Are copay or High Deductible Medigap plans a better long-term alternative?

Starting Medicare with lower premiums is a good thing.

When clients age into Medicare, many take advantage of the guaranteed issue and benefits that come with eligibility. Many members start when they are healthy and financially strong while keeping longevity and affordability in mind.

Starting Medigap with a copay or high deductible option could reduce premiums by half in the first year, but increases are likely to be less than a low deductible option over time. Consider that if a Medigap plan increases premiums at 7%, the cost of coverage doubles in just 10 years.

Signing up for affordable coverage is a must and why advisors search for plans clients can afford for the long haul.

Let’s break down some of the average Medigap costs your clients might see.

  • The average cost of an MN Basic (with riders) is over $200 per month.
  • The average cost of an MN Copay plan is under $200 per month.
  • A MN High Deductible plan average is under $100 per month.

With a copay (Plan N), the member typically pays a copay of $20 – $50 per visit. The cost is not high enough to alter decisions on seeking care if needed.  Having a copay reduces unnecessary claims, which lowers premium increases over time. Cost sharing plans protect the ‘blocks’ premium increases.

With a High Deductible Medigap, the member pays 100% of costs until they hit the deductible ($2340 for all MN HD Medigap plans). Like copay plan, the deductible does not prevent a client seeking necessary care and allows them to take advantage of significant premium savings in years where they have low claims.

Discussing Medigap cost sharing plans with your client demonstrates the value of a having a local professional advisor to help them work out the best approach for their health and financial needs.

Many clients are only shown MN Basic plans with riders, and we think a good number of them will appreciate lower premiums and lower increase overtime by considering a copay or High Deductible Medigap plan.

As with any Medigap plan, Cost Sharing plans have the portability and guaranteed coverage many clients are seeking.

Once you start a conversation about lowering their premiums, you often earn the right to discuss how to address other concerns, such as Hospital Indemnity, Dental or a Cancer plan. During your suitability conversations you should be identifying the right blend of plans to fulfill all their health and financial goals.

Medigap plans should be paired with high quality dental coverage such as Ameritas or UnitedHealthone senior dental plans and a high or low coverage PDP.

When clients share costs, they flatten the premium increase curve leading to longer term affordability. This can be a double win for those choosing Plan N (copay) or High Deductible G when first eligible for Medicare.

Consider Mutual of Omaha or SilverScripts if you are looking for a standalone PDP, both have high and low option coverage, with wide networks and formularies.

To get appointed or to learn more, reach out to LaRae Mills or Weston Peterson.