Marc Cuniberti: Navigating Medicare and medical insurance
November 5, 2017
Medicare provides basic medical insurance to those over 65 but the free part is only what is called Medicare A and only if you or your spouse paid Medicare taxes according to the criteria.
Medicare plans are labeled A through N and each letter has different benefits. As the letters go up the plans usually improve and/or cover something not covered in the previous plan letter.
Pretty simple stuff actually but prior to getting my insurance licenses, quite frankly the whole Medicare thing was quite daunting and I don't doubt many people feel the same way. The subsequent plans over the basic plans are commonly referred to as "gap" or Medigap insurance.
First off, know that all plans are federally mandated to be identical. That means no matter where you might buy a plan, they all cover same thing.
But insurance companies don't have to sell those plans for a mandated price. That means you could be paying more for the same plan depending on where you bought it.
A plan bought from insurance company A could be more expensive than if you bought it from insurance company B even though it's the same plan. So much for consumer protection from our insurance regulators.
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Can plans differ drastically in price?
WeissRatings thinks so claiming "you could end up paying hundreds … even thousands of dollars in unnecessary premiums."
Not only are the same plans sold for different amounts, the mark up for a particular value service may be increased way beyond the actual value added by the subsequent plan.
For instance, suppose a plan decreased a fixed deductible by $180. The premium should be increased by that amount. But Weiss found gross and unexplainable increases.
Weiss conducted an analysis of 70,852 individual premiums nationwide and estimated insurers have marked up their premiums by unexplainable $1.2 billion.
Weiss also found price differences in charges based on application questions that had no bearing on actual costs to the insurance company.
In other words, insurance companies were using data that had no cause and effect to the cost of services which meant premiums should have been identical but were not.
The California Department of Insurance (CDI) provides comprehensive information on buying Medigap coverage at: http://www.insurance.ca.gov/01-consumers/105-type/95-guides/05-health/03-medsup/
They also have comparison information of which they state; "The rates are intended to give you an idea of what a Medicare Supplement Insurance policy may cost. The premium rates may vary depending on your specific Medicare Supplement Insurance needs and individual or group profile.
"The premium rate each company charges an individual or group is based on a number of different factors including your age, location, and the benefit plan you select. To find out more about one of these policies, call the company's consumer service telephone number included on the Medicare Supplement Insurance website for the policy plan that interests you."
The link for this information is: https://interactive.web.insurance.ca.gov/apex_extprd/f?p=111:30
Shopping for Medicare/Medigap insurance is not a scary as it seems once you know the resources that are available to consumers and those resources are actually fairly plentiful.
The CDI is likely the first place you should start. There are also many paid services and booklets one can purchase for objective comparisons to make sure you are getting the best deal for your particular situation.
This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603, 530-823-2792. MKB Financial Services and Cambridge are not affiliated. His website is http://www.moneymanagementradio.com. California Insurance License # OL34249
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