Tracking down an insurance policy

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….