Most people treat their Medicare supplement plan the way they treat a landline: It’s something they sign up for once, at 65, and never think about again. That instinct might make sense for other types of insurance. But it’s the wrong instinct when it comes to your supplement plan, and it can cost you hundreds of dollars a year, sometimes for a decade or more, without you noticing.The part nobody expects: Identical coverage, different priceHere’s what most people don’t know about Medicare supplement, or Medigap, plans: They’re standardized by the federal government. A Plan G from one insurance company covers exactly the same things as a Plan G from every other insurance company selling in your state. Same benefits, same rules, no exceptions. The only thing that changes from carrier to carrier is the premium, and that gap is often much bigger than people expect. It’s common to see one company quoting around $140 a month for a Plan G in a given ZIP code, while another quotes $240 for identical coverage. If you live in Massachusetts, Minnesota or Wisconsin, your state uses its own Medigap plan structure instead of the lettered system, but the same principle applies: Compare identical coverage across carriers.That difference isn’t a mistake in the system. It’s simply how a heavily regulated product still leaves room for companies to compete on price. Once you understand that the benefits can’t differ, price becomes the only variable worth comparing. If it helps to see the price comparison laid out visually, this video walks through a similar rate check, including how identical Plan G quotes can vary by $100 or more depending on the carrier.About Adviser IntelThe author of this article is a participant in Kiplinger’s Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.Why the same plan gets more expensive every year you ignore itInsurance companies tend to price Medigap plans competitively when they’re trying to attract new customers, then raise those rates gradually in years two, three and four. Meanwhile, a different, equally reputable company may be offering the exact coverage you already have at close to what you originally paid. The result is a slow drift where loyal customers end up paying the most for the same benefits, simply by not looking elsewhere.Consider this scenario based on real-life patterns I often see in my practice: Carol enrolled in a Plan G at 65 for $150 a month and never revisited it. Eight years later, she was paying $310 a month for the same coverage, on the same plan letter, that a different company was now selling to new customers for $165. Nothing about her benefits had changed. What had changed was the price she was willing to keep paying without checking.The catch: You need to shop while you’re still healthyHere’s the part that makes this more than a simple money-saving tip. When you first become eligible for Medicare, you get a six-month Medigap open enrollment window where you can buy any plan, from any company, regardless of your health. Once that window closes, switching companies generally means answering health questions. Depending on your answers, you can be charged more or declined altogether. Several states (including New York, Connecticut, Massachusetts and others with “birthday rule” laws) require little or no underwriting to switch, but check with your State Health Insurance Assistance Program (SHIP) to see your state’s specific rules before assuming this applies to you.That’s the trap in Carol’s story. The money was there to be saved every year she waited, but the ability to make the switch wasn’t guaranteed to still be there when she finally looked. The right time to compare pricing isn’t when you’re sick and need to. It’s now, while you still qualify for whichever plan turns out to be the better deal.The piece that isn’t standardized: Part DIf you go the Medicare supplement route, prescription drug coverage isn’t included. You’ll need a separate Part D plan, and unlike Medigap, these plans aren’t standardized. Premiums, deductibles and which medications are covered can vary significantly and can change from one year to the next, even if you don’t change anything yourself. This is worth reviewing every single year, not every few years, during the annual enrollment window that runs from October 15 through December 7.Even people who aren’t currently taking any medications are better off enrolling in a Part D plan rather than skipping it. Going without one, if you don’t have other qualifying drug coverage, can trigger a penalty that gets added to your premium for as long as you’re on Medicare.Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel, our free, twice-weekly newsletter.What to do this fallYou don’t need to wait until something feels wrong with your current plan to check whether it’s still the right price.Pull your current Medigap premium and compare it against current rates for the same lettered plan from other carriers licensed in your state, not just your existing company.Do this while you’re healthy. If your health has changed since you last shopped, ask an independent agent what your options are before assuming you can switch freely.Mark October 15 through December 7 on your calendar every year, and use that window to review your Part D or Medicare Advantage plan, even if last year’s plan still feels fine.The takeawayMedicare isn’t a decision you make once at 65 and close the book on. Your health changes, insurance pricing changes, and the marketplace shifts every year whether you’re paying attention or not. Reviewing your coverage every two to four years, and your Part D plan every single year, can mean meaningful savings without giving up a single benefit. The only real risk is waiting too long to look.Related ContentThe ‘100% Overwhelming’ Decision: What Do You Do About Medigap?How Medigap Insurance Is Affected by Preexisting ConditionsWatch Out for the ‘Medigap Trap’11 Costly Medicare Mistakes You Should Avoid MakingThe Social Security Number Most Couples Never Calculate (and Should)This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Medicare Supplement Rates: How to Save Money
