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The projected monthly total of Medicare Part B, Part D drug coverage, and supplemental insurance will average $469 from age 65 to 85 in Hawaii, versus $634 in Florida, with a projected lifetime difference of $40,000 between the two states. “For the average American who’s trying to live on Social Security, it makes a big difference,” said Ron Mastrogiovanni, founder and CEO of HealthView Services. Even the affluent, he said, “don’t want to spend more money than they have to.”
Variation in premiums for supplemental insurance, also known as “Medigap” coverage, is the main driver of this cost differential. (Part B premiums are set by the government, while Part D premiums represent a smaller portion of total costs.) Those with original Medicare often opt to buy supplemental insurance from private insurance companies to cover out-of-pocket costs that Medicare doesn’t pay for, such as deductibles, co-payments and co-insurance. Premiums for Medicare supplement plans can increase over time with the participant’s age and inflation.
Retirees in Florida may be paying comparatively more for their Medigap plans, but they’re not necessarily getting more coverage for their money. There are 10 levels of Medigap insurance available nationwide, and the federal government requires that plans within each tier provide standard levels of coverage. For example, all Plan C policies cover the full Part B co-insurance, while all Part K plans cover 50% and all Part L plans cover 75%.
HealthView Services compared prices for Plan C across the country, so the coverage should be standard from Tampa to Waikiki. It’s possible a given insurance company might offer additional benefits beyond the standard basic coverage, but experts say there are plenty of cases where the exact same coverage sells for a different price.
Comparing regional differences
The premium price differential largely reflects variations in regional healthcare costs and consumption, said Dan Mendelson, CEO of Avalere Health, a Washington, D.C.-based strategic advisory firm. In places where patients access more services and undergo more procedures, and where those services and procedures are more expensive, those factors filter down to patients in the form of higher insurance premiums.
Combined cost comparison of Medicare Part B, Part D and Supplemental Coverage (Plan C) State Projected average monthly costs from age 65 to 85 Lifetime costs (projected life expectancy of 85 years) Hawaii $469 $112,528 New York $595 $142,899 California $601 $144,260 Florida $634 $152,184 Michigan $634 $152,175 Arizona $588 $141,082 Source: HealthView Services
While the HealthView Services analysis focused on state-level costs, there are regional and even local differences as well. In St. Louis, Mo., for example, Plan F premium prices range widely from $153 per month to $397 per month, according to Allsup Medicare Advisor©, a Medicare plan selection service.
Local and state price differences are inter-related, Mendelson said. A given locality may have a range of premium prices for a Medigap plan tier, but in a higher cost and usage region that range will skew higher than it will in a place with lower health-care costs and usage. Add up local-level pricing and you get state prices that trend higher in some states than others.
The HealthView Services analysis didn’t include prices for Medicare Advantage, coverage managed by private health plans that contract with the government to provide Part A and Part B under a somewhat different structure than original Medicare, which is managed by the federal government. Nearly one-third of Medicare recipients are enrolled in Medicare Advantage, with the remaining in original Medicare.
Choosing the right plan
Medicare’s annual open enrollment period begins on Oct. 15 and runs through Dec. 7, but unlike Part D drug plans, Medigap policies can’t be switched annually at this time.
That’s because, outside of a 6-month window, Medigap insurance companies can generally use medical underwriting to decide whether to accept a consumer and how much to charge that consumer. Those who enroll during their window, which starts when the person is 65 or older and enrolled in Medicare Part B, will have their pre-existing conditions waived.
There are other, limited circumstances that qualify consumers to apply and be accepted into any Medigap policy regardless of their health status, but moving generally isn’t one of them — Medigap policies are portable, so a retiree can use the same policy in Arizona that he first bought in New York, provided he still has original Medicare. If he finds a better deal after relocating to Arizona, he’ll have to pass medical underwriting in order to buy it.
The stickiness of the Medigap policy choice is all the more reason to choose a plan carefully and not necessarily default into the cheapest option. While the coverage levels are standard within each plan tier, the customer service might vary from carrier to carrier, and some policies might offer additional benefits on top of the standard ones. For example, one policy might include coverage for eyeglasses, a benefit not typically covered under original Medicare, while another doesn’t.
Medigap
insurance companies sometimes have salespeople who visit prospective
clients in their homes. But they may only represent one carrier, and
it’s best to do independent research before going with whomever shows up
at the door. “When someone’s in your living room sharing crumb cake,
it’s hard to say no,” said Nate Purpura, vice president of consumer
affairs at ehealth.com, parent company of broker eHealthMedicare, whose
licensed agents help consumers choose from a wide variety of plans.
Many
people stay put in retirement. Others move to be closer to family. But
some people approaching retirement are weighing two or more
destinations. And those folks should include the cost of healthcare
along with taxes, climate and other factors in their calculation,
Mastrogiovanni said: “To ignore something this expensive doesn’t make
sense.”Culled from Marketwatch
