Medicare Supplement Insurance (Medigap) Costs
Reviewed by: Selah Lee, Licensed Insurance Agent
When Original Medicare (Parts A and B) doesn’t cover all healthcare costs, Medicare Supplement Insurance (Medigap) 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.”
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 insurance 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 deductibles . 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 [i] 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 [i] . We put together a breakdown to help answer, “How much does Medicare supplemental insurance cost?”
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To be eligible for a Medigap plan, first, you must be enrolled in Original Medicare (Parts A and B). When you combine Medicare Part A and Medicare Part B with a Medigap plan, you pay a monthly premium 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.
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.
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.
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.
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 providers and hospitals that are covered. If you must receive care that’s out-of-network , you’ll be responsible for all the costs not included in your coverage.
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Insurance companies and providers must give a clear description of Medigap costs, including coverage limitations . Your Medigap costs will be higher if you put off enrolling when you’re first eligible.
Your open enrollment period includes guaranteed issue 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.
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.
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