Medigap & Medicare Supplement Premiums
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Beneficiaries of Medicare insurance pay MediGap premiums, otherwise also known as Medicare supplement premiums, as part of their health care arrangement. This coverage is meant to take care of any out of pocket expense when the person needs to undergo tests or hospitalization in relation to their health condition. The premiums are paid monthly and the rates depend on the plans. Different insurance companies following federal and state laws guidelines, however, set these rates, and not Medicare.
Premiums Are Not The Same
In total, there about ten kinds of Medicare policies a person can choose from, although other states may sometimes offer more than the ten options. While the plans are standardized no matter which insurance company you get this from, its coverage and benefits may differ and the premiums cost may also vary. Hence, it really pays to look into several offers before going with one type.
Insurance coverage that determines how much Medicare supplement premiums are computed is based on the following plans:
Community rated, which means regardless of the age of the beneficiary, everyone under this plan pay the same rate. In other words, if the coverage is entitled for someone who is already 72 years old, the MediGap premiums this person pays is the same as the 45-year-old individual who purchases the same policy. The cost of the premium is also determined by inflation and the region or state where the policy is obtained.
Issue-age rated, which means that the premiums are based on the beneficiary’s age when the insurance was first enrolled. In many case, people who get health insurance coverage when they are younger could avail of a lower medical supplement premiums cost. This cost could remain the same even as they grow older. Thus, if a 30-year-old individual buys a plan under this rate, his premium cost may be considerably less compared to someone who buys coverage at 75 years old.
Attained-age rated, which means that premiums are paid based on the how old the beneficiary is in a given year. Under this rate, premium costs gradually increase as the individual gets a year older. Yet, if the person buys the coverage early on, say at 35 years old, his Medicare supplement premiums are still considerably lower than someone who enrolls when he is already 65 years old. Inflation and current health status of the individual may also affect the pricing. The individual may also need to undergo a medical evaluation with each coverage renewal.
Some insurance companies do offer discounts and other types of rate breaks, if only to offer plans at a lower premium. For instance, a 35-year-old non-smoker may receive lower MediGap premiums rate compared to someone his age but has declared he is a smoker.
If the individual has the capacity to pay for his premiums annually, the rates may also be more cost-effective and cheaper, compared to someone who opts to pay his premiums monthly or by the quarter.
Some insurance providers may also offer lower premium rates, if the person getting insured is willing to pay high deductibles. This is usually applicable to one plan type of option (Plan F).