Vast Differences in Medigap Insurance Rates for Same Benefits
Aug. 29, 2005 Medigap supplemental insurance
benefits have been mandated to be the same since 1992. So, a policy for
Plan F, for example, provides identical benefits for senior citizens
regardless of which company issues the policy. The companies, however,
design their own rates and the premiums vary widely.
Medigap Plan Benefits
Summary of 12 Basic Medigap Insurance Plans
(Presented by State of Texas Insurance Board
but applies to all states) pdf.
Weiss Ratings, Inc., that sells a consumer guide
for Medigap shopping, has just issued its latest survey of premiums and
says they find that senior citizens continue to encounter striking
differences in premium rates for policies offering identical coverage.
Weiss analyzed premium rates offered by 117 of the
159 insurers for that write Medigap policies and found that wide
variations in rates continue to exist for all plans.
The national average cost of a Medigap policy for a
65-year-old female ranged from $1,159 to $3,443 in their analysis.
(See lowest and highest rates for Plans C and F by state and end of
story.)
Pricing disparities are even more dramatic on
specific plans; for instance, rates for the popular Plan C varied from a
minimum of $651 to more than $9,000. The broad ranges in premium rates
as reported by Weiss for Plans A through J are illustrated below:
2005 Medigap Premium
Rates**
Plan
Minimum ($)
Maximum ($)
Average ($)
A
355.32
5,986.00
1,159.85
B
693.00
3,980.43
1,446.01
C
651.24
9,798.40
1,766.22
D
697.60
4,588.25
1,437.30
E
747.00
3,099.00
1,362.41
F
516.00
10,788.80
1,755.49
G
700.80
4,624.00
1,452.02
H*
916.80
12,319.64
3,228.73
I*
1,457.40
9,283.89
3,346.29
J*
1,738.80
7,460.00
3,443.43
*Plans
H, I, and J are the most expensive (as seen above) because they include
prescription drug coverage. When the Medicare Prescription Drug
Act (MMA) becomes effective in 2006, these plans will no longer be
sold with drug coverage to new participants.
Weiss Ratings Advises Consumers to Comparison
Shop
Regional differences in health costs, insurers'
underwriting and pricing methodologies, the health status of the target
population, and state policies regulating rates account for the wide
pricing disparities of Medigap policies. In reviewing the rates for a
65-year-old female, Weiss found the following pricing contrasts:
In Arizona, Plan C costs $976 with Pennsylvania
Life Insurance Company, while Guarantee Trust Life Insurance Company
issues the same policy for $2,735, representing a 180 percent difference
in cost. In Ohio, the same plan ranges from $888 with Paramount
Insurance Company to $3,622 with Mutual Protective Insurance Company,
more than a 300 percent difference.
In Pennsylvania, premiums for Plan F vary from a low of $1,236 with
Humana Insurance Company to a high of $2,655 with Standard Life &
Accident Insurance Company, representing nearly a 115 percent difference
in cost, while rates in Indiana run from $940 with Lincoln Heritage Life
Insurance Company to $3,304 with Oxford Life Insurance Company.
"Consumers have been plagued with Medigap pricing
inconsistencies on standard plans for more than a decade now," said
Melissa Gannon, vice president of Weiss Ratings, Inc. "With the
introduction of two new plans and prescription drug coverage in January,
seniors will face countless choices, making it more important than ever
to comparison shop for price and financial safety," advised Gannon.
Senior citizens shopping for the least expensive
Medigap policies with the safest insurers can obtain a Shopper's Guide
to Medicare Supplement Insurance ($45 plus S&H) available from Weiss
Ratings at 800-289-9222 or by visiting
www.WeissRatings.com.
The report, based on each consumer's individual
circumstances, provides customized comparisons of the actual premium
rates offered in his or her county of residence for each of the ten
Medigap plans, along with the Weiss Safety Rating for each carrier.
Weiss Ratings, Inc. reviews more than 8,000 stocks
daily, including all those traded on the New York Stock Exchange, the
American Stock Exchange, and Nasdaq. Weiss also issues investment
ratings on more than 12,000 mutual funds, covering equity, fixed-income,
and closed-end funds, and provides financial risk ratings on more than
15,000 financial institutions, including banks and insurance companies.
It is the only major rating agency that receives no direct or indirect
compensation from the companies it rates. Ratings and analyses are
available through
www.weissratings.com or by calling 800-289-9222.
