Are you considering a Medicare Supplement Plan but worried about potential risks? Read on to find out more about the drawbacks and potential downsides of Medigap plans so that you can make an informed decision.
Medicare Supplement plans, also known as Medigap, are highly regarded for their coverage and freedom. However, there are several key disadvantages to be aware of.
Cost Concerns
One of the most significant drawbacks of Medigap plans is the cost. The monthly premiums vary depending on your location and the carrier. For example, someone turning 65 might expect to pay between $80 and $120 per month for a Plan G or Plan N, and rates can be higher in states like Florida and New York.
Rate Increases
Another concern is the rate increases over time. Typically, you may see an annual rate increase ranging from 0% to 5%, but it can sometimes be higher due to factors like industry claims and inflation. It is advisable to anticipate a yearly rate increase. If you are healthy, shopping around for a lower rate may be possible, but this isn’t guaranteed.
Lack of Coverage for Additional Services
Medigap plans do not cover dental, vision, or prescription drugs. These services must be purchased separately, which adds to the overall cost of healthcare.
Underwriting Requirements
In most states, there are underwriting requirements to change Medicare Supplement plans. This involves health questions and reviewing your medication history, meaning carriers can decline your application. Therefore, it is possible to be stuck with a Medigap plan if you cannot pass underwriting to switch to a lower premium. However, switching to a Medicare Advantage plan remains an option without health questions, regardless of your health status.
Certain states, like New York and Connecticut, do not have underwriting requirements for Medigap plans. Other states, such as California, Nevada, Missouri, and Washington, allow changes around specific dates, like your birthday or plan anniversary. These rules help save money by enabling easier switches between Medigap plans without underwriting.
If you reside in a state without such provisions, you might be stuck with your current carrier if your health does not permit changing to another carrier offering lower premiums.
Initial Plan Selection Risks
Another risk is choosing the wrong Supplement Plan during your open enrollment period when no health questions are asked. If you purchase a plan such as a high deductible Plan G, mistaking it for a regular Plan G, and realize it after your open enrollment has ended, you might be stuck with that plan if your health prevents you from switching and you don’t live in a state with special rules allowing changes without underwriting.
Get in touch with a Medicare expert today
Overall, the primary risks associated with Medigap plans are the costs, rate increases, underwriting requirements, and the possibility of making an incorrect choice during open enrollment. Despite these drawbacks, Medigap plans offer extensive coverage and freedom, allowing you to see any doctor nationwide who accepts Medicare.
If you want to compare Medigap plans to find the best option for you don’t hesitate to call us at 800-208-4974!
Alex Wender is the founder and CEO of Bluewave Insurance. He has been blogging about Medicare-related topics since 2010. Since then, he and his agency have helped thousands of people across the country choose the right Medicare to fit their needs.
