We live in a world full of brand names. For laundry, we know brands like Tide and Gain. For athletic apparel, there is Nike, Reebok, and Adidas. Likewise, in the Medicare supplement insurance world, we have many brand name Medigap companies like Blue Cross Blue Shield, AARP United Healthcare, Aetna, and Cigna.

People often base their decision off Medigap companies they’ve heard of. You may be surprised to know some of the best premiums are from companies you may not have heard of.

But what if your agent offers you a plan from a Medigap company you’ve never heard of them? Can you trust a company that you’ve never heard of before?

Fortunately, when it comes to Medigap the answer is YES. Here’s why:

Medicare standardized all Medigap plans way back in 1990. That means that each company offering these plans CANNOT change the benefits of standard plans. So for example, a Medigap Plan G must include a certain set of benefits – nothing less and nothing more – no matter which company sells it. If you enroll in Mutual of Omaha Plan G or Blue Cross Blue Shield Plan G, your benefits are the same. This means you have a perfectly predictable payment response from the insurance company every time you have a claim. It doesn’t matter which company you bought your insurance from.

Let’s follow that up with 3 reasons why you might choose a lesser-known carrier:

You Can Trust the Financial Ratings

People tend to automatically discredit companies they have not heard of, but the truth is that in the health insurance world, there are literally hundreds of insurance companies, even though you may only be familiar with the 5 or 6 big national brands. Fortunately, companies like A.M. Best can give us reliable financial data. Any Medigap company with an A or B+ rating is large enough to handle many, many claims all at one time. The top financial rating tells us that this is no “fly-by-night” carrier that might go under tomorrow, and they can be counted upon to provide the coverage we purchased. 

Off-Brands Can Sometimes Be Cheaper

Think about it – if you are a big company like AFLAC and you run tons of television ads to market your products, someone has to pay for that. Costs are generally passed onto policyholders in the form of insurance premiums. Smaller brands have less recognition, but they also likely spend far less on advertising. This means that a lot of times you can get great rates on a policy from a lesser-known insurance company.

Medicare, not the Medigap Carrier, Determines What Will Be Paid

What a Viable and More Affordable Plan Than Medigap: We Got You Covered

If Medicare covers a claim for you at 80%, then your Medigap company MUST pay the other 20%. They can’t decline to cover these expenses, so we almost never run into slow-pay issues with Medicare insurance companies. They pay their bills as soon as Medicare pays its share and passes on the remainder to them. You need not worry that just because you haven’t heard of a company they aren’t reliable.

With all that said, it amazes me that sometimes people will pay $300/year more for a name-brand company. If your friend has a Medicare supplement that pays great and on time, that’s generally not due to the insurance company being awesome. It’s due to the simple fact that Medicare claims are passed on for payment to your Medigap company like clockwork. Paying on time is an industry expectation.  If you have an opportunity to save on premiums by choosing one of these off-brand insurance companies, give it a try. There is little risk involved as long as the company has decent ratings.