Fewer Medigap Options; Prices Vary Widely

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Fewer Medigap Options; Prices Vary Widely

Supplemental health insurance that offers prescription drug coverage is rapidly disappearing for millions of seniors this fall. For the fifth year in a row, the number of Health Maintenance Organizations (HMOs) participating in Medicare continues to decline, forcing former enrollees to find other health plans. Seniors who lose their drug coverage face staggering increases in out-of-pocket prescription drug costs, because most HMOs provided some prescription drug benefits. In the many areas where there are no other HMOs in which to enroll, seniors are finding that there are fewer Medigap options as well.

A new survey by Weiss Ratings, Inc., a leading independent provider of ratings and analysis of insurance companies, found that many insurance companies have ceased to offer the higher priced Medigap plans that cover prescription drugs and plans “H,” “I,” and “J.” Some have gone out of business altogether. According to the survey, 146 companies sold Medigap plans in 2002, compared to 167 in 2001 and 181 in 2000.

Average premium increases vary widely by states and there is wide variation in the price for the same plan. “There is still a huge variation in Medigap costs from company to company, implying that many consumers are being greatly overcharged and could save money simply by shopping around,” says Martin D. Weiss, Ph.D., chairman of Weiss Ratings, Inc.

Despite more than 10 years of standardized Medigap plans—from the basic “A” plan to the comprehensive “J” plan—Weiss’ analysis of 114 providers of Medigap policies found that there continues to be a wide variation in price for the same plans. The broad ranges in premiums for a 65-year-old woman are illustrated:

In Florida, Plan A costs between $766 and $2,028.
In Texas, the rate for Plan F varies from a low of $887 to a high of $2,487.
In Arkansas, the least-expensive Plan J costs $2,878, while the most expensive plan is $9,376.

Overall, Weiss found that consumers in Florida would pay the highest average premiums for Plans A through G, while Arkansas has the highest average premiums for Plans H, I, and J.

Editor’s Tip:
If you are shopping for the least expensive and safest Medigap policy, you can obtain a Consumer Guide to Medicare Supplement Insurance ($49) available from Weiss Ratings at 1-800-289-9222 or by visiting www.WeissRatings.com. The report, based on each consumer’s individual circumstances, provides customized comparisons of the actual premium rates offered in his or her county of residence for each of the 10 Medigap plans, along with the Weiss Safety Rating for each carrier.

Sources: “Rate of Medigap Premium Increases in 2002,” Weiss Ratings, Inc., August 7, 2002.

For a related article on this topic, see “‘Unprecedented’ Health Care Increases Predicted for 2003” at http://www.tscl.org/NewContent/101617.asp.

November 2002