What is the average cost of supplemental insurance for Medicare?
The cost of Medicare supplemental insurance plans, or Medigap, varies depending on location, insurance provider, and the type of plan a person chooses.
Some insurance providers offer discounts, factor preexisting conditions into costs, or have high-deductible options.
Medigap is an additional policy that people with Original Medicare parts A and B can buy through a private insurer. Parts A and B require deductibles, coinsurances, and other out-of-pocket costs for some treatments, along with an annual premium. However, Medigap plans pay for these when a person receives eligible treatment.
Private insurers administer Medigap plans, meaning that costs may vary according to state regulations, insurer choice, and personal circumstances such as age. Medigap plans are lettered A to N, excluding E, H, I, and J. Plans with the same letter must offer the same level of coverage, even if the cost is different.
This article explains how to navigate Medigap pricing.
Glossary of Medicare terms
We may use a few terms in this article that can be helpful to understand when selecting the best insurance plan:
Out-of-pocket costs: An out-of-pocket cost is the amount a person must pay for medical care when Medicare does not pay the total cost or offer coverage. These costs can include deductibles, coinsurance, copayments, and premiums.
Deductible: This is an annual amount a person must spend out of pocket within a certain period before an insurer starts to fund their treatments.
Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, this is 20%.
Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare supplemental insurance costs
This article originally appeared on Medical News Today
Private insurers decide the price of a Medigap plan instead of the Centers for Medicare and Medicaid Services (CMS). The monthly premium is the only factor that will differ between policies with the same letter. For example, Medigap Plan M offers the same benefits and coverage regardless of which company sells it. However, one insurer may sell plan M for $100 more monthly.
However, these are only estimated costs, as some private insurers adjust their quotes based on several factors. For example, they may offer discounts for certain groups of people, including:
women
people who do not smoke
married individuals
those who choose to pay annually instead of a monthly premium
people who pay via an electronic fund transfer
individuals with multiple policies
Insurers may also offer Medicare SELECT policies with a premium different from other plans. These policies require that a person receives services from specific hospitals or healthcare professionals to qualify for reimbursement.
High deductible options are available, in which a person pays a higher deductible of $2,800. These plans include:
Plan F
Plan G
Plan J, if a person purchased it before January 1, 2006
Along with the monthly Medigap premium, individuals must pay a monthly Medicare Part B premium. In 2024, this costs $174.70.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Medicare supplemental insurance benefits
Medigap helps people pay for out-of-pocket costs that Original Medicare does not cover, filling specific gaps in coverage. A Medigap plan may also cover part of some services not included in Original Medicare, such as overseas emergencies.
Medigap plan types are lettered A to N, excluding E, H, I, and J.
The same type of Medigap plan must offer the same benefits across insurers, but the plans offer different levels of coverage. For example, some cover all the Part B coinsurance or copayment, while others cover 50% or 75%. Others have an out-of-pocket limit, above which the Medigap insurer will pay all costs.
Choosing a Medicare supplemental insurance plan
People should discuss the plan premium with the insurer upfront. Medicare provides a valuable Medigap policy search tool for comparing the costs of local plans. Once a person has determined which type of plan best suits their needs, they can search their ZIP code to identify local insurers offering this plan.
The timing of enrollment can also make crucial differences to a person’s level of coverage and monthly cost. Some companies might exclude preexisting health problems or charge a higher premium for those without a guaranteed issue right or who apply outside the Medigap open enrollment period.
A guaranteed issue right means an insurance provider must sell a person a specific plan, include coverage for preexisting conditions, and not charge more. People have a guaranteed issue right in certain situations, such as a previous plan leaving Medicare, an insurer going bankrupt, or an insured individual moving out of a plan’s coverage area.
Companies will also generally offer better rates during the Medigap open enrollment period, which starts when a person has Medicare Part A and Part B and turns 65 years old. This is a one-time enrollment period that lasts for 6 months.
The insurance provider’s approach to age is also vital, as this dictates how the premium will increase over time through a process known as age rating. The options include:
No-age-rated or community-rated: Every individual in a specific area pays the same premium without considering their age.
Issue-age-rated: The insurer bases the price on a person’s age when taking out the policy, and any price increases relate to other factors such as inflation.
Attained-age-rated: The premium increases in line with a person’s age.
Other factors affecting coverage might include a waiting period in which they will not cover preexisting conditions. They may take previous coverage into account when calculating this waiting period.
Summary
Medigap plan premiums vary depending on the plan type, the location of the beneficiary, and the insurance provider. A person must also pay their 2024 Medicare Part B premium of $174.70 and any out-of-pocket costs that a particular plan does not cover.
Any plan with the same letter will offer the same benefits regardless of price. A person can ask an insurance company representative about age rating, preexisting condition waiting periods, and any factors, including smoking status, marital status, or overall health, that may affect the premium. Applying for Medigap during open enrollment can help to reduce the premium.
View the original article on Medical News Today
