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Medigap policies

Tracking down an insurance policy

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Now that Medicare is coming up, I have to find an insurer from whom to buy a Medigap policy. Yesterday I found an unexpected and valuable resource for insurance consumers, which I’ll describe below.

First, by way of background for those who have not yet enjoyed the privilege of trying to navigate the astonishing maze that is Medicare, the system works like this:

You can choose “Traditional” Medicare, a type of indemnity plan cobbled together with Medicare Part A (which covers approximately 80 percent of most hospital bills and which is free) and Medicare Part B (covering a certain amount of but not all of your doctor’s bills, at a cost of about $95 a month); or you can choose an “Advantage” plan, which is basically a private HMO with all the benefits and risks associated therewith. Most people feel the “traditional” plans are worth the extra cost.

If you go the “traditional” route, you must also buy a “Medigap” policy to cover the significant amounts that the government policy does not provide for. Medigap policies are standardized plans that come in a dozen flavors, from Plan A through Plan L.  An hour or two of poring over the rules and features will reveal that Plans C and F are probably the only way to go—these are the plans that cover most or all of the things that Medicare proper does not cover. I’ve decided that Plan F is best, because it not only picks up the 20 percent missed by Plan A, it also will cover so-called “excess” charges for doctors who think they should make a living in the practice of medicine.

Now. Because these plans are farmed out to private insurance companies, the market is just. freaking. insane! The plans are all the same; insurers are required to offer identical plans with identical benefits. But the prices are all over the map. Here in lovely Arizona, for example, you can pay anything from $93/month to $417/month for the same plan!

The state Insurance Department hands you a booklet showing premium comparisons. It’s forty-six  pages long!!!!! You have to sift through fifty-three insurance companies, trying to figure out which offers what plans for how much, and which companies are reliable and which are likely to rip you off or give you a runaround.

It takes hours and hours to parse through all this stuff.

I figure I can afford $150/month at the outside. Thirteen companies in Arizona offer Medigap policies for $150 or less. So, I made a table, preparatory to telephoning every one of these corporate horror shows. In it, I made room for a price comparison, notes on conversations with CSRs, and notes on Google, Better Business Bureau, and Consumerist reports. Then I spent about four hours trying to track down information on the thirteen likely vendors.

While stumbling around in Google, I came across a consumer service offered by the Texas Department of Insurance. Go to this page and you can search for an insurance company. Because Texas is famously huge, most insurance companies of any significance do business there. Enter, for example, something like “Lincoln Heritage,” and up will come a long page showing contact information (including headquarters addresses and phone numbers, plus names of company officers), financial information spanning the past three years, links to four financial rating organizations, a summary of the company’s history, and…ta da! complaint records!

Yes. Texas tells you how many complaints each company has registered in each of several underwriting areas and also calculates a “complaint ratio” and a “complaint index,” showing how the company’s complaint history compares with those of other insurance companies.

This, as you no doubt recognize, is platinum-plated data.

Thanks to the Texas Insurance Department and the Better Business Bureau, I’ve narrowed the preliminary search down to five companies with clean complaint histories and a likelihood of staying in business for a while:

Assured Life: $97/month
Loyal American: $138/month
Sterling: $139/month
United of Omaha: $93/month
USAA Life: $129/month

Amazingly, the cheapest companies appear to deliver high-quality service—Assured, run by a fraternal organization, and United of Omaha, associated with Mutual of Omaha, have the cleanest complaint records all the way around. So I’m hoping one of those will do.

The cost of this is just breathtaking: take $96 for Medicare Part B and add a bare minimum $93 for Medigap and you’re already up to $189, more than I’m paying for COBRA! And then I still have to buy Medicare Part D, the prescription plan, which is around $50 a month with a $250 deductible!!!!!

What I don’t understand is why the pathetic State of Arizona, whose administration by and large is a joke, can manage to provide employees an EPO for $39 a month that covers almost every doctor in the state (including the pricey Mayo Clinic) and provides prescriptions with a $15 copay, but the vast and powerful federal government can’t manage to engineer better rates than this. Now it must be admitted that if you had to pay the full freight for COBRA, that EPO would run almost $500 a month, and that the retirees’ cost for it is $400 a month.

So…maybe $240+++ a month that of course I do not have and will not have for the duration of 2010 is a bargain. But still….

Nope… Money unhappens

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That six-month free ride for COBRA sounded too good to be true, and, as the saying predicts, it wasn’t. True, I mean. Called the Department of Administration again today to confirm what I thought I’d heard and learned that the “six” syllable actually occurred in the word sixty, as in sixty days.

You have sixty days after canning to enroll in COBRA and start paying up.

LOL! My scheme would’ve worked if I’d been born on March 7 instead of May 7. But in the cold cruel light of reality, it fell way short of its goal.

Oh well. At least I still have the $571 GDU dumped in my account today. Now all I have to do is persuade the federal government that it’s 2009 earnings (which it is), so that I don’t get nicked on the Social Security earnings limit. Even five hundred bucks will make a difference.

Medicare is going to cost a lot of money. Relatively. Yes, I do understand that $300 a month is a microscopic droplet in the bucket compared to what some people are paying for health insurance. But nevertheless, it’s more than eight times what I’ve been paying for an excellent plan, at a time when I’ll be earning a third of what I grossed on the job. With the ARRAS discount in force, Medicare will actually cost more than COBRA!

The base cost of Medicare Part B will be $110 a month. Parts A and B cover your basic needs, but leave your pants down around your knees: it’s an 80-20 coverage with rather limited hospitalization and no prescription meds. As we all know, one serious car accident, one heart attack, one stroke and 20 percent of the resulting medical bills will ruin you financially.

To take up the slack, you have to buy a “Medigap” policy from a private insurer. These policies, which come in a dozen flavors, are standardized, so that all policies issued in any one of the 12 available plans are the same. Only three—Plans C, F, and J—seem to cover all the contingencies well. Insurers charge whatever they feel like charging, and so in Arizona premiums for Medigap policies range from around $80 a month to over $300, depending on your gender and age. One outfit charges $417 to $560 for plan J—this is for supplemental insurance!

On the low end, a 65-year-old Arizona woman will pay between $107 and $163 to get into one of those three plans. Well, at least she did last year; I can’t get my hands on the 2010 rates, but I’m sure they’re higher.

Then you have to buy a prescription drug plan—and you have to get it whether or not you take any meds. If you don’t buy in as soon as you’re eligible, you’re penalized with a whopping fine when you go to sign up later. These plans run around $25 or $30 a month, and they don’t cover all drugs nor do they cover all costs of drugs; you still get to pony up a hefty copay for most prescriptions.

So: $110 for Plan B + $110 or so for Medigap + $25 for drugs and you’re at $245…at 2009 rates. Let’s add, say, 10% for inflation, and that brings us to about $270, for the cheapest plans on the market. By way of comparison, my cost for COBRA will be $185 a month; my cost for an employer-based EPO that let me go to the Mayo Clinic was $36 a month.

I guess you can get cheaper coverage by going with an HMO, which is what Medicare Advantage is. But having watched my mother die pretty hideously in the negligent hands of HMO doctors, I’m not going that way (it’s not in an HMO’s financial interest to treat you when you have a catastrophic illness; au contraire, what works for them is to deny you’re sick until it’s too late to do a thing for you, and then to withhold palliative care).

Interestingly, AARP’s much vaunted senior-friendly plan is far from the cheapest. They charge $187 for Plan C, $190 for Plan F, and $217 for Plan J. By comparison, the lowest rate I could find for Plans C and F was $107; four companies charge around $115 to $120, and quite a few are in the $150 range.

Well, I’ll be happy if I can keep the total cobbled-together cost of this pushmi-pullyu lash-up under $300. But I figure three C-notes a month is what I’d better budget for Medicare over the next two or three years…until it goes up.