There are many reasons why some states have more expensive Medigap plans than others. The rules in some states vary, and the cost of living can also play a factor. If you live in a state where Medigap premiums are higher, it’s likely going to provide you with more value. The cost of healthcare is on the rise, and you want to have the coverage you need when you need it. Some people make the mistake of thinking they’ll get proper insurance when they need it, but much like car insurance, you need the coverage before the problems arise. In the context below, we’re going to discuss the most expensive states for Medigap and explain potential reasons for the higher costing policies.
Most Expensive States for Medigap Plans
One thing I noticed in this research is that states with community rating methods tend to be higher for those age 65 and balance out through the life of the policy. So, while you pay more in the beginning, the rate increases won’t occur due to age. Eight of the ten most expensive states for Medigap plans use a community rating. The other two states have high costs of living and different special rules that can influence prices.
While these are the highest premium states for Medigap, there’s one thing I want you to know; never judge a policy by the premium, but rather by what the policy can do for you. Are you moving, considering dual residency, or perhaps just curious? Those are all good reasons to looks at the costs of Medigap in each state.
These quotes are based on Medigap Plan G for a 65-year-old woman, non-smoker during the Medicare Supplement Open Enrollment Period; for storytelling purposes, we’ll call her Sarah. Keep in mind, men usually pay more for healthcare, and these are only cost estimates.
If Sarah lives in Arkansas when she turns 65, she can expect to pay $150 a month for Plan G. Well, Arkansas follows community rating methods, so if her best friend is 70-years old with the same coverage, and the same company they’ll have the same premium.
There are perks to community rating; that’s why a handful of states have adopted this as the only allowable rating method. While you may think the premium is high, the cost of healthcare in Arkansas is high too.
With Arkansas being the third most unhealthy state, it would make sense to see higher costing healthcare. Without a Medigap policy, you could end up paying a lot for services, especially in a catastrophic health event.
If Sarah lives in California when she turns 65, she can expect to pay around $155 for Medigap Plan G. Now, the biggest perk to living in California while on Medicare is the “Birthday Rule.”
While the “Birthday Rule” is beneficial, it’s also a factor in the higher costs of Medigap. Oregon also uses the “Birthday Rule,” but the cost of living in Oregon is slightly lower than in California, so the premiums in Oregon tend to be more comparable to other states.
California doesn’t have community rating laws.
Three states follow their own rules for Medigap, and Massachusetts is one of them. In this state, there are different plan names than traditional options. Plus, doctors aren’t allowed to charge excess charges in Massachusetts. Also, Massachusetts follows community rating rules.
Further, Massachusetts has a two-month window annually where Medigap plans are Guaranteed Issue. Plenty of reasons for Medigap to cost more here. Even the cost of living, Massachusetts, is one of the more expensive places to live in the United States. And, Medigap is no exception here.
For Sarah, the comparable option to Plan G would be the 1A Plan, and it would cost about $160 a month. But, as far as coverage goes, the 1A plan makes sense if you want to protect your savings from medical debt.
The sunshine state isn’t one of the most expensive places to live, but it’s certainly not the cheapest. Florida requires insurers to use issue-age rating methods, but the carriers can choose community rating instead if they wish.
The cost of Plan G for Sarah in Florida would be about $170 a month. While this may seem high, the average price of Medicare beneficiaries in Florida is higher than the national average.
Since the average cost of care per beneficiary is higher in Florida, it would make sense that the premiums for Medigap are higher. Meaning, it’s even more important to have insurance that’s going to be there when you need it.
Community ratings are the law in Washington. Further, those with pre-existing conditions will only have a 3-month waiting period instead of the usual 6-months.
For Sarah, Medigap Plan G in Washington would cost her $175 a month. But, once you have Medigap in Washington, you can apply to buy or switch plans at any time.
While nearly a third of Medicare recipients in this state have Medicare Advantage, that type of policy isn’t available in nine of the counties. Overall, while the premiums might seem high, there is more freedom with a Medigap than Medicare Advantage.
While Vermont was listed as the healthiest state, the cost of living is still about 15% higher than the national average. Further, Vermont follows the community rating method that influences a higher price. If Sarah lived in Vermont, she’d pay about $185 for Medigap Plan G. Which isn’t bad considering Vermont pays higher Social Security benefits than more than half the states. But Medigap plans are worth it, no matter where you reside.
Minnesota has different options for supplemental insurance than the traditional plans. And, like most of the states on this list, follows community rating method laws. If Sarah were a resident of Minnesota, she could customize her policy to have benefits equivalent to Plan G; this would cost her about $190 each month.
A large number of beneficiaries choose Medicare Advantage coverage in Minnesota, so the pool of people buying Medigap is smaller, which can also drive up the costs. While many are choosing alternatives to Medigap, it’s more beneficial to have the coverage you need than just a lower premium.
The third highest costing Medigap plans are in Connecticut. Medigap plans are Guaranteed Issue year-round in Connecticut. Also, there are community rating laws in this state. Further, those living in Connecticut have a higher Social Security benefit than most other states; they’re number two in the country for the highest benefit amount.
With the higher costs of living, special Medigap rules, and higher benefit amounts, it would make sense that Sarah would pay more. In Connecticut, Sarah can expect to pay about $200 each month for Plan G.
The second highest costing Medigap plans are in Maine. Those with Medigap in Maine can switch to a different policy with the same or fewer benefits throughout the year. Maine follows community rating method laws.
Medigap premiums in Maine only vary due to tobacco use. Premiums don’t go off age, and those under age 65 still qualify for the same costs as those over 65. Because of these rules, it’s no shock that premiums are much higher in this state.
For Sarah, Medigap Plan G in Maine would cost about $205 a month. But, even when she’s 90, she’ll have a premium equal to a person that’s 65. While it may seem like a lot at first, long term, it’s the most comprehensive option.
1. New York Has the Most Expensive Medigap Plans
The highest costing Medigap plans are in New York. Let’s take a look at why. Medigap plans are Guaranteed-Issue year around in New York. Also, there are community rating laws in this state.
The cost of living in New York is one of the highest in the country. When you mix year-round Guarantee Issue with community rating and a high cost of living, you get the most expensive Medigap plans.
For Sarah, Medigap Plan G in New York will cost about $270 a month. But, if she believes that’s too high, she can always look into Plan N or High Deductible Plan G. Consulting an agent about your potential coverage can save you money long term.
Learn About Your Options Today!
Were you surprised by any of the states with the most expensive Medigap plans? Is your state on this list? If you learn one thing, remember that you never judge a policy by the premium, but rather by what the plan can do for you. To find the most suitable coverage for your needs, give us a call at the number above. Or, fill out an online rate form to see your rates now!