Medicare is a great health insurance plan for Americans age 65 or older. Patients insured under Medicare enjoy hospital and medical coverage; as well as other benefits that help lower the cost of prescription drugs and medical treatments. Many patients are not aware that not all medical services are 100% covered by Medicare. Some very important preventive and health maintenance services are only covered up to 80% by Medicare.
Patients should not forgo preventive services or prescription medications just because they are not 100% covered by Medicare. Supplemental insurance is available from private insurance carriers under the name “Medigap”. There are 10 different Medigap options or plans, ranging from A to J (plans K and L are relatively new and not too common). All plans offer different levels of supplemental coverage and extended benefits such as prescription drug coverage. Plan A is the most affordable while plan J offers comprehensive coverage at a higher premium. Plan F is currently the most commonly obtained by those insured under Medicare Supplemental Insurance.
Although the coverage and benefits of Medigap plans are standardized by the Centers for Medicaid and Medicaid Services, the premiums tend to vary significantly from one private insurer to another. Studies performed by the General Accounting Office (GAO) have found that in 2003 the lowest premium for Plan A was $352. Meanwhile, the GAO study found that the highest premium for Plan J was $6,659. The GAO attributed the great disparities in premium pricing to fierce competition between insurers and the marketability of plans across different states.
In 2004, the GAO found the following average Medigap annual premiums for a 65 year old Medicare Supplemental Insurance recipient:
Plan A: $1,113
Plan B: $1,377
Plan C: $1,689
Plan D: $1,387
Plan E: $1,356
Plan F: $1,710
Plan G: $1,453
Plan H: $3,168
Plan I: $3,156
Plan J: $3,323
The GAO study shows that it really pays to shop around for a Medigap plan. As there are hundreds of insurers and perhaps thousands of agents ready to sell Medigap to Medicare recipients; the best advice to follow is to compare the pricing of the plans offered by different insurers.