Location is everything, especially when it comes to insurance that's supposed to supplement your Medicare coverage.
Medigap is a form of insurance that will fill in for the areas where your own Medicare policy may fall short, such as deductibles, copayments and coinsurance. Some policies cover certain extras, like medical care when you're traveling outside of the U.S.
Medigap supplements Medicare parts A and B, which cover hospital and physician's visits. Medigap plans offer an array of different benefits that will vary and are distinguished by letter (A, B, C, D, F, G, K, L, M and N).
Federal law requires that you get a six-month period from when you first enroll in Medicare to buy a Medigap policy and do so without the insurance company digging into your health history and sticking you with higher premiums because of your medical conditions.
Federal law also includes guaranteed renewability on Medigap policies, meaning that as long as you pay your premiums, the insurer can't cancel your coverage.
There are a handful of other situations in which a retiree may not be denied Medigap coverage; for instance, in the event you have Medicare and retiree health-care coverage through work and that employer plan is ending.
This is where things get complicated.
Depending on where you live, if you miss these opportunities to purchase "guaranteed issue" Medigap, insurers in your state may deny you coverage, according to research from the Kaiser Family Foundation.
"Medigap is mostly regulated at the state level, so there are federal minimum requirements," said Gretchen Jacobson, associate director, program on Medicare policy, at the Kaiser Family Foundation.
"Beyond that, it's left up to the state to regulate," she said.
This is how consumer protections will differ from one state to the next.
Four states
Though enrollees have six months after they first sign up for Medicare to buy a guaranteed-issue Medigap policy, generally those federal protections no longer apply once that time period is up.
That means your insurer will subject you to medical underwriting before allowing you to buy Medigap coverage — and you could either be on the hook for higher premiums or be denied coverage altogether.
Conditions that may result in you being denied coverage include heart disease, insulin-dependent diabetes and stroke.
Only four states — Connecticut, Massachusetts, Maine and New York — require that insurers offer guaranteed issue Medigap either continuously or annually, according to Kaiser Family Foundation.
This is different from state law in California, Oregon and Missouri, where Medigap purchasers have a guaranteed right to switch their policies, said Jacobson.
State rules
You should also know that your state dictates whether other factors, such as your age, smoking status and residential area, will affect your Medigap premiums.
For example, a 65-year-old New York City resident in "good" health will pay an estimated $9,800 in premiums this year for a Medigap Policy F.
The same policy will cost $8,550 for a 65-year-old in "good" health living in Los Angeles.
There are three premium frameworks that insurers may use to set their prices, which will vary by state.
The community-rated system requires that insurers charge all customers generally the same monthly premium for a given type of Medigap policy, regardless of their age.
What might be the best option in one part of the country may not be the best option elsewhere.Gretchen Jacobsonassociate director, program on Medicare policy, at the Kaiser Family Foundation
This framework is currently in effect in Arkansas, Connecticut, Massachusetts, Maine, Minnesota, New York, Vermont and Washington state, according to Kaiser Family Foundation.
The issue-age-rated system charges customers based on their age when they purchase the Medigap policy, so that younger purchasers pay less. Premiums may rise because of inflation but not due to age.
Finally, the attained-age-rated system bases the premium on a customer's current age, so that premiums rise as you get older.
In all, 38 states and Washington, D.C., permit insurers to charge Medigap premiums based on issue-age and attained-age rating systems.
What you should know
When you're ready to choose a Medigap plan, come prepared with questions. Here's where to start.
What am I getting for my premiums? How much you pay each month is only one factor to consider when selecting the right Medigap plan. Know what's covered, whether it's your deductible, foreign travel emergency, or coinsurance for skilled nursing care. Consider whether you'll have access to your favorite providers.
How does this insurance company price its policy? Premiums will vary by state. The pricing methodology your insurance company uses will affect what you pay now and how much you'll pay later.
What's the local law? Find the local State Health Insurance Assistance Program where you're based to ask questions about Medicare and Medigap.
"People entering Medicare should really weigh their options carefully and, to some degree, evaluate them as though they are their care options for the next few decades," said Jacobson of Kaiser Family Foundation.
"What might be the best option in one part of the country may not be the best option elsewhere," she said.
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