Recently, I naively sought out information about Medigap Insurance. My expectation was this would be an easy matter; after all how complicated could filling a gap be?
Well, it turns out to be incredibly complicated. There are age rules, penalties, limited enrollment periods, and a lot of different programs with different insurance companies offering different coverage at (you guessed it) different prices.
I intended this article to help you better understand Medigap Insurance, but that goal has been lowered significantly. I’ll refrain from railing about how confusing the whole Medicare thing is. Instead, I’ll try to hit some highlights that remind me of the advice a CPA once gave me about taxes: “If you want to save on taxes, complicate your life.”
As with Medicaid, you must sign up for Medigap Insurance when you are 65, unless you have Credible Coverage. If you are still working, for example, and your employer is paying a Medigap equivalent, they can provide you with a Credible Coverage form to submit as proof of coverage. (You should keep this proof for the rest of your life in case of future challenges to your continuity of coverage.)
The window for signing up or changing policies is at the end of each year unless you experience a qualifying event. But don’t wait until October; begin exploring your options when you turn 64 or as soon as you know you need a change.
The Medigap plans available range from zero premiums with deductibles as high as $4,000 to monthly premiums and lower deductibles. If you have a monthly premium, it is deducted from your Social Security check. If the insurance company raises that premium, you may take the hit to your monthly check but not be aware of the increase. I’d call that cost creep and it is hard keep track of, especially if you have had the same policy for a decade and the increases were small but consistent.
Since the costs and coverage can change, it is important to review your Medigap policy each year. Whether you work with an 800 number or a local agent, take the time to call or meet so you can better understand changes and any new options available.
Since Medigap Insurance often includes prescription drug coverage, an annual review is doubly important. You don’t want to find out at the drugstore your $400 a month prescription is no longer covered.
If you are assisting an older friend or loved one, be sure to add an annual review of all insurance coverage to the long list of tasks you are already trying to manage.
Yes, this is complicated, but to paraphrase my CPA, if you want a successful retirement, complicate your life. After all, Aging in Place doesn’t happen by accident.