For the average person turning 65 or leaving group coverage after that age, they are typically thrown into the world of Medicare and the onslaught of information comes their way. There will be brochures and expensive mailings from all kinds of companies not to mention Medicare itself and quite honestly, most people find it to be overwhelming. There are two critical items to keep in mind when looking at all the Medicare options where the old adage of "Don't Sweat the Small Stuff" comes into play. A better take on it would be, "Don't Ignore the Big Stuff" and we'll look at two ways this applies when choosing a Medicare Supplement insurance plan.
First, there's the question of premium or the amount of money you will pay to keep your policy in effect. This can run anywhere from zero (with Advantage plans) to an average of about $130 for age 65 (depending on area) on the F plan. There are plans priced in-between and even higher but that's the range we want to look at since it makes up the majority of the market. Many people are tempted to look at that no to low premium and be taken in by the lower rate or the "Small Stuff" not realizing that you always get what you pay for. These plans tend to offer low or now cost with pretty good benefits for the smaller bills up front but there's always a trade-off. If you have larger bills, you will generally have much more exposure out of pocket versus Medicare supplement plans (especially the F Plan). Betting against big medical bills in your 60's, 70's, and beyond is probably not a good one to make so don't be persuaded by the low up-front cost of Advantage plans. This also goes for some of the lower priced Medicare supplement plans where they don't cover excess, deductibles, or have other cost sharing structures on the back-end. The F Medicare supplement plan may be slightly higher on a monthly basis but you will have very little if any out of pocket exposure on the back-end as you need medical care. Keep in mind that it can be difficult if not impossible to change plans later on if your health changes and although we all plan to be invincible to last day on this earth, most health care costs are incurred in the last year of life. Don't save on the small stuff (monthly premium) only to be saddles with 1000's of dollars of expense later on.
The second concern deals with the actual Medicare supplement plans themselves. There are lesser priced Medigap plans when compared to the F plan but they have holes in their coverage, some of them significant. The deductibles (Part A for hospital and Part B for physician) are fixed amounts but the Excess that Medicare providers can charge is not capped and is a flat percentage (15%) of the total cost. There is no cap to this amount...you just pay 15% of whatever the charge is for providers charging the Excess amount. Some people might look at the C Medicare supplement plan or lesser options to save a few bucks monthly versus the F plan only to find out the hard way later on what Excess really means to the pocket book. This excess charge will only become more of an issue as Medicare looks to provider re-imbursements to shore up its financial house. This will force more and more providers to charge the excess and you need to be protected.
There will be cheaper plans on the market and ultimately, we will shop multiple carriers to make sure you get the best rate for a particular plan since they are standardized by law but you want to make sure to have the right plan from the onset and sufficiently cover the big bills.