Medicare Supplement Insurance Plan Costs
Original Medicare offers broad coverage to help with certain hospital and medical costs, but doesn’t cover all costs of the services and supplies you may need. Medicare Supplement (Medigap) insurance plans fill in some gaps in basic benefits left behind by Original Medicare.
Medicare Part A and Part B (which make up Original Medicare) have out-of-pocket costs you may have to pay, such as deductibles, copayments, and coinsurance. That’s where Medigap insurance comes in. The various Medigap plans cover various portions of Original Medicare expenses.
There are 10 standardized Medigap plans in 47 states named with letter designations (such as Medigap Plan M). Massachusetts, Minnesota and Wisconsin have their own standardized plans. Each Medigap plan of the same name carries the same basic benefits no matter where you buy the plan. For example, if you buy Medigap Plan M in Boston, it’ll include the same basic benefits as a Medigap Plan M in Laredo. Some companies may offer additional innovative benefits.
Medicare Supplement insurance plan cost: premiums
Like almost all insurance plans, Medicare Supplement insurance plans do require premium payments. Because Medigap plans are offered through private insurance companies, the costs associated with each plan may differ. So, to follow up with the above example, a Medigap Plan M you buy in Boston may not cost the same as a Medigap Plan M you buy in Laredo, but the basic benefits would be the same.
Each private insurance company offering Medicare Supplement insurance plans can set its own plan premiums using one of these rating methods:
- Community-rated: Each beneficiary is charged the same monthly premium, regardless of age. These premiums will not increase as you age, but may increase over time as a result of inflation.
- Issue-age-rated: The premium cost of these plans is based on your age when you first buy the Medigap policy. In general, premiums are lower for younger buyers. These premiums will not increase as you get older, but may increase as a result of inflation.
- Attained-age-rated: Premiums are set based on your current age and increase as you get older. Premiums are lower for younger buyers but increase over time.
Note that besides your Medigap plan premium, you still need to pay your Original Medicare premium(s) as well; Medigap doesn’t cover your Medicare Part A or Part B premium. Many people don’t pay any Part A premium – if you worked at least 10 years (40 quarters) while paying Medicare taxes, Part A is premium-free. But most beneficiaries pay a monthly Part B premium.
When to apply
You can apply for a Medigap policy anytime you’re enrolled in both Medicare Part A and Part B, but when you apply can make a big difference – both in terms of whether you’re accepted into the Medigap plan, and in terms of other details, including cost.
Your first opportunity to buy a Medicare Supplement insurance plan is during your Medigap Open Enrollment Period. This six-month period begins the month you’re both enrolled in Medicare Part B and 65 years old or greater. If you sign up for a Medigap plan during this period, you have a guaranteed issue right to buy the policy without undergoing medical underwriting or paying a higher premium because of a health problem. Once your Medigap Open Enrollment Period has ended, in most cases you don’t have guaranteed issue rights. There are some other situations where you may have guaranteed issue rights.
Factors that affect Medicare Supplement costs
Besides buying a Medicare Supplement insurance plan during a time when you may have guaranteed issue rights, the following factors might affect the cost of a Medigap plan.
- Some insurance companies may offer discounts to women, people who are married, and non-smokers.
- Insurance companies might give discounts to those who pay yearly, or who pay their premiums using electronic funds transfer.
- You may be able to purchase a high-deductible option for Medigap Plan F, which might offer a lower premium, but requires you to pay a substantial deductible before the plan begins.
- If you enroll in a Medicare SELECT plan (a type of Medigap policy that may limit you to using doctors in the plan’s network), you might have a lower premium. Network restrictions apply.
Please note that not every type of Medigap insurance plan or discount will be available in every state or from every insurance company that offers Medigap plans.
This website and its contents are for informational purposes only. Nothing on the website should ever be used as a substitute for professional medical advice. You should always consult with your medical provider regarding diagnosis or treatment for a health condition, including decisions about the correct medication for your condition, as well as prior to undertaking any specific exercise or dietary routine.