 days of losing Medicaid, and
• you start paying your premiums again

Retiree Health Insurance

Find out if you can get retiree health insurance from your or your spouse's former employer or union. If you can get it, it may cost less than a Medigap policy and have more benefits, such as prescription drugs.

FYI: If your drop your retiree health insurance, you may not be able to get it back. Check with your former employer or union before making any decision about dropping retiree health insurance.

Prescription Drug Assistance Programs
Prescription Drug Assistance Programs offer free or low cost prescription drugs from states, drug makers, discount cards and discount pharmacies

Other Types of Policies
There are other kinds of insurance policies that should not be mistaken for comprehensive health insurance. Specific disease policies, such as "cancer policies," pay for care only for the specific disease. Hospital indemnity policies pay you a set amount of money for each day you are in the hospital. These policies only pay a fixed amount of your health care costs and can leave you with a large share of major health bills. You would be better off checking out other insurance options.

Choosing a Medigap Plan and Company

Once you have explored these other health coverage options and have decided to buy a Medigap policy, these 5 steps will help you find the plan that's right for you.

Step 1: Look at Your Health Care Costs
Step 2: Choose a Medigap Plan
Step 3: Find the Medigap Insurance Companies
Step 4: Compare Companies
Step 5: Select an Insurance Company

Step 1: Look at Your Health Care Costs
Look at how much you have been spending on health care each year. As best you can, think about what your future health costs may be and list these also. Be sure to include your costs for any of the services covered by Medigap plans:

• Medicare Part A (Hospital) Costs
• Medicare Part A Deductible
• Medicare Part B (Doctor) Costs
• Medicare Part B Deductible
• Blood
• Skilled Nursing Home Costs
• Medicare Part B Extra Charges
• Foreign Travel Emergency
• At-Home Recovery
• Preventive Services

Step 2: Choose a Medigap Plan
Review Medigap Plans A-L in detail to decide which plan or plans have the benefits you need and want. You may choose one or more plans to look at more closely.

Step 3: Find the Medigap Insurance Companies
Find out which insurance companies sell Medigap plans in your state. The Medicare Personal Plan Finder lists these companies. You can also call your state insurance department or State Health Insurance Assistance Program (SHIP) for help. The SHIP in your state provides information and one-to-one counseling to people with Medicare.

Step 4: Compare Insurance Companies
You will likely have several insurance companies to compare. Take your time and choose a company carefully.

For most people, the amount of the premium is a major factor in their decision. Find out the premium each company would charge you for the Medigap plan (or plans) you are looking at. You can then compare the costs—there can be big differences.

One of the reasons there may be such big differences in price is the pricing or rating method the company uses. While a policy may cost less when you first buy it, it may cost you more in the long run because of the rating method used. Here are the three ways policies are rated: attained-age, issue-age, and community-rated.

• Attained-age-rated policies generally are cheaper at age 65, but their prices increase automatically as you age.
• Issue-age-rated policies charge a rate based on your age when you first buy the policy, but the rate doesn't increase automatically as you age.
• Community-rated policies charge everyone living in your area the same rate regardless of age.

You might want to look for community-rated and issue-age-rated policies. They might be the best buy because, even though they might cost you more at age 65, they'll cost you less as you get older.

All policies increase premiums to keep up with increases in health care costs.

After you have compared premiums, there are several other things you can look for in an insurance company.

• Check to see if the companies you are looking at have arranged with Medicare to file your Medigap claims automatically. Automatic claims filing can save you time and headaches.
• Check the financial soundness and stability of the companies in reports from independent rating services. Check two of the rating services, Weiss Research, Inc. or A.M. Best Company, Inc. or look in your local library. As a rule, companies with an "A" or better rating will be a good choice.
• Check for complaints. Your state insurance department can tell you whether they have received many complaints about a company.

Step 5: Choose an Insurance Company

Once you have compared Medigap premiums and looked into the stability of the insurance company, take your time to sort through the information you have gathered.

Ask more questions and talk to people and groups that you trust. Help is available to you if you need it. Many SHIPs can provide you with more information about the insurance companies doing business in their state.

Need and advisor in your area, go to http://www.seniorsonlyfinancialadvisor.com