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According to a new study, Medigap policies that supplement Medicare’s basic coverage can cost different amounts, depending on the company selling the policy. The findings highlight the importance of shopping around before purchasing a policy.
When you first become eligible for Medicare, you may purchase a Medigap policy from a private insurer to supplement Medicare’s coverage and plug some or virtually all of Medicare’s coverage gaps. You can currently choose one of eight Medigap plans that are identified by the following letters: A, B, D, G, K, L, M and N (If you were eligible for Medicare before January 1, 2020, but not enrolled, you may also be able to purchase Plans C and F, but those plans are no longer available to people who are newly eligible for Medicare). Each plan package offers a different menu of benefits, allowing purchasers to choose the combination that is right for them.
While federal law requires that insurers must offer the same benefits for each lettered plan (e.g. each plan G offered by one insurer must cover the same benefits as plan G offered by another insurer), insurers set their own prices for each plan. This means that the price of each plan can vary considerably, depending on the insurance company that is providing it.
The American Association for Medicare Supplement Insurance (AAMSI) compared costs of plans in the top 10 metro areas and found huge cost differences. Using Plan G for comparison, which is the most popular, the AAMSI found that the lowest price for a 65-year-old woman to purchase a plan in Dallas was $99 a month, while the highest price was $381 a month. This is an annual difference of more than $3,000 for the exact same plan!
The AAMSI also found that no one company consistently offered the lowest or highest price. In their study, investigators discovered that 13 different companies had either the lowest or highest price. This means you cannot simply rely on one company to always have the better price.
When looking for a Medigap policy, make sure to get quotes from several different insurance companies. Additionally, if you are going through a broker, check with two or more brokers because one broker might not represent every insurer. While it can be hard work to shop around, the price savings from doing so can certainly be worth it.