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Gail MarksJarvis: Why seniors should choose wisely when selecting Medigap supplement insurance

Gail MarksJarvis, Chicago Tribune on

Published in Senior Living News

To appreciate the concern, it's important to understand how the plans work.

A key is how insurance companies treat pre-existing conditions. If you start Medicare at age 65 you will be accepted into the Medigap insurance plan you want regardless of whether you have good or poor health. But if you don't initially choose Plan F, and you want to switch to Plan F or another plan down the road, the insurance company will check your health. On that basis, you could be turned away from the insurance you want or face a hefty premium based on your health condition.

With the doors closing on Plan F, now is the time to get in if you want the certainty of the most comprehensive plan and are either turning 65 or are older, healthy and already enrolled in Medicare. Anyone who is already in Plan F on Jan. 1, 2020, will be allowed to stay with it for the rest of their lives.

Yet realize that if you are in Plan F after 2020, you could face an unpleasant surprise. Many insurance agents think Plan F premiums could rise after 2020 because the plan won't be taking in any more young, healthy people. As those in Plan F grow older and sicker, the insurance companies may go to government regulators and request the right to raise rates.

With that possibility in mind, some insurance experts and financial planners are telling clients who are turning 65 to go with another alternative, Plan G. It's as comprehensive as Plan F, but requires people to pay the annual deductible for Medicare. This year that's $183.

Kenneth Clark, a consulting actuary and principal of Milliman, said because Plan G is likely to become the new comprehensive plan that will take in a broad group of participants after 2020, it could have a lot of people with poor health and need to raise premiums.

In a recent paper, he told health insurance companies to start figuring out their risks and the premiums they will need to charge after the 2020 changes.

The uncertainty of future costs puts people in a bind as they try to figure out now which Medigap plan might be best for them throughout retirement.

Padget said on emotional grounds alone a person may want to commit to Plan F now "because you won't get a chance again later."

And Maura Carley, president of Healthcare Navigation, which provides health insurance consulting, said given the possibility that changing health could keep a person from moving from one health insurance plan to another, the best approach for Medigap is to "look at supplements as forever choices." She likes both Plan F and Plan G.

Before committing to a plan, she added, ask the insurance company if their policy is "portable." That means if you buy it in one state now, and find yourself moving to another state later, you won't lose the insurance because you can't buy it in your new residence.

"People say they are never going to move, but things change," she said. "You may have to move by the kids."

About The Writer

Gail MarksJarvis is a personal finance columnist for the Chicago Tribune and author of "Saving for Retirement Without Living Like a Pauper or Winning the Lottery." Readers may send her email at gmarksjarvis@chicagotribune.com.

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