On Medicare? Choosing the Best Medigap Policy

Short guide on how Medicare Beneficiaries can choose the best Medigap policy. I go over the three best plan options, where to get a list of companies operating in NJ, and additional resources.

Medigap policies, also called Medicare Supplement policies, are sold by private insurance companies to fill in the gaps left by original Medicare. There are 12 standard plan options and about 11 different insurers to choose from in New Jersey. With the wide range in options, this article will help you decide if a Medigap policy is right for you and how to choose the best option.

What does a Medigap Policy Cover?

Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) do a pretty good job in covering you for medical services, but they still leave people exposed to deductibles, coinsurance and copays.

In 2012, Medicare Part A has a $1,156 deductible that resets every 60 days, and Part B has an annual deductible of $140. For Part B, once the deductible is met, you then pay a 20% cost sharing for your services.

A Medigap policy will help you pay those deductibles and coinsurances so you can avoid large claims exposure. These plans are also accepted anywhere that Medicare is accepted so they work seamlessly accross the United States.

When is the best time to buy a Medigap Policy?

The best time to buy a Medigap policy is during the guaranteed issue period, but you can purchase or switch plans at almost any point in time.

 Guaranteed Issue Period

The guaranteed issue period lasts for six months and starts on the 1st day of the month in which you turn 65 or older and you are enrolled in Medicare Part B. During this time period, insurance companies cannot use medical underwriting to determine your rate or deny your acceptance.

After the guaranteed issue period, you can still buy a policy but companies can use your medical history to adjust the rate or deny coverage.

Which is the best plan option? Plan F, G and N!

With 12 standardized plans, it can be tough to narrow down the choices. I think the best are Plans F, G, and N. 

  • Plan F is the most comprehensive plan with almost all services covered 100%
  • Plan G is the same as F except you are responsible for the annual Part B deductible
  • Plan N will be the lowest premium of the three, and you will have to pay your Part B deductible as well as a $20 copay at your physician.

Things to Keep in Mind

Like most health insurance, premiums will tend to go up as you get older so make sure that you will be able to afford your plan in the future as the price increases. Once the guaranteed issue period is over, you can be rejected for new coverage so be prepared to stick with your first choice. 

Plan G – in many cases is more than $140 less per year than Plan F, so this is a good value. If you can save $300 in premium and only have to pay an extra $140, you win.

Plan N – is a good mix between low out of pocket costs to you and low premiums.  

What companies sell Medigap in NJ?

The New Jersey State Health Insurance Assistance Program provides a list of the available companies in NJ. List of NJ Medigap Companies

Choosing a Medigap Company

The plans are all standardized, so Plan F with one company will have identical coverage to another company’s Plan F. How I like to compare the companies:

  • Reputation of the company
  • Past rate history, if you can get it. Do they consistently have high increases year to year?
  • Do they medically underwrite if you are out of your guaranteed issue period?
  • Do they offer any discounts?

Additional Resources:

If you have any questions on choosing a Medigap policy, I am happy to help out. You can reach me at http://www.newjerseyinsuranceplans.com.

I also recommend you use these resources below:

Medicare and you 2012

Medicare Guide to Choosing a Medigap Policy

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Twisted Teabag March 21, 2012 at 11:45 PM
Is there a formula to allow one to compare their employer coverage/expense with Medicare and Medicaid coverage/expense? Putting off retiring until I can get a handle on what the impact will have on me.
Mike Sheeran March 22, 2012 at 12:42 AM
Twisted, I don't know of any tools, but this may help you. If you are actively at work and your employer is under 20 employees, you will have to purchase Part B which is $99.90 per month. If your company is over 20 employees then you can delay enrolling in Part B until later. (You will want to speak to your group administrator and Medicare regarding this.) Option 1 - Stay on group: Your employer based premium + $99.90 per month. You will still have copays for your doctor's, hospitals and prescriptions etc... You will also still need to use the network of whatever insurance carrier you have. Option 2- Medicare Only: Waive off the group and purchase Part B for $99.90. You can also purchase supplement Plan F for about $160ish per month and a Part D prescription Card for somewhere around $50 per month depending on the plan. In this scenario, you can see any physician in the country and have zero out of pocket for the $160+$99.90 monthly. All copays and deductible will be picked up 100% by Medicare and the supplement. The only variable will be how many prescriptions you take and how much that may run you per month. The prescription portion is the one drawback to coming off of the group plan in most cases. Medicare.Gov - allows you to enter your prescriptions and it will tell you how much your expected costs will be. https://www.medicare.gov/find-a-plan/questions/home.aspx
Kelli March 22, 2012 at 04:02 AM
Mike, There is also PAAD for those who have a lower income and can't afford a Rx plan. PAAD has much lower co-pay for Rx. There is also Sr. Gold on PAAD for those who have a little higher income. One of the big problems I see with my oMm is that she can't afford a supplemtal insurance due to low SS Disability income, but Makes approx. $75.00 over the cap for Medicare.So she is in the suck zone and can afford Medicare only.
Mike Sheeran March 22, 2012 at 02:50 PM
Kelli, I'm glad you mentioned PAAD and the Senior Gold program. They are great programs, but unfortunately there are still a lot of people who are just above the income limits to qualify. Your mother may also want to take a look at a Medicare Advantage plan next annual election period. Some of the Advantage plans are $0 per month and offer additional coverage like dental, gym memberships etc... Definitely review all of the benefits before making that move though since the insurance would then be through a private insurer opposed to Medicare. Also, for your mother or others looking at PAAD and other programs, the state has a self screening program that lets you sort through the different options. Check it out here: http://www.mynjhelps.com/
Brad Hoss February 01, 2013 at 01:19 AM
On <a href="http://www.medigap4seniors.com/medicare-supplement/choose-medicare-supplement-policy-carefully/">choosing a medigap policy</a>, does this require that you sell your soul, or something equally as costly, to the policy maker? Or will they usually make reasonable deals?


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