Aren’t they standardized?
If you have been searching around for prices of supplements, you may find yourself asking, “Aren’t supplements standardized?” You can also wonder, “Why are supplements all different prices, then?”
My short answer would be, “yes, but…” As you can guess, there is a little more to it than that. My goal here is to point out the differences so you can make an informed decision rather than just going with price.
There are 10 different Plans that you can get from Medicare Supplement companies. Not all Plans are offered by all companies, but each company has to offer at least Plan A (as opposed to Part A). If you need reminders of what the items in the left column are, you can revisit them (or visit them for the first time) here for Part A and here for Part B.
|Medigap Benefits||Medigap Plans|
|Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Part B coinsurance or copayment||Yes||Yes||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes***|
|Blood (first 3 pints)||Yes||Yes||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|Part A hospice care coinsurance or copayment||Yes||Yes||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|Skilled nursing facility care coinsurance||No||No||Yes||Yes||Yes||Yes||50%||75%||Yes||Yes|
|Part A deductible||No||Yes||Yes||Yes||Yes||Yes||50%||75%||50%||Yes|
|Part B deductible||No||No||Yes||No||Yes||No||No||No||No||No|
|Part B excess charge||No||No||No||No||Yes||Yes||No||No||No||No|
|Foreign travel exchange (up to plan limits)||No||No||80%||80%||80%||80%||No||No||80%||80%|
This is all I have to look at then, right? Wrong, unfortunately. This part is standardized, but what are not standardized are the additional or innovative benefits that companies offer on top of this coverage, and how they choose to structure rate increases. These are key!
There is one company I know of that offers Vision and Dental benefits with their supplements. These, of course, are two things not covered by Medicare or supplements without this rider.
There is another company that will pay anything that is billed as preventative at 100%, even if it’s not in Medicare’s schedule.
There are yet other companies that offer patented versions of plans listed above.
These examples affect the price. More importantly, the added benefits can be very important if they include things important to your healthcare outlook. There is a benefit listing of such innovative additions on the website for the National Association of Insurance Commissioners.
How do insurance companies set prices for Medigap Policies?
Another thing that is often overlooked is premium structures. This is also “standardized” to a point: the government allows companies to offer community-, attained-age, and issue-age ratings . Premiums will generally change due to medical inflation of the company, but these rating structures add a new dynamic to rate changes. Many people don’t know this about Medigap policies until too late. I’ll explain what they mean here.