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Part IV Medicare Supplemental Insurance Series
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How To Calculate Costs
Why do some plans cost more than others, but offer the same benefits?
Well, the truth is that while all Medicare supplemental insurance plans are required by law to offer the same benefits from one company to another, prices vary because each insurance company can calculate their costs in a different way.
It's a bit confusing, but here are the terms you need to know so you can calculate which plan is best for you today, and for the future.
1. Communited-based supplemental insurance - this type of supplemental insurance isn't related to age at all, which is why it's sometimes called "no age related" Medigap coverage. If you get this type of coverage, you'll pay the same monthly premium regardless of your age. Your costs could go up due to inflation, but your age will never be a factor.
2. Issue-age-related coverage - This type of supplemental insurance is based on your age when you enroll, and it's sometimes called "entry age related" Medigap coverage. Because this type of coverage is based on your age right now, younger people will often pay less than older people. However, once you sign up your prices won't go up as you age. Your costs could go up a bit due to inflation, but otherwise you won't pay more as time goes on.
3. Attained-age-related coverage - This is supplemental insurance that's based on your current age, but it will cost more as you grow older. If you choose this type of supplemental insurance be sure to understand how much the plan will cost as time goes on. A Medicare supplemental insurance plan that costs very little today could cost you a bundle down the road.
The costs for supplemental insurance also depend on a few other factors. Sometimes women and non-smokers will pay less, while those with pre-existing conditions who miss open enrollment could pay more. Geographical ratings, medical underwriting, and other forms of discounts also play a part in the costs for supplemental insurance.
Because of this it's very important that you shop around, and ask how it is that each insurance company sets their policies. Make sure you know how much you'll pay today, and how much you'll pay as the years go on.
Up Next - Medicare Terms Defined
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