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Medicare Supplement Insurance (Medigap) Costs

A breakdown of the Medigap costs and how you enroll.

Key Takeaways

  • When Original Medicare (Parts A and B)Original Medicare (Parts A and B) is fee-for-service health insurance available to all Americans aged 65 and older and some individuals with disabilities. Original Medicare is provided by the federal government and is made up of two parts: Part A (hospital insurance) and Part B (medical insurance). doesn’t cover all healthcareHealthcare is the industry dedicated to maintaining or improving health and well-being. costs, Medicare Supplement Insurance (Medigap)Medicare Supplement Insurance (Medigap) are policies designed to provide coverage that Original Medicare (Parts A and B) do not. Medigap policies are purchased in addition to Original Medicare and have their own monthly premiums you'll need to pay. plans are available to help cover cost gaps in coverage.

  • Offered by private health insurance companies, approved by Medicare.

  • Medicare supplement costs have different rate structures called “ratings.”

What is Medicare Supplement Insurance (Medigap)?

Original Medicare (Parts A and B) covers the majority of your healthcare needs, but it’s not intended to cover everything. If you rely on Original Medicare alone, you risk “gaps,” which may lead to significant expenses from medical treatments and extended hospital stays.

Supplement Insurance (Medigap) is health insuranceHealth insurance is a form of insurance that covers a portion of your medical expenses. In exchange, you pay a monthly premium and other costs. sold by private companies to cover costs in these gaps.

Also known as letter plans, Medigap policies range from essential coverage, Plan A, and increases alphabetically to the most comprehensive Plan J (although this plan is no longer available to new beneficiaries). Plans K and L also cover a portion of the Part A and B deductiblesA deductible is the amount you pay out of pocket before your insurance company covers its portion of your medical bills. For example: If your deductible is $1,000, your insurance company will not cover any costs until you pay the first $1,000 yourself.. In contrast, Plan N focuses on Plan A deductibles. For more information on each plan, check out our Medigap coverage guide.

It’s important to know that all Medigap policies are standardized [1]  by the federal government, which means each plan must be the same in each state. For example, a Plan “A” policy sold by “Company 1” must provide the same coverage as the Plan “A” policy sold by “Company 2.”

Aside from which plans are available in your state, one of the things you’ll want to figure out before buying Medigap is how the insurance company calculates its rates [2] . We put together a breakdown to help answer, “How much does Medicare supplemental insurance cost?”

How Much Does Medigap Cost?

To be eligibleSome health plans require you to meet minimum requirements before you can enroll. The rules of eligibility can vary by plan. for a Medigap plan, first, you must be enrolled in Original Medicare (Parts A and B). When you combine Medicare Part AMedicare Part A, also called "hospital insurance," covers the care you receive while admitted to the hospital, skilled nursing facility, or other inpatient services. Medicare Part A is one of the pain parts of Original Medicare. and Medicare Part BMedicare Part B is the portion of Medicare that covers your medical expenses. Sometimes called "medical insurance," Part B helps pay for the Medicare-approved services you receive. with a Medigap plan, you pay a monthly premiumA premium is a fee you pay to your insurance company for a health plan coverage. This is usually a monthly cost. for Medigap, as well as any Original Medicare premiums.

 

How is the cost of a Medicare supplement policy determined?

Insurance companies use one of three formulas, or rating systems, to determine the supplemental insurance cost.

Community-rated

Everyone in the state pays the same price for the same letter plan, regardless of age.

For example: Bob and Linda both sign up for Plan A, and both pay $50 per month for their Medicare supplement costs.

Issue-age-rated

The policyholder’s age determines the price. Prices are higher the older you are when you sign up.

For example: Linda signed up at the age of 65. She pays $50 per month for her Medigap costs. Bob waited until he turned 70. He pays $75 per month for the same plan.

Attained-age-rated

These plans have the lowest cost when the purchaser is close to age 65. These plans are affordable when they begin, but increase over time. These plans can become the most expensive option of the three.

For example: Bob bought a policy at the age of 65 for $100 per month. His monthly premium has increased each year, and he now pays $200 at the age of 75.

What is Medicare SELECT?

Some states offer a low-cost version of their Medigap plans, which is called Medicare SELECT. The low cost comes from the limited network of healthcare providersHealthcare providers are doctors, specialists, therapists, labs, pharmacies, clinics, hospitals and urgent care centers that give care to patients. Your insurance company usually pays your healthcare provider. and hospitals that are covered. If you must receive care that’s out-of-networkOut-of-network refers to doctors, hospitals and other providers that do not have an agreement to treat your health insurance company's clients. Visiting an out-of-network provider typically means more out-of-pocket costs and less coverage., you’ll be responsible for all the costs not included in your coverage.

Are There Any Hidden Costs?

Insurance companies and providers must give a clear description of Medigap costs, including coverage limitationsLimitations are restrictions on your health insurance coverage. Either your plan won't cover a service, or there may be cost limits on the coverage.. Your Medigap costs will be higher if you put off enrolling when you’re first eligible.

Your open enrollment period includes guaranteed issueA type of enrollment into a Medicare Supplement plan when an applicant can apply without going through medical underwriting. rights, which means you cannot be denied coverage because of your medical history.

If you wait to sign up for Medigap after your OEP, you may not have the same rates or coverage levels.

How Do I Buy Medigap?

At GoHealth, we have teams of licensed insurance agents to evaluate Medigap plans and shop each state’s best rates. Of course, there are also several resources to do it yourself. If you’re ready to purchase Medigap insurance, or if you have any questions about what it costs or what it covers, contact us. Our licensed insurance agents can evaluate your needs, medical history and current Medicare status to make sure you get the coverage you need, when you need it.

Refer to our Medigap enrollment guide for further information.

FAQs

What Personal Information Should I Have With Me During Enrollment?

To enroll in a Medigap plan, you’ll need to provide some basic information:

  • Name
  • Current address
  • Phone number
  • Social Security number
  • Identification documents (birth certificate, driver’s license, or passport)
  • Payment information

You’ll also want to make a list of all the medical services you currently need, or you think you may need in the future. This will help you or your enrollment specialist figure out what kind of gaps you need to fill.

What’s the difference between Medicare Supplement (MediGap) and Medicare Advantage?

You can choose either a Medicare Supplement or Medicare Advantage plan, but you cannot be enrolled in both plans at the same time.

  • Medicare Advantage Plan (Part C)Medicare Advantage is health insurance for Americans aged 65 and older that blends Medicare benefits with private health insurance. This typically includes a bundle of Original Medicare (Parts A and B) and Medicare Prescription Drug Plan (Part D). is an alternative to Original Medicare (Part A and Part B). With Medicare Advantage, you receive Part A and Part B through your plan along with extra coverage benefits.
  • Medicare Supplement (MediGap) plans help cover gaps in Original Medicare. These usually include out-of-pocket expenses such as co-paymentsA co-payment is the fixed amount you pay directly to your provider for medical services or prescription drugs covered in your plan. For example: If your plan includes a co-payment of $20 for office visits, you'll pay $20 to your doctor whenever you have an appointment., co-insuranceCo-insurance is the percentage of your medical costs that you pay after you meet your deductible. The remaining amount is paid by your insurance company. For example: If you have a $1,000 medical bill and your co-insurance is 20%, you'll pay $200. Your insurance company will cover the final $800., and deductiblesA deductible is the amount you pay out of pocket before your insurance company covers its portion of your medical bills. For example: If your deductible is $1,000, your insurance company will not cover any costs until you pay the first $1,000 yourself.. Private health insurance companies provide Medigap plans under state and federal regulations.

Are Prescription Drugs Covered by Medigap?

If you enroll in a Medigap plan, you will also need to enroll in a Medicare Prescription Drug Plan (Part D)

Does it Cost Extra to Enroll With an Agent?

That depends. Many agents and brokers sell specific Medigap policies and the pricing can vary. At GoHealth, our licensed insurance agents provide industry expertise at no cost while making sure you get the benefits that are best for you.

What's Next?