How do I know I’m not overpaying for Medigap?

Editor’s Note: Journalist Philip Moeller, who writes widely on aging and retirement, is here to provide the answers you need in “Ask Phil.” Send your questions to Phil.

Ethel – Tex.: I turn 65 in September. I enrolled in Medicare Parts A, B and D. I want a comprehensive Medigap plan, specifically Plan F. My husband is 74 and has AARP UnitedHealthcare Plan F, with which we are satisfied. Both my dear parents were enrolled with AARP Medigap plans in their lifetimes. I tend to be very loyal to AARP. Am I a shmuck? An agent is pitching Plan G from a different carrier (the company looks reputable) at a considerably lower premium, attained age rated. I feel there has to be a catch, maybe 20 years from now, and what is lower now will be more expensive. I realize you might not publish specific insurance names, but perhaps you could comment.

Phil Moeller: Ethel is asking exactly the right question, proving that she is anything but foolish. She is also correct that I tend not to comment on specific companies’ Medicare policies unless I’ve looked at them in detail. This is particularly true of Medigap plans, which are private insurance plans that can differ greatly depending on the state rules and competitive environment where you live. Medicare’s Part D prescription drug plans and Medicare Advantage plans are also sold by private insurers, but the Centers for Medicare & Medicaid Services regulates these policies, and they are similar across the country (some local rules may still differ). Medigap policies, by contrast, are regulated at the state level.

READ MORE: Which Medigap plan should you get?

Having said this, UnitedHealthcare’s AARP Medigap plans certainly are very popular, and letter F plans are the best-selling Medigap policy by far. Letter F plans also provide the most comprehensive coverage of things that Original Medicare (Parts A and B) does not cover fully, including some things it doesn’t cover at all. As a consequence, Part F also is the most expensive Medigap plan when compared against the nine other “letter” plans that may be sold where you live. There is a list of all these plans on page 11 of the annual CMS Medigap guide. The quirk about these plans is that federal rules mandate that every insurer’s letter plan A (or B or C, etc.) offers the identical coverage. However, insurers do not have to charge the same premiums for these plans, and wide price discrepancies do exist in many states for identical plans.

Looking ahead, which is what Ethel should do, there are many insurance experts who feel that Plan G will become increasingly attractive. It covers everything that Plan F covers except the annual deductible that Medicare requires be paid by beneficiaries before their Part B coverage kicks in. Part B covers doctors, outpatient expenses and durable medical equipment, and nearly everyone encounters this annual deductible. In 2016, the Part B deductible is $166.

Under terms of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), C and F plans sold to newly eligible Medicare beneficiaries will not cover the Part B deductible beginning in 2020. However, if you already have one of these plans before this deadline, you will be allowed to keep it and renew it each year. This restriction may cause many Medicare newcomers to no longer buy these now-popular plans, and this could put upward pressure on premiums for remaining plan members. Letter G plans are getting more attention and are worth serious consideration.

The other part of Ethel’s well-informed question refers to the broker’s recommended Plan G as being an “attained age rated” plan. There are three different rating systems that insurers use for pricing their policies. Here is a brief explanation of them from page 18 of the CMS Medigap guide:

Community-rated (also called “no-age-rated”). Generally the same premium is charged to everyone who has the Medigap policy, regardless of age or gender.

Issue-age-rated (also called “entry age-rated”). The premium is based on the age you are when you buy (are “issued”) the Medigap policy.

Attained-age-rated. The premium is based on your current age (the age you’ve “attained”), so your premium goes up as you get older.

The guide has additional information. Generally, attained-age-rated policies are likely to face larger future premium increases than policies using the two other ratings approaches. However, if the initial price is low enough, you might still come out ahead. I wish I could tell Ethel and other readers how to find great histories of how individual insurers have changed rates on their Medigap policies in each state. Unfortunately, I have not been able to find this information. If anyone has, please let me know.

Until then, I recommend Ethel and others use Medicare’s online tool to find prices for Medigap policies where they live. This will help Ethel compare all Plan G premiums sold by insurers in Texas. She also can see Plan F premiums for insurers other than UnitedHealthcare. The tool searches based on a person’s ZIP code, and I don’t know Ethel’s. However, when I used the ZIP where I live (Virginia), I got back a list of 17 Plan G policies, and all of them were attained-age-rated. Most of my Plan F choices are also attained-age-rated, although there were a couple of issue-age-rated plans and one community-rated plan. Notably, that was an AARP plan.

READ MORE: Do you know how Medigap policies work?

Debra – N.Y.: I’m a former administrative assistant in New York City. I was laid off five years ago and can’t find a job. My savings went on spending for dental issues. I am making ends meet by running a small eBay store where I barely make $7,000 a year. I get my health care from Weill Cornell Medicine, where they let me pay what I can afford. Now, I need Medicare, but I don’t have a nickel to spare. I can’t really afford even the Part B premium. But I hear that if I don’t get it now, but maybe win the lottery later and can afford it, that I will be penalized. Without money, what are my options? I want to wait as long as I can to collect Social Security, so that my benefits will be as much as possible.

Phil Moeller: Debra, I’m sorry to hear about your hard times, which have been shared by way, way too many Americans in recent years. You should definitely qualify for Medicare’s various low-income assistance programs, which defray premiums and insurance expenses, plus its Extra Help program to help pay for prescription drugs. I am assuming you are not on Medicaid, but that may be an option as well. You should call the free counseling service in New York provided by the State Health Insurance Assistance Program. Someone there should be able to gather your income and other related details and help you get these benefits. Best of luck.

Karen – Fla.:  I will be turning 65 in 6 months. I have health insurance through my employer, who employs more than 20 people. My 23-year-old daughter is under my plan and is now pregnant. She is a student. I am afraid to apply for Medicare for fear I will lose her from my plan. Please advise. I have a high-deductible plan and am nervous about hospital costs for myself if I don’t have Medicare.

READ MORE: Should I keep regular health insurance if I’m enrolling in Medicare?

Phil Moeller: Karen, you can breathe easy. You do not have to get Medicare when you turn 65, because you will continue to have employer health coverage, and as you note, your employer has more than 20 employees (if it had fewer, you would need Medicare). So, you can keep your employer plan and keep your daughter on it until she turns 26. If you are nervous about hospital costs, you could get just Part A of Medicare. Part A covers hospital costs, and there is no premium for getting it if you have enough wage earnings to qualify for Social Security. It can come in handy if you have hospital expenses that are not fully paid by your employer’s plan. On the downside, however, signing up for Part A would invalidate your continued participation in a health savings account. Such plans are not permitted for people who are on Medicare, and getting Part A is considered being on Medicare.

Jamie – Ala.: Does Medicare cover you when you travel out of state?

Phil Moeller: If you have Original Medicare (Part A and B), a Part D drug plan and perhaps also a Medigap plan, you will be covered anywhere in the United States. You also will be able to see any caregiver that works with Medicare and has agreed to accept the agency’s payments for your care. However, the story might be different if you instead have a Medicare Advantage plan, as do nearly a third of all Medicare beneficiaries. Medicare Advantage plans may offer reduced or even no coverage for health care outside the plan’s primary geographic market area. Some plans do offer emergency care when you travel outside its market area, but this is not something you want to leave to chance before you travel. If you have a Medicare Advantage plan, call your insurer and find out exactly what coverage it offers outside its home market.

Anonymous – Pa.: I get Social Security disability. If I get married, will my new spouse be covered by my medical insurance through Social Security disability?

Phil Moeller: This is a straightforward question to answer, and the answer is no. But the topic of whether spouses are covered under Medicare apparently trips up lots of folks. After all, family health insurance plans are the norm in the world of private employer health insurance. But this world changes a lot when people roll off their employer plans and onto Medicare. And one of the biggest changes is that there are no family plans in Medicare. Each covered individual must have their own Medicare coverage.

READ MORE: My Medicare only provides minimal coverage out of state. What should I do?

While this can make more work for the couple, it also means that each person can get the package of Medicare policies that best meets their needs. Odds are that married spouses do not have identical health needs. They may take different prescription drugs, for example, and therefore, might benefit from having Part D prescription drug plans with different insurers. One spouse might have a chronic health problem and require regular hospital care and the care of several specialists. The other may have no major health issues. Thus, the first spouse might get the best care at the lowest price by having basic Medicare (Parts A and B), a Medigap policy and a Part D plan. The second spouse might be just fine with a less expensive Medicare Advantage plan that includes a bundled Part D plan. If the second spouse does develop more serious health problems, they can use Medicare’s annual open enrollment process to switch to more appropriate coverages. Now, things often are not so clear-cut in the real world. My point is that Medicare should not be a one-size-fits-all program for married couples.

Mary – Ore.: My husband and I will be 65 in September. Since your book on Medicare will not be available until later in the fall, can you recommend some titles for me to read? My husband thinks your “Get What’s Yours” book on Social Security was absolutely the best source for information.

Phil Moeller: It is very hard, at least for this writer, to recommend a competitor’s book. But flattery will get you everything! Patricia Barry writes about Medicare for AARP. Her “Medicare for Dummies” book is a useful consumer guide.