Focusing on Price May Cost You
Medicare Supplement Secrets Part 1
We all know the adage “You get what you pay for.” With Medicare Supplement plans that holds true. Let’s say you're shopping for a Plan G. You may be surprised to learn that plans with the exact same benefits can cost very different amounts depending on the company you choose. Right now in St. Joseph County IN. a 65 year old female can purchase a plan G for as little as $90/mo with one company, and as much as $200/mo with another. Same exact coverage.
Some clients say, “if the coverage is the same shouldn’t we go with the lowest priced company?” No. Focusing on price of a supplement alone can come back to bite you.
The most important factor we consider when recommending a Medicare Supplement is the track record of the insurance company.
That’s because you may have your Medicare Supplement plan for 20+ years. And over that time, the monthly price will go up. Some companies start out with low rates, then once you’re stuck, raise them through the roof. We avoid these companies.
I compare picking a Medicare Supplement plan to a marriage. Like any long term relationship, we want a stable partner for the long haul.
In Indiana the average historic increase in Medicare Supplement premiums* was 3.8% for UnitedHealthcare AARP, 4.3% for Anthem, 6% for Mutual of Omaha, and 8% for a small insurer called Pekin.
Right now for a Plan N for a 65 year old Female in St. Joseph county, UHC and Anthem cost about $20 more per month than Mutual of Omaha or Pekin. Around $100/mo vs $80.
However overtime, using the average annual increases for the companies it becomes a very different picture. After 20 years, Pekin is estimated to be $150 per month more expensive for the same coverage. Which company would have been the least expensive? The most stable one. UHC.
In Indiana, there are probably about a dozen insurers with stunningly low Medicare Supplement prices vs. UHC, Anthem, Humana, Mutual of Omaha, etc. However, we tend to recommend these larger, more stable companies, even if they are a bit more expensive today. You know the old phrase, “penny wise but pound foolish”.
*Average annual increase rate calculated from rate filing data made available by the Indiana Department of Insurance Rate Watch tool. We averaged approved rate increases for each company for the period from 2014-2020, for standardized Medicare Supplement plans issued after 2010. Rates may vary by state, company, and plan type. Historic performance is not a guarantee of future performance. This piece is intended to educate. I am not receiving payment of any kind from any of the named companies for this article. This reflects the opinion and experience of our agency.