Original Medicare helps beneficiaries with many healthcare costs, but there are still out-of-pocket expenses and personal medical needs that can escape coverage. Supplemental insurance can help fill the gaps left by Medicare, but these extra plans might not be the best fit for everyone. This guide can help Medicare Beneficiaries understand if supplemental insurance is right for their unique situation.
What is the Average Medicare Supplemental Insurance Cost?
The average monthly premium cost of a Medicare Supplement is estimated to be about $150. This is only an average and although the benefits of a Medicare Supplement plan are the same when compared with a plan of the same letter, the premiums vary. The main things that impact the monthly premium are your age, your gender, and your geographical location.
Generally, you will find that the higher the deductible, the lower the monthly premium will be. The deductible is the amount you must pay before your Medigap insurance will pay anything at all.
Another consideration to keep in mind when purchasing Medigap insurance is that Original Medicare does not have an out-of-pocket maximum. Most Medigap plans have a maximum out-of-pocket limit. When you pay your maximum, then your Medigap plan will pay the rest.
You pay the monthly premium even if you do not need any covered medical services.
How Do Insurance Companies Determine the Medigap Plans Cost?
Many factors affect Medigap Plan Costs. The main ones are your age, your gender, and your geographical location. Some factors to compare and the way the companies determine how they affect the cost of their specific monthly premium include:
- Community Rated (also called “no age-related”): Just as it sounds, everyone in a certain geographical area will pay the same monthly premium no matter how old they are when they enroll in the Medigap plan.
Your monthly premium may increase because of inflation, but it will not increase because of your age. Mr. Smith, age 67, pays the same monthly premium as Mrs. Jones, age 75.
- Issue-age-related (also referred to as “entry age-related”): Just like it sounds, the monthly premium is based on the age you are when the policy is first issued to you. The premium stays the same for as long as you have the policy and will not increase as you age.
The younger you are when you purchase the policy, the lower your premium will be. For example, Mr. Smith who purchased the policy at age 65 may pay a monthly premium of $150. Mrs. Jones, who purchased the exact same policy at age 75 may pay a monthly premium of $175.
- Attained-age-related: The monthly premium is based on your current age, meaning every year the premium will increase. If you purchase a Medigap policy when you are younger, you will save money. But as the years pass and your premium increases, you may be paying a lot more and this may eventually be the most expensive Medigap coverage.
- Geographical location: A monthly premium for a policy for coverage if you live in Texas may be substantially lower than a monthly premium for the exact same policy for coverage in New York.
- Gender: In some states, monthly premiums are lower for women than for men.
For more information visit Medicare Supplement (Medigap) Costs.
What Else Do I Need to Know About Medicare Supplemental Insurance Cost?
How many supplement plans are there? There are 10 Medicare Supplement plans available. They are labeled by letters from A to N. Be sure to compare Plan A with one company to Plan A from the other one.
Although plans with the same letter are required to provide the same benefits, they are not required to charge the same monthly premium. Plan A from company X may cost $150 a month whereas Plan A from company Y may charge $175 a month.
Are there any restrictions on plans? Yes. If you became eligible for Original Medicare after January 1, 2020, you are no longer eligible to purchase Medigap Plan C or Plan F. These two plans are being phased out.
How does a high deductible option work? Some companies offer a high deductible option for Plans F or G. This means that before the Medigap policy pays anything at all for any covered services, you must pay $2,340 out-of-pocket. If you want foreign travel emergency services coverage, that will be a separate $250 annual out-of-pocket deductible.
Can I be denied coverage or charged a higher monthly premium if I have a pre-existing condition? If you enroll in a Medigap plan during your Initial Enrollment Period, the company must sell you the policy no matter what your medical history is even if you have a pre-existing condition like diabetes, cancer, or a heart condition.
If you enroll later, during the annual Open Enrollment Period, you will not be charged a higher monthly premium for a pre-existing condition, but the company can refuse to cover your pre-existing condition for six months after your policy begins. Original Medicare will still pay its share since it has no pre-existing condition limitations.
Miscellaneous Information You Need to Know Before Purchasing a Medigap Policy
When choosing a Medicare Supplement plan, keep in mind that different insurance companies may charge differently for the exact same coverage. Compare prices but be sure you compare the exact policy. For example, compare a Medigap Plan G with one company with a Medigap Plan G with another one.
Other factors that can make a difference in your monthly premium may be:
- Does the company offer any discounts? Some companies offer a discount for nonsmokers or for married couples. They may offer a discount for having automatic withdrawal from your bank account to pay your monthly premium. There may be a discount if you and your spouse both purchase a Medigap policy from the same company.
- Does the company sell a Medical Select policy which means a lower monthly premium if you use certain providers?
- Does the company offer a lower premium if you agree to a higher deductible?
- Costs of Medigap Policies, Medicare.
- Understanding Medigap Insurance, Medicare.