Medicare: When to Sign Up, What to Sign Up for

If you’re turning 65 this year, you’ll likely need to join some 64 million other Americans and enroll in Medicare at some point.

Generally, you're first eligible to sign up for Part A and Part B starting three months before you turn 65 and ending three months after the month you turn 65, according to Medicare.gov.

But the bigger question is not when to sign up, but what to sign up for.

According to Kaiser Family Foundation: Medicare beneficiaries can choose to get their Medicare benefits (Part A and Part B) through:

1. The traditional Medicare program, or,
2. They can enroll in a Medicare Advantage plan, such as a Medicare HMO or PPO. Medicare Advantage plans provide all benefits covered by Medicare Parts A and B, often provide supplemental benefits, such as dental and vision, and typically provide the Part D prescription drug benefit.

Many traditional Medicare beneficiaries also rely on other sources of coverage to supplement their Medicare benefits. Supplemental insurance coverage (Medigap) typically covers some or all of Medicare Part A and Part B cost-sharing requirements and, in some instances, provides benefits not otherwise covered by Medicare.

Beneficiaries can also enroll in a Part D plan for prescription drug coverage, either a stand-alone plan to supplement traditional Medicare or a Medicare Advantage plan that covers drugs.

In 2018, nine in 10 people with Medicare either had traditional Medicare along with some type of supplemental coverage (51%), including Medigap, employer-sponsored insurance, and Medicaid, or were enrolled in Medicare Advantage (39%), according to a 2021 Kaiser Family Foundation report.

Or viewed another way, Medigap, provided supplemental coverage to two in 10 (21%) Medicare beneficiaries overall, or 34% of those in traditional Medicare (roughly 11 million beneficiaries) in 2018, according to Kaiser Family Foundation.

How to Pick a Medigap Plan

Picking a Medigap plan can be overwhelming. According to MedicareInteractive.org: “Insurance companies may offer up to 10 different Medigap policies labeled A, B, C, D, F, G, K, L, M and N. (Policies in Wisconsin, Massachusetts, and Minnesota have different names.) Each lettered policy is standardized. This means that all policies labeled with the same letter have the same benefits, no matter which company provides them or their price.

But even though the benefits might be the same from plan to plan, the prices are unlikely to be so. According to a new report published by the American Association for Medicare Supplement Insurance, noted the following, finding the best Medigap 2023 prices depends on where you live and it can really pay to comparison shop.

For instance, in New York where the lowest monthly rate for Medigap Plan G (which is the most popular plan after Plan F) is $278 and the highest for identical coverage is $476, according to Jesse Slome, the author of the report.

And in Iowa, by contrast, the lowest monthly rate for Medigap Plan G is $79 while the most expensive is $192. (Below are the lowest rates for Medicare Supplement Plan G found in each state.)

According to Humana, Plan G includes all the benefits of Medicare Supplement Plans A, B and C with the exception of the Medicare Part B deductible. It's a good fit for people who want some coverage for hospitalization but are willing to pay the Medicare Part B deductible on their own. Compare what all the Medigap plans cover and what they cost.

Katy Votava, president of Goodcare.com and author of Making the Most of Medicare: A Guide for Baby Boomers, says Plan G is a “good” option for most who want a Medigap supplement plan. “As the (American Association for Medicare Supplement Insurance) report notes, there is a wide variety of price for the very same level of plan,” she said. “Medigap benefits are levels are prescribed by law and yet there are tremendous variations in price amongst plans offering the same benefits.

According to Votava, Medigap plans use one of three underwriting styles: issue-aged, attained-age, and community rated. “Issue-aged underwriting is based on the age a person is when they enroll in a policy,” she noted. Attained-age underwriting is based on a person’s age each year they’re in the plan. Community rated underwriting means that everyone is charged the same premium, regardless of age. Each underwriting method influences premiums to some degree.”

That said, variation in underwriting methods do not account for wide differences Medigap premiums, she noted.” It is common to see plans with the same underwriting style offered by different companies but with substantially dissimilar premiums,” said Votava.

Ultimately, Medigap insurance is an economically inefficient marketplace. “Consumers don’t know how to shop for the product leading to wide price variations for the same product,” she said. “And given the wide variation in monthly premiums, that’s all the more reason for consumers to shop for a solid company that offers the lowest price.”

Another tip: Ask your healthcare providers about which Medigap insurance companies they will process the paperwork for you. “That way they will get the most out of the coverage,” she said.

Here’s are some more tips about finding the best Medigap insurance coverage, according to the American Association for Medicare Supplement Insurance.

• Rates (premiums) are based on where you live.
• There can be as many as 20 different insurers offering coverage.
• No one insurance company always has lowest cost.
• Neither is one insurer consistently the most expensive.
• Insurers can offer discounts (up to 14% or more).
• They can charge added premium fees (not shown below).
• Insurance agents may represent only one or two plans.
• Some agents (brokers) will represent more insurance companies.
• Asking about the history of rate increases is important.

For a woman turning age 65, Medigap Plan G:

Rates are not shown for Minnesota or Wisconsin which have different types of plans.

The American Association for Medicare Supplement Insurance selected ZIP codes that had the highest incomes for each of the respective states. There’s no reason the association picked this as the criteria. It just seemed fair and equal.

Read more about Medicare on Retirement Daily on TheStreet.