Do I really need a Medigap policy?
By Margie Ware
In Berkshire County we have fewer health insurance choices for seniors than in other parts of the Commonwealth. Often a client about to turn 65 will walk into our office with the “Medicare and You 2007” book and ask where all the Medicare Advantage plans are, “because none of them seem to mention Berkshire County.”
The majority of Berkshire County elders have access to only standard Medigap plans. Since the inception of Medicare Part D, there are now only two levels of coverage available — Core Insurance and Supplement One Insurance. So with only three companies offering coverage, and two types of plans, it should be easy to pick, right? The hardest choice is the decision whether or not to purchase insurance, and then how much coverage to get.
Contrary to popular belief, not everyone needs a Medigap policy. Medicare Parts A and B on their own are much more comprehensive than many health insurance policies now owned by those under 65. But because Medicare’s audience largely lives on fixed incomes, it becomes important to put fiscal predictability into people’s lives. And the more insurance you own, probably the more predictable your cash flow is going to be. But that predictability comes at a price.
Supplement One Insurance covers every gap in Medicare with the exception of prescription drug coverage. On average it now runs between $160-170 per month, so the cost is not insubstantial. In general, SHINE (Serving Health Information Needs of Elders) recommends this insurance to individuals who have discretionary retirement income, travel outside the country, and/or have liquid assets that may be at risk in case of a long skilled nursing facility stay.
Conversely, we recommend the lower-cost “Core” plans for people who answer “no” to the following three questions:
1. Is your personal income under $18,000/year? (For couples this number is approximately $23,000-$24,000.)
2. Are you still traveling outside of the country?
3. Do you have more than $10-12,000 in liquid assets?
A “no” to either the first or third question means that we would recommend Supplement One insurance. A “no” on question two alone would mean that we would advise you to take out travel insurance in the event of a trip beyond our shores.
But if all the answers are "no," we are comfortable recommending “Core” insurance, which covers the 20% of bills not covered by Medicare Part B. The most noticeable benefit someone loses is having his or her Part B deductible paid. But the loss of a $131 benefit is more than made up by the difference in monthly premium. Core policies can run $70/month less than Supplement One. And for individuals on moderate incomes with moderate assets, that $70 can be the difference between stretching for groceries and fuel costs and having a bit of a cushion at the end of the month.
So are there people who don’t need to purchase Medigap insurance? That group breaks down into two categories — those who could use it but can’t afford it, and those for whom the expense is truly “insurance” and who may SHINE counselors are available at your local Council on Aging, and in person and by phone at Elder Services of Berkshire County to answer questions. Call us at
1-800-544-5242 or 499-0524.
Margie Ware is the Elder Services’ Regional SHINE Director
