How much does a Medicare Supplement plan cost?
This article was updated on: 09/16/2018
Perhaps you are considering supplementing your Medicare Part A and Part B coverage with other insurance that can help you pay out-of-pocket Medicare costs. It may be a good idea to learn about Medicare Supplement plans and how much they cost.
Medicare Supplement plans (also known as Medigap plans) are designed to work alongside Part A and Part B and to help pay out-of-pocket costs, which may include deductibles, copayments, and coinsurance, for example. Medicare Supplement insurance coverage for these expenses varies by plan type.
If you enroll in a Medicare Supplement plan, you will typically pay the insurance company a monthly premium in exchange for coverage. How much a Medicare Supplement plan will cost may depend on factors such as:
- The plan you select
- The insurance company you choose to provide your Medicare Supplement plan
- The time period when you apply for a Medicare Supplement plan
Factors affecting Medicare Supplement plan pricing
To fully understand how these factors may affect your Medicare Supplement plan cost, let’s examine each factor separately.
- Which Medicare Supplement plan you buy
The type of Medicare Supplement plan you choose can influence your cost for coverage.
Unlike Medicare, which is sponsored by the federal government, Medicare Supplement plans are offered by private insurance companies. In 47 states, there are up to 10 standardized Medicare Supplement plans available. With the exception of Massachusetts, Minnesota and Wisconsin, which have their own standardized Medicare Supplement plan types, Medicare Supplement benefit plans are labeled with alphabetic letters for easy reference.
All the standardized Medicare Supplement plans share some basic benefits. Aside from the first benefit listed below, not all plans cover these benefits at 100%. Basic benefits include:
- Medicare Part A coinsurance and coverage for hospital services
- Medicare Part B coinsurance or copayment
- Blood transfusions (first three pints)
- Hospice care coinsurance or copayment
Aside from these basic benefits, some Medicare Supplement plans may include additional benefits. For example, Medicare Supplement Plan M includes 100% of the coinsurance for Medicare-covered skilled nursing facility care, 50% of the Part A deductible, and 80% of emergency care received during foreign travel (up to plan limits) in addition to the basic benefits. Plan G covers the same benefits as Plan M; however, Plan G also covers 100% of the Part A deductible and 100% of the Part B excess charge (the legally allowed amount above the Medicare approved fee). Because Plan G provides more coverage than Plan M, it is likely to cost more than Plan M. You can compare the coverage provided by the 10 standard Medicare Supplement plans by viewing this chart.
- Which insurance company you buy the plan from
Insurance companies offering Medicare Supplement plans set their own premiums. This means that if you want to apply for Medicare Supplement Plan F, for example, the monthly premium you will pay may vary significantly between one insurance company and another even though they are offering identical standard benefits (some insurance companies also offer additional benefits). Premiums may vary among states as well.
In addition, some insurance companies may offer special discounts on premiums – for example, if you’re a non-smoker. Medicare Supplement plans are guaranteed renewable in most cases; generally as long as you continue to pay your premiums, you may continue your coverage from the Medicare Supplement plan year after year.
You may also want to consider the long-range cost of your Medicare Supplement plan as well as the short-range, immediate cost of the plan when choosing an insurance carrier. Depending on the pricing structure the company uses, your premium may increase over time as described below.
- Issue-age-rated: The insurance company bases your premium on your age at the time you purchase the Medicare Supplement plan. Your premiums are lower the younger you are. Over time, premiums may increase because of inflation and other factors, but they won’t increase because of your age.
- Community-rated: The insurance company establishes premiums so that everyone who purchases a specific Medicare Supplement plan in a particular region pays the same premium each month regardless of their ages. Over time, premiums may increase because of inflation and other factors, but they won’t change because of your age.
- Attained-age-rated: The insurance company bases your premium on your current age. Premiums increase in cost as you grow older. Your age, coupled with inflation and other factors, may make the plan expensive as the years pass.
- When you apply for a Medicare Supplement plan
Probably the best time to apply for a Medicare Supplement plan is the six-month period that begins the first month you are enrolled in Medicare Part B and you are age 65 or older. This time period is often referred to as Medicare Supplement Plan Open Enrollment, and you cannot be turned down for insurance coverage or charged a higher premium because of a health condition you have, although you might face a waiting period for coverage of your health condition.
If you wait until a later time to apply for a Medicare Supplement plan, the insurance company may review your medical history before deciding whether or not to offer you coverage. This medical history review is referred to as medical underwriting, and it can affect your ability to get coverage, or result in a delay in your coverage or an increase to the premium amount you pay for coverage.
Tips for evaluating Medicare Supplement plans and associated costs
- How much coverage do you need from a Medicare Supplement plan? You might want to take a close look at what each standardized plan covers so you can buy the plan that may meet your needs. For example, if you travel abroad frequently, a Medicare Supplement plan that covers emergency care outside the United States may be worthwhile insurance protection. Some plans pay for 80% of approved emergency medical expenses when you’re out of the country, up to plan limits. If you don’t travel abroad, you may not want to pay for coverage you’re fairly confident you won’t use.
- Once you identify the Medicare Supplement plan type you desire, compare insurance companies and their premiums. You can do this by clicking on the Compare Plans button in this page. Before signing up for a Medicare Supplement plan, you might want to contact the insurance company or its agent and find out how the insurance company sets its premium rates and whether it offers any discounts.
If you want to learn more about your Medicare coverage and options. I am here to help you. Feel free to use one of the links below to set up a phone call with me or request personalized information from me by email. You can also do some research on your own to get familiar with Medicare plan options in your area by clicking on the “Compare Plans” button on this page.
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