Average Cost of Supplemental Insurance for Medicare

What is the Average Cost of Medigap Insurance?

According to our research, the average cost of Medicare Plan G is $132.25 per month, whereas the average cost of Plan N is $98.85. Plan G and Plan N are the most popular plans purchased by new beneficiaries.

We evaluated over 100 Medicare Supplements (Medigap) to find out how much it costs the average person to buy Medicare Supplement Insurance. Where you live, age and the amount of coverage purchased were consistent factors that influenced costs the most.

How Much Does Medicare Supplement Insurance Cost?

Even though we did the study, telling you the average cost of Medicare Supplement insurance won’t help you very much. What you need is a Medicare Supplement Rate Comparison for your local area.

The cost of supplemental Medicare insurance is based on:

1. Where you live
2. Your age
3. Your gender
4. Your use of tobacco
5. The amount of coverage

We’ve made it very easy for you to input those five bits of information and get a free report that is customized for you. Your free report will include the Medicare Supplement rate increase history on all insurance companies in your area.

No calls. No email spam. Just answer the following questions and we’ll do the rest. No kidding.

You can also browse plans with our free tool.

Let’s explore questions about premiums in a couple of different ways. Like, how much coverage can I get that I can afford? And, how can I save money on a Medigap plan and still be covered for my major medical costs? And, is supplemental Medicare insurance a waste of money?

Those are the questions we’ll help answer and offer additional resources.

How Much Coverage Can I Get with a Medigap Plan?

As its name implies, Medigap covers the gaps in Original MedicareOriginal Medicare is private fee-for-service health insurance for people on Medicare. It has two parts. Part A is hospital coverage. Part B is medical coverage.. These gaps include deductiblesA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share., copaymentsA copayment, also known as a copay, is a set dollar amount you are required to pay for a medical service., coinsuranceCoinsurance is a percentage of the total you are required to pay for a medical service. , blood, and foreign travel. They are covered through 10 different plans.

Each plan is standardized and given a letter code (A through N). This makes comparing plans easy. Simply pick the plan with the outpatient, inpatient, nursing facility, and travel coverage you want and shop the carriers in your area that offers the plan.

The plan with the most coverage is Medigap Plan FMedicare Supplement Plan F is the most comprehensive Medicare supplement plan available. This plan covers all Original Medicare deductibles, coinsurance, and copayments, leaving you with no out-of-pocket costs on all Medicare-approved services.. This plan offers full coverage for all of the gaps in Medicare. So, if you have a Plan F policy, and the health services you use are all Medicare-approved, you pay nothing out of pocket.

After Plan F, Plan G offers the most coverage. Medigap Plan GIf you're turning age 65 this year, Medicare Supplement Plan G is the most comprehensive Medicare supplement you can buy. It's also the most popular. You might be thinking that Medicare Supplement Plan F is... is available to everyone turning age 65 with guaranteed issue rightsGuaranteed-issue is a right granted to Medicare beneficiaries and applies to Medicare Supplement insurance (aka, Medigap plans). All states and the federal government enforce this essential right, which protects Medicare beneficiaries from medical underwriting.. This plan covers everything in Plan F except the Medicare Part BMedicare Part B is medical coverage for people with Original Medicare benefits. It covers doctor visits, preventative care, tests, durable medical equipment, and supplies. Medicare Part B pays 80 percent of most medically necessary healthcare services. annual deductible.

A plan that’s growing in popularity is Plan N. Medigap Plan N costs less than Plan G, particularly for nonsmokers, and is a good option for healthy people. You get full coverage on the big stuff. But you pay a small copay for doctor office visits and emergency room care.

The following chart will show you the coverage offered by all 10 lettered plans. The chart makes it easier to find the best Medigap plan for your needs:

Get a Free Medicare Supplement Rate Comparison

Medicare Deductibles, Coinsurance, Excess Charges, Blood… Oh, My!

Most of the costs covered by supplemental policies can be broken down into deductibles, coinsurance or copayments, excess charges, and the cost of blood.

Here’s an overview of Medicare’s out-of-pocket expenses:

• Medicare Part AMedicare Part A is hospital coverage for Medicare beneficiaries. It covers inpatient care in hospitals and skilled nursing facilities. It also covers limited home healthcare services and hospice care. deductible: This is a per-benefit period cost, not an annual deductible. If you have two inpatient hospital stays more than 60 days apart, you’ll pay the deductible for each period. The Part A deductible is $1,600.
• Medicare Part A coinsurance:  This is a daily cost that starts on the 61st day of inpatient treatment. All plans cover this cost. It’s $400 per day for the 61st through the 90th day. From the 91st day on it’s $800 per day.
• Medicare Part A HospiceHospice is a special way of caring for people who are terminally ill. Hospice care involves a team-oriented approach that addresses the medical, physical, social, emotional, and spiritual needs of the patient. care coinsurance or copayment: Medigap plans cover the parts of hospice that Medicare doesn’t.
• Medicare Part A Blood (First 3 pints): This benefit is included with all Medigap plans. When you need blood, Medicare only pays for the 4th pint and above. Blood is very expensive, so it’s important to have the first 3 pints covered.
• Medicare Part A Skilled Nursing Facility coinsurance: Medicare covers up to 100 days of skilled nursing care. But, Medicare only pays 100% for the first 20 days. After that, you’ll pay $200 per day.
• Medicare Part B deductible: The Part B deductible is $226 per year. You’ll pay this amount before Medicare begins covering its share of your doctor visits, lab work, and physical therapy.
• Medicare Part B coinsurance and copayments: All Medigap plans cover some Part B coinsurance and copayments. Because Medicare only covers 80% of your medical expenses, this benefit is what helps pay the remaining 20% for you.
• Medicare Part B excess chargesA Medicare Part B excess charge is the difference between a health care provider’s actual charge and Medicare’s approved amount for payment.: Some providers add an excess charge (up to 15%) to Medicare’s assigned rate for services. Medicare Part B excess charges are covered by Plan F and Plan G.
• Foreign travel emergency: Medicare covers you in all states and territories, but it does not cover foreign travel emergencies. Some Medigap plans do.

Do I Really Need Supplemental Insurance With Medicare?

Let’s address the elephant in the room. Is a Medicare Supplement plan really necessary? If so, why?

Many people about to retire are shocked to learn that Medicare only pays about 80% of Medicare-covered costs and that there’s no out-of-pocket maximum on the costs that beneficiaries pay (the remaining 20%). Learning this is when most Medicare beneficiaries become interested in supplemental Medicare insurance.

Since Medicare only covers about 80% of your major medical costs, the remaining 20% is your responsibility. These out-of-pocket costsOut-of-Pocket Costs for Medicare are the remaining costs that are not covered by the beneficiary's health insurance plan. These costs can come from the beneficiary's monthly premiums, deductibles, coinsurance, and copayments. are paid in several different ways, including:

1. Medicaid (if you qualify)
2. Medicare Savings Programs (QMB, SLMB, QI)
3. Employer Group Health Coverage
4. VA Benefits
5. TRICARE for Life (for military retirees)

These are the most common ways people cover their out-of-pocket costs in Medicare. If you don’t qualify for one of the benefits listed above, then you pay out-of-pocket or buy a Medigap plan. We can help you compare Medigap plans in your area.

If you’re thinking about the self-pay option, think twice. This is a very risky proposition. The cost of advanced diagnostics, surgery, and hospitalization is enough to bankrupt most people.

Can you afford to pay 20% of the cost of cancer treatment or a hip replacement? The average cost of a hip replacement in the United States is about $32,000. Most of us can’t afford 20% of major healthcare costs out-of-pocket.

A Medigap policy helps pay some of the deductibles, copayments, and coinsurance in Medicare Parts A and B. Some plans have out-of-pocket limits. These plans pay all your covered medical expenses once you’ve paid a certain amount. Most plans cover one or more of the gaps straight across the board.

The cost of a policy is a function of the gaps you want to have covered. The more expansive the coverage, the more the policy will cost.

For this reason, it’s important to evaluate the out-of-pocket expenses you are most likely to have. This way you can choose the right amount of Medicare coverage and avoid a higher premium.

What Determines the Monthly Premium on a Medicare Supplement Plan?

In most states, there are ten standardized Medicare Supplement plans. Each plan is identified by the letters A, B, C, D, F, G, K, L, M, and N.

Medicare Supplement plans A and B, for example, do not cover everything that plans F and G cover. However, all policies with the same letter offer the exact same benefits.

This makes plans easier to choose. Simply look at the comparison chart, find the plan with the coverage you want, then go price shopping.

Here are the most common factors that affect premiums:

• Plans with more coverage most often cost more.
• The insurance company (companies with a larger, younger pool of people have lower rates).
• Where you live (in a high-cost-of-living area plans generally cost more)
• How the plan is “rated” (how they factor your age into your cost)

Tip: Some companies charge the same monthly premium to everyone, regardless of age. Some companies charge according to your age when you buy the plan, and some companies charge according to your current age so your premium may increase yearly. Your licensed insurance agent can help you make the right choice.

Do Medicare Supplements have Deductibles?

The term deductible is probably familiar to you in terms of your car insurance. It’s the amount you pay before your insurance begins to pay.

Some Medigap plans cover the Medicare Part A hospital deductible but make you pay the Medicare Part B medical deductible. Other plans don’t cover either deductible.

There are two plans that have substantially lower premiums. Both Plan F and Plan G have a high-deductible option.

With the high-deductible option plans, you pay the plan’s deductible amount before the plan pays anything. If you are healthy and have saved for the day when you may need to pay the deductible, one of these plans may work for you.

High Deductible Plan FHigh Deductible Plan F is a version of the regular Medigap Plan F. You pay all costs until spending reaches the annual, then the plan pays all Medicare-approved costs. is only available to individuals who qualified for Medicare before 2020.

How Can I Save Money on Medigap Premiums?

The way to save money on your supplement coverage is to take on some of the risks (costs) yourself. Plan N is one of the options. You pay all excess charges and pay a copay when you see your doctor or use the emergency room.

Medicare Supplement Plan NMedicare Supplemental Plan N is one of the ten standardized Medigap plans. Although it is one of the newest plans available, Medicare Plan N is quickly becoming a favorite with Baby Boomers aging into their... is not the only plan with cost-sharing. Plan K and Plan L are two more options.

With these plans, you share a percentage of your Part A and Part B costs. They protect you from the big costs with a maximum out-of-pocket limit.

Saving on Medigap premiums comes down to understanding both your health and financial needs. Many Medicare beneficiaries, especially the good savers, like the high deductible plan options on Plan F and Plan G.

If you choose one of the high-deductible plans, you pay all Medicare-covered costs (coinsurance, copayments, deductibles) up to the deductible amount before your policy kicks in and starts paying 100%.

What About Medicare Advantage Plans?

If a Medicare Supplement isn’t an affordable option for you, Medicare Advantage is an alternative. Just like Medigap insurance, a Medicare Advantage planMedicare Advantage (MA), also known as Medicare Part C, are health plans from private insurance companies that are available to people eligible for Original Medicare (Medicare Part A and Medicare Part B). can save you from unlimited out-of-pocket expenses.

That’s about where the similarities end.

We wrote an entire article detailing why Medicare Advantage plans are bad to explain the differences. Please read it if you are considering Medicare Advantage as an option.

Do Medicare Supplement Rates Increase?

When a private insurance company (e.g., UnitedHeathcare, Aetna, Humana, Cigna, etc.) has more members it generally has better financial stability, rates are lower, and rate increases don’t come as frequently.

Rate increases are a delicate balance for insurance companies. As premiums increase, healthy people shop around for better rates to reduce their costs.  As a result, the pool of healthy people shrinks, and they are forced to increase rates to cover costs.

Insurance companies have three different ways of rating their policies. The rating method used determines when a rate will increase.

Rating methods include issue-age rating, attained-age rating, and community rating. So, if you are still wondering what is the average cost of supplemental insurance for Medicare, the best thing to do is to get a quote and look at the rates on the plan you want.

Get a Free Medicare Supplement Rate Comparison

Or you can call 1-855-728-0510 (TTY 711) and speak with a licensed insurance agent. The number will connect you with our preferred agency, HealthCompare.

Medigap Plans Don’t Include Prescription Drug Coverage

There’s a simple rule to follow with Medicare supplement insurance plans. If Original Medicare doesn’t cover it, your supplemental insurance can’t cover it either.

One of the strengths of Original Medicare is that it covers your major medical, allowing you to choose additional coverage ala carte style. To get a prescription drug plan, you buy a Medicare Part D plan.

You can purchase a Part DMedicare Part D plans are an option Medicare beneficiaries can use to get prescription drug coverage. Part D plans provide cost-sharing on covered medications in four different phases: deductible, initial coverage, coverage gap, and catastrophic. Each... plan during your Initial Enrollment PeriodThe Initial Enrollment Period is a seven-month period when new beneficiaries can enroll in Medicare without a penalty. Most people enroll in Medicare at age 65. or the upcoming Medicare Open Enrollment PeriodDuring the Medicare Open Enrollment Period, Medicare Advantage and Part D plan members can change, switch, or drop a plan they chose during the Annual Election Period. OEP starts on January 1 and ends on March 31. — from October 15 through December 7 each year.

Medicare Supplement Enrollment

Contrary to popular belief, Medicare Supplements are not part of Medicare’s Open EnrollmentIn health insurance, open enrollment is a period during which a person may enroll in or change their selection of health plan benefits. Health plan enrollment is ordinarily subject to restrictions. Period. You can apply for a Medigap policy anytime you have both Medicare Part A and Part B. This is the only eligibility requirement.

However, the best time to apply is during your 6-month Medigap Open Enrollment PeriodUpon initial enrollment in Medicare Part A and Part B, beneficiaries have a one-time, six-month period to buy a  Medicare supplement policy with guaranteed issue rights. This is the Medigap Open Enrollment Period.. This is when you have Medigap protections (guaranteed-issue right) and are not required to go through medical underwriting.

You get better rates and more choices if you buy a policy in your Medigap Open Enrollment Period. This is when you can buy any policy sold in your state, even if you have pre-existing health problems. This period starts the first month you have Medicare Part B and you’re 65 or older.

After this enrollment period, you may not be able to get a policy. If you are able to get one, it may cost more due to your health history.

Final Thoughts

Getting the best coverage is all about balancing risk vs. reward. The risk is the 20% gap, particularly the inpatient careInpatient care refers to care provided in a hospital or other inpatient facility. Inpatients are admitted and stay at least one night depending on their condition. deductible.  Plans F, G, and N cover this cost completely.

If you have a chronic condition that is not prone to hospitalization or frequent visits to a specialist, explore cost-saving options with your insurance agent. Plan N does not cover Excess Charges, like Plan G, but it costs a lot less.

If your health is good, and you can afford to take some risk by self-insuring, ask your insurance agent if high-deductible Plan F or G is right for you.

Do you know the answers to these popular questions about Medicare supplement insurance?

Citations & References

medicare.gov