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The biggest question surrounding Medigap plans is, “what is the average cost of Medicare Supplement plans?”. Unfortunately, the answer isn’t always that simple. The average cost of supplemental insurance for Medicare can be anywhere between $50-$300+ in monthly premiums.
The benefits of a Medigap plan are always the same no matter what company underwrites the policy. But, the price will vary by company and by state.
In the context below, we’ll go over the average cost of Medicare Supplemental insurance. Also, we’ll discuss the factors that influence those costs.
What is the Average Cost of Supplemental Insurance for Medicare
Many factors need to be taken into consideration when reviewing Medigap pricing. Elements that influence pricing are the company’s ability to pay claims, underwriting, and rating method. Various state rules can also impact the cost of insurance.
Plan F is the most common plan. It picks up all the charges left over by Medicare. The cost is around $150 a month in some states and as high as $300 a month in others. This plan won’t be available after 2020 Medicare changes occur, at least not to newly eligible beneficiaries.
Medicare Plan C is identical to Plan F, except it doesn’t cover excess charges. In most cases, the premium is only a dollar or two lower per month than Plan F.
Plan G is the most popular plan in the country; it covers everything except the Part B deductible. Plan G starts around $90 a month and ranges up to $170 depending on the state and your age.
Plan D is identical to G, except it does not cover excess charges. The cost of Plan D is within a couple of dollars of the cost of Plan G.
Plan N is gaining popularity and could receive some of the lowest rates increases of all the plans. Medicare Plan N has a $20 copay for doctor visits and a $50 copayment for the emergency room.
There aren’t many people enrolled in this plan, the costs are usually between Plan N and G, even though the coverage isn’t as good.
Cost-Sharing Policy Premiums
Plan K and L are the strangest plans offered by Medicare; they leave you responsible for excess charges and portions of other costs, they do have a maximum out of pockets to protect you from catastrophic illnesses.
Medicare Plan K leaves you with 50% of the costs after Medicare pays its portion. This policy has a higher maximum out of the pocket of the two plans.
Plan L leaves you with 25% of the costs after Medicare pays its part. This plan has a lower maximum out of pocket than the Plan K. Most carriers don’t offer these plans, and they aren’t available in all states.
Keep in mind few people enroll in either of these two plans, so the premium cost comes in between Plan N and Plan G.
Average Cost of High Deductible Medicare Supplement Plans
These plans are essentially the same plan; you are responsible for all your portion of costs until you reach a small deductible. These plans are the lowest costing plans on the market ranging from about $50 a month to $70.
For a more detailed explanation of what the plans cover, contact us at the number above and speak with a licensed agent.
Understanding the Cost of Medicare Supplement Plans
Prices can differ by company, even when the same coverage is offered in the same state.
Imagine ten people are paying $100 a month into a bucket. They use this bucket for their health care expenses. If no one is using much money monthly, then the amount everyone is contributing will stay the same.
Although, if one person starts taking $800 a month from the bucket, everyone will have to chip in more to keep that bucket full. If a company has more members, it’s more financially stable, rates are lower, and rate increases are slower.
Also, as premium rates increase, healthier people shop around to find lower costs. Members leaving a Medigap plan means the company has fewer clients paying into the bucket; this causes the remaining members to pay more.
The Impact of Rating methods
The last factor that affects the cost of a plan is the age rating. All Medigap plans have three ways they look at the age rating, issue age, attained age, or community rating.
While on the surface, it would seem like one would be better than the other for rate increases, other factors have more impact on the rate increase than age.
Specifically, the starting cost of your plan is considerably affected by the financial strength of the company from whom you choose.
- Issue Age – the age you are when you get a plan; you will always pay the same as someone entering the plan at that age. It doesn’t mean that your price will never go up.
- Community Rated – everyone in the area pays the same, and their rate increases are the same. Usually, states with community ratings will have higher premiums.
- Attained age – rates increases are based on your age; on the surface, you would think this would be the rating with the highest increases, but that is not usually the case.
Strict vs. Liberal Underwriting
Remember the bucket we talked about before and how the one member needed $800 a month to cover their health care costs. Some companies like Mutual of Omaha have strict underwriting, meaning unless you are in a Guaranteed Issue situation, or your one-time open enrollment, you must go through underwriting.
Mutual of Omaha’s health questions and vetting process is strict. Some companies have a laxer underwriting process that allows more people with health problems to join their plan. As a result, these companies have to charge more to keep up with paying the medical costs for unhealthy members.
Get Help Finding the Best Plan for You
Our insurance agents are experts at understanding the underwriting guidelines with different companies. And, if you believe an Advantage plan is more suitable, we can help you determine the benefits of choosing one plan over the other.
While Medicare isn’t mandatory, delaying coverage could impact your future costs. Don’t try to figure out your Medicare alone, we’re here for you!
The best part about working with us, you’ll have a personal guide to health insurance. Why wonder if your policy is the best when you can know for sure.
Call us today to find the plan that’s right for you, or fill out an online contact form to get started!