Frequently Asked Questions
Medicare Supplements are known by several names including Medigap, Med Supp, and Medicare Supplement. The plans are designed to cover a variety of out-of-pocket expenses associated with Original Medicare such as deductibles, conisurance and co-payments.
In 47 states there are 10 standardized plan types; A, B, C, D, F, G, K, L, M and N. All Medicare Supplement plans with the same letter offer the same benefits, regardless of which insurance company you buy them from. However, prices may vary significantly for the same Medicare Supplement plan so it’s a good idea to comparison shop for prices before selecting and enrolling in a Medicare Supplement plan.
Plan F is generally considered to be the “Cadillac” of Med Sup plans. It’s the most comprehensive Medicare Supplement plan available, and the most frequently purchased option. To see the lineup of standardized plan coverage, follow this link or look at this graphic.
Having standardized benefits does simplify the buying decision, but there are some other important things everyone should know about Medicare Supplement plans before they select a plan:
- Automatic Renewal: Once you are accepted for a Medicare Supplement plan, as long as you keep making premium payments, your carrier is obligated to renew your plan.
- Enrollment is Not Always Guaranteed: Medicare Supplement insurance is regulated by the states, so there will be eligibility differences based on where you live. For example, in New York, most applicants must be accepted anytime, while in other states all applicants must be accepted only within their first six months of eligibility for Medicare Part B and in a few other situations. Outside of the eligibility periods, carriers are allowed to reject an applicant based on adverse health conditions. This means that if you apply at the wrong time, you may not be eligible for a Medicare Supplement policy.
- Medicare Supplement Plan Rate Increases Do Occur: Medicare Supplement carriers can increase rates, and experience has shown the increases can exceed the rate of general inflation. Rate increases are based on:
- The claims experience of the membership of the plan and…
- The way the plan was set up initially. Some plans charge everyone in the plan the same rate no matter their age, some charge a rate based on someone’s age when they enter the plan and some charge based on a person’s current age.
- Medicare’s Annual Enrollment Period does not apply: Medicare Advantage and prescription drug plans are available for open enrollment from October 15 through December 7. This open enrollment period does not apply to Medicare Supplement plans. However, it is still the right time for someone with a Supplement Plan to find a drug plan that suits their needs and to consider whether switching to an Advantage plan will meet their financial and health care needs. Also remember that Medicare Advantage plans have networks, so you should look for plans that include doctors and medical facilities you prefer.
When you’re trying to come up with a plan to finance a child’s college education, consider all your different sources of cash but also realize that the money you earmark for college means you may not have much money left over to save for your own retirement. Comprehensive college education planning should include a thorough understanding of all the family’s financial objectives and current and prospective financial positions. Grandparents who are able financially and interested emotionally in the education of your children should be included in the planning process. Retirement and estate planning perspectives should also be considered before entering into an educational funding program.
Tuition and fees have risen 94% since 1989, nearly triple the 32.5% increase in inflation. The sticker price — tuition, fees, and room and board — for a year of undergraduate education ranges from $33,000 at Ivy League schools to $10,500 at state universities. If college costs continue to increase at even twice today’s low rate of inflation, the cost of a four-year degree for a child born today would be $109,000 for a state university and $260,000 at an Ivy League school.
If you have kids or are planning to have them, the importance of starting to save for their college costs right now cannot be overstated. College costs have been rising about 6% to 8% annually for the past 20 years, more than twice the annual rate of inflation. In short, if you want your child to eventually go to college, you will be responsible for paying most or all of the costs. And because those costs are already skyrocketing, you need to start saving to meet them today.