The Worst Medicare Supplement Companies Have Two Things In Common

Medicare supplements can protect retirees from the effects of a recession. This is why you should be aware of two warning signs in weak Medigap companies before you buy: inconsistent rates and poor customer service. Here's why you should be wary.

Overall, it doesn't matter which insurer you choose, as each supplemental plan with the same letter gives you the same benefits. All states except Massachusetts, Minnesota, and Wisconsin use the federal Medigap system with plans labeled A through N. These three states have their own Medigap rules. In all other states and Washington, D.C., a Plan G from any company must have the same benefits as a Plan G from any other company. 

The price and any extras the company might offer are what set them apart. This is why you should pay attention to how prices change and to poor service, two main red flags to watch for from the start. You don't need those, especially when you may already be paying more for Medicare in 2025.

The price of a Medigap plan changes in three main ways. There is community-rated, which means everyone pays the same price, no matter their age. Then, there is issue-age-rated, which means your price is set by your age when you first sign up. Finally, there is attained-age-rated, which means your price can go up as you get older. These will affect how much you will pay now and later, and why you should check how the company sets its prices.

You can use Medicare's Medigap tool to compare plans. Just enter your ZIP code, choose one plan letter, and you will see quotes from different companies side by side. The rules in your area, how the company prices by age, and regular price updates can be the difference in what you pay. So before you pick a plan, write down how each company sets prices for your plan in your ZIP code.

In addition, Medicare's official guide gives you questions to ask before you buy a Medigap plan. Ask the insurer about things like pricing policies, age ratings, and what monthly payments might be as you age. In addition, you may want to find out if plan payments go up annually regardless.

Poor customer service can undermine Medicare healthcare benefits. To check if a company has it, you can go to the NAIC's Consumer Insurance Search. Type the company's name, pick the right one from the list, and look at its complaint record. For Medigap, check the "Medicare supplement" or "accident and health" section. You will see the number of complaints over several years, the complaint index, and what the complaints are about, such as delays, denials, or billing problems. Many state insurance departments also publish a complaint index. For example, California's consumer complaint study and the Kansas Insurance Department's annual complaint index report.

California's consumer complaint study ranks each insurer by a "justified complaint ratio," which is the number of justified complaints for every 100,000 policies or exposures. The downloadable tables show each company's rank, how many policies or exposures it has, and the number of justified complaints over the past three years. 

Texas also shares extra details in an open dataset. The Texas Department of Insurance posts complaint index scores for each company and the number of active policies by type of coverage. The index is the company's percentage of complaints divided by its percentage of policies in force, and the state uses 1.00 as a benchmark. If a company's complaint index is above 1.00 and better options are available, you will be smart to choose a company with a lower score. By checking reports and asking the right price questions, you can ensure your Medigap coverage will be beneficial.