I’m retiring soon and think I’m going to skip buying a Medicare Advantage plan and purchase a Medicare Supplement plan and add a stand-alone Medicare Part D Prescription Drug Plan to my coverage. In your book, it’s Option 2; Medicare Part D + Supplement as you outline in your book.
If I do that, can I change Medicare Supplement insurance companies if the plan I buy ends up being more expensive than another Medicare Supplement options after a few years?
I just finished reading the book, and it’s nothing short of excellent. I didn’t think I would be able to understand Medicare at all. I started reading another book and got lost and gave up. It didn’t hold my interest like your book did.
Thank you for your kind words! It truly makes me incredibly happy to hear my book has helped you.
The quick answer: it depends on where you live and whether you can pass medical underwriting when you want to change Medicare Supplement insurance companies. *There’s also a helpful nugget at the end of this post, so be sure to read to the end.*
Since you’ve read the book, you must have picked up on the section where I ask the reader if they can afford ever-increasing Medicare Supplement premiums. Medicare Supplement premiums generally increase in price the older you get while Medicare Advantage premiums are the same whether you’re sixty-five or 105 years old.
Many Medicare Supplement insurance companies offer discounted or new-to-Medicare rates for people turning 65. Most Medicare Supplement insurance companies offer similar rates for people between ages 65 and 70. Don’t be fooled by introductory rates—look at the premiums over time. They’re usually listed in the policy booklet or application, and age 70+ rates can really shoot up. This is where an independent Medicare insurance agent can come in really handy. A local, field-based independent Medicare insurance agent will be able to tell you about a company’s history of annual rate increases and make a customized recommendation.
Can you continue to afford those premium increases? If you can, do you really want to? If you can’t, or don’t want to face that in future years, you have two options. The first one is switch to a Medicare Advantage Plan. The second is to switch to a cheaper Medicare Supplement (Medigap) insurance policy.
If you switch from one Medicare Advantage plan to another, the Medicare insurance companies MUST accept you, so no problems there.
Medicare Supplement insurance companies DO NOT. The problem with switching Medicare Supplement plans a few years after you retire is (outside of some individual state rules, outlined below) they don’t have to accept you. They can ask you medical questions and deny you coverage outside of what’s called the Medicare Supplement (Medigap) Open Enrollment Period.
Medicare Supplement (Medigap) Open Enrollment Period
Since it sounds like you’re retiring soon, you’ll be in your Medicare Supplement (Medigap) Open Enrollment Period. That means you can sign up for any Medicare Supplement plan you want to, without any medical underwriting. All Medicare Supplement insurance companies must sell you a Medicare Supplement policy, cover all your pre-existing health conditions and can’t charge you more for a Medigap policy because of past or present health problems.
This only happens once. One time. The Medicare Supplement (Medigap) Open Enrollment Period only occurs one time in your life.
Medicare Supplement (Medigap) Open Enrollment Period Limitations
If you’re turning sixty-five or getting Medicare for the first time, it’s extremely important to know there are only certain times you can buy a Medicare Supplement without being asked health questions. If you buy a Medicare Supplement within the first six months of getting Medicare Part B, the insurance company has to accept you. This is called the one-time Medicare Supplement (Medigap) Open Enrollment Period. If you don’t sign up for a Medicare Supplement plan within this timeframe, you will probably have to answer health questions and could be denied coverage. If you’ve previously been or are very sick (cancer, heart attack, stroke, etc.) before you got Medicare and want to make sure you can get a Medicare Supplement plan with no health questions, it is paramount you don’t miss this window.
The Medicare Supplement Open Enrollment Period automatically starts the month you’re sixty-five and enrolled in Medicare Part B. If you defer Medicare Part B because, for example, you’re working and have employer-sponsored healthcare coverage, the period starts when you finally do elect Medicare Part B. This is a one-time, six-month enrollment window. After this period, you may not be able to buy a Medicare Supplement policy without answering health questions. If you’re able to buy one, it may cost more due to past or present health problems.
Medicare Supplement Enrollment Exceptions
Several states have exceptions to this. In California, you can switch your Medicare Supplement plans between carriers (as long as it’s not an upgrade) every year in the sixty days following your birthday with no medical underwriting. In Oregon, you have thirty days. In Missouri, you can switch within sixty days of your anniversary date of your initial effective date into a Medicare Supplement plan. Washington, New York, Connecticut, Minnesota, and Wisconsin also have special rules that may allow you to switch. If you’re in any of these states, I highly suggest you talk to a representative from a Medicare Supplement insurance company or a Medicare insurance agent to help guide you through the process. Planning ahead is key here—don’t wait until the last minute or drop your current coverage without doing your homework or getting help.
Medicare Supplement (Medigap) Guarantee Issue Rights
There are other scenarios where people may be able to get Medicare Supplement insurance outside of the Medicare Supplement (Medigap) Open Enrollment Period. Some rules are federal, some are state-based. If this applies to you, your best bet is to lean on an expert Medicare insurance agent for guidance. Independent Medicare insurance agents in your area know the state-based rules, as do telephone representatives working for Medicare Supplement insurance companies. Medicare.gov has a decent webpage outlining these scenarios and you can find the link to that page by going to PrepareforMedicare.com/links.
Medicare Supplement Plan “Letters” Are All The Same, Regardless of Company
All Medicare Supplement plans are the same. A Medicare Supplement Plan G is a Medicare Supplement Plan G, regardless of what insurance company you buy it from.
While a few Medicare Supplement insurance companies may offer some buy-up options or a few bells and whistles (like discounts). AARP/United Healthcare, Humana, Aetna, Mutual of Omaha, Blue Cross and Blue Shield… they all offer Medicare Supplement plans in multiple states, and every Medicare Supplement Plan G, N, C, F… any “lettered” Medicare Supplement medical plan’s benefits are exactly the same. They all provide the exact same level of “gap” coverage as the other.
Medicare Supplements vs. Medigap Plans
Medicare Supplements and Medigap plans are the same thing, by the way. They’re synonymous; people in different parts of the country use them interchangeably. Kind of like soda and pop. Same thing. Medicare.gov even uses both Medigap and Medicare Supplement interchangeably (I wish they’d just pick one and stick with it!)
Today, Medicare Supplement plans come in several flavors, which have letters attached to them. These are A, B, C, D, F, High-F, G, High-G, K, L, M, and N. There are also something called Medicare Select Plans, which are essentially Medicare Supplement plans with networks. I wouldn’t pay much attention to those because they’re pretty scarce, come with network restrictions, and not many folks buy them.
Medicare Supplement AM Best Ratings
There are a boatload of other, smaller Medicare Supplement insurance companies out there, most of which you’ve probably never heard of, selling Medicare Supplements in certain states or counties. As I recommend in my book, before you buy any Medicare Supplement plan, make sure you check their financial strength. You can do that by checking here or going to their individual websites and snooping around. Ideally, I recommend people buy a Medicare Supplement plan from a company with at least an A- (A minus) rating from AM Best.
*Here’s the helpful nugget I mentioned at the beginning of the post.*
Finally, a lot of Medicare Supplement companies will allow you to drop down to a less expensive plan without any medical underwriting. For example, if you buy a Mutual of Omaha Medicare Supplement Plan G and want to drop down to a less comprehensive and cheaper plan N from the same company, most companies allow you to do that. They just won’t let you increase or improve your benefits without medical underwriting.
Don, I hope that helps!
I love answering Medicare questions. Send me yours by clicking here and I’ll pick a few for a future blog post!
To your wealth, wisdom, and wellness!
Author Bio: Matt Feret is the author of the Prepare for Medicare book series and launched prepareformedicare.com to help people get objective answers to questions about Medicare. He’s held leadership roles at numerous Fortune 500 Medicare health insurers in sales, marketing, operations, product development and strategy for over 20 years. Matt holds a BA from Virginia Tech and an MHA from Washington University in St. Louis.