Which leads me to the Cadillac’s of Medicare Supplements, plans H through J. I will address each one of these individually instead of groups, although each of these includes the foreign travel benefit (see note above).
Plan H
Covers all basic benefits (see Plan A), skilled nursing coinsurance (above 20 days), the Part A deductible ($812) and a basic drug benefit with a $1,250 limit. This means your supplement will only pay up to that amount for prescriptions and you’d be out of pocket at least the same amount. If you are taking a rather expensive medicine, such as Lipitor for example which currently runs about $432 for 90 days, you can easily spend that benefit limit for one prescription alone annually. Get all your prescriptions together and add up what you pay out of pocket before deciding on a policy with this benefit; it may not be worth the extra premium.
Plan I
Identical to plan H except that it includes 100% excess charges and at home recovery. The drug benefit is the same as well – $1,250.
Plan J
The flagship of Medigap policies. Pays for absolutely everything included in all the other plans and has a prescription drug benefit limit of $3,000. You would have to have over $6,000 in prescription costs to reap benefits of this one and premiums are hefty – in some areas up to $500 a month or more!
Medicare Decisions
Now that you’ve decided which benefit you need we are down to the finish line – decisions, decisions, and decisions. Which company should you choose to provide supplemental coverage for you? Again, do your homework before you do anything else. There are a few steps you can take you to make an informed decision.
- Contact your state insurance department for a list of companies licensed to do business in your state.
- Check on the financial stability and performance of the company that interests you. Insurance companies are rated on a scale from A to F by independents such as A.M. Best, Standard & Poor’s and Weiss Ratings. Look for companies that carry A’s with all three of these. You can check insurance company ratings at ambest.com as well. Explanation from one extreme to another:A rating – company has strong capitalization as a cushion against the impact of unexpected losses; follows a strong investment policy in terms of safety and liquidity, had a strong profit performance during the past five years and has good results on stability – in other words, it offers excellent financial security.D rating – means the company demonstrates significant weaknesses which could negatively impact policyholders, generally liquidity and stability is weak and you may want to look for a safer company
- Ask the company whether their policies are “attained age” or “issue age”. Attained age policies will increase your premium every time you have a birthday, which could mean you end up paying a 100% increase in premiums in as little as 5 years. Insurance companies will offer these types of policies what seems to be dirt cheap when you are 65 and it may very well be a good deal for the first year or two. However, the premium increases in subsequent years are not worth sticking around for. Look for issue age type policies which place you in an age group. Your premiums will never go up just because you have a birthday and if there is a premium increase it is spread out over the entire base of policyholders. These increases can be anywhere from 3% on up but may not occur very often.
- Ask about renewability. Is the policy guaranteed renewable or does it include a clause that will allow the insurance company to drop you like a hot potato when you get seriously ill? It won’t say this in so many words but watch for legalese and fine print.
- Find out if the company is restrictive with regards to doctors. Do you have to choose a primary physician and stay within a network? Once you venture outside of the network the policy may not pay any benefits – so check and be sure you can see any doctor you want, anywhere in the country.
- Ask how claims are handled. Do you have to do any paperwork or is it entirely handled by the company? Preferably you want a company that does electronic claims filing. By late 2003 all companies are required to do this so you may as well find one that already has all the kinks worked out of the system.
- Does the company offer other benefits such as prescription discount cards, mail-order prescriptions, vision, eye and dental discounts as well as vitamin or chiropractic discounts? These discounts can vary from provider to provider but can save you up to 40% in some cases. Call around the pharmacies and ask for prices on the same prescriptions – compare, compare, compare!
- Who do you contact if you have questions or concerned? Are you required to call a faceless 1-800 operator in Texas while you live in Georgia? Or, will you have a personal agent you can contact locally to help you? Personal agents often provide a better response time and 9 times out of 10 the agent that sells you the policy will stay with you as long as he or she is with the company.
The final decision will always lie with you and what you can afford. As mentioned earlier premiums can vary from company to company although plans A through J are the same wherever you go. What gives your potential carrier the upper hand will be value, financial stability, excellent customer service, fast payment of claims and a genuine desire to help you. I suggest steering clear of companies that cannot deliver on one or all of these aspects.
