Medicare Supplemental Insurance or Medigap insurance as it is frequently referred to, is not required to be purchased by Medicare beneficiaries. The advantage to having Medicare Supplemental Insurance is that it assists in covering the “gap” of 20 percent that Medicare does not cover.
Additionally, you are not subject to pre-existing conditions exclusions if you are enrolling to a Medigap plan within six months of your 65th birthday, or enrolling in Medicare Part B. If you wait to purchase Medicare Supplemental Insurance beyond this six month window, any medical conditions you may have can result in higher premiums or exclusions of those conditions for coverage.
There are three methods that insurance providers use to determine the rates for Medicare Supplemental Insurance. Community-rated, Issue-age-rated, and Attained-age-rated are the methods used.
Community-rated policies typically charge the same rate to everyone in a geographic location. Premiums will not be increased because age changes, but can fluctuate due to inflation and other factors.
Issue-age-rated policy premiums are determined by the age at which you purchase coverage. With issue age policies, your premiums will also not change due to increased age, but may change with inflation and other factors.
The Attained-age-rated policy premium is determined by your current age. These policies generally have lower premiums for younger buyers, but can increase significantly as the insured ages. These premiums are also subject to inflation and other factors.
If opting not to participate in Medicare Supplemental Insurance, there is a possibility that you may end up with a large amount of out of pocket expenses should you have need for doctor or hospital services. Your cost may vary depending on if your doctor or medical facility accepts assignment of Medicare. This means that the provider of services is paid directly by Medicare. If assignment is not accepted, you may be charged as much as fifteen percent more than the approved Medicare charge, and you would be responsible for everything above the eighty percent that Medicare will pay on your behalf.
You should evaluate your health and finances objectively and look at long term projections when considering your options surrounding Medicare. The cost of Medicare Supplement Insurance is worth the cost more often than not, but you will want to see what your options are.