According to MedicareWire research, the average Medicare Supplements are additional insurance policies that Medicare beneficiaries can purchase to cover the gaps in their Original Medicare (Medicare Part A and Medicare Part B) health insurance coverage.... premium in 2020 was $154.50 per month. We evaluated over 100 of the best Medicare Supplement plans to find out how much it costs the average person for Medicare supplemental insurance.
- The amount of coverage the policy offers is the #1 cost factor.
- Zip code and age significantly influence the monthly premium.
- Costs vary by insurance carrier and rating method (attained-age, issue-age, community).
- Gender and the use of tobacco also influence A premium is an amount that an insurance policyholder must pay for coverage. Premiums are typically paid on a monthly basis. In the federal Medicare program, there are four different types of premiums. ....
- Several other factors influence Medicare supplement insurance cost, too, so read on.
Do you know the answers to these popular questions about Medicare supplement insurance?
Top 10 Best Medicare Supplement Insurance Companies:
- Aetna Medicare Supplements
- Mutual of Omaha Medicare Supplements
- Cigna Medicare Supplements
- Manhattan Life Medicare Supplements
- Blue Cross Blue Shield Medicare Supplements
- Bankers Fidelity Medicare Supplements
- Anthem Medicare Supplements
Our complete list is available here.
Are Medicare supplements worth it? It might seem as if Medigap plans are expensive. But, going with Original Medicare alone is not wise. The coverage gaps in Medicare add up fast, particularly if you have an emergency. Paying 20% of all your outpatient coverage might not seem so bad, but getting slapped with a $1,400 hospital bill really smarts. And that's just for the deductible! We answer this question in more detail here.
Original Medicare Only Pays 80%
Many people about to retire are shocked to learn that Original 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.... (Part A and Part B) 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 people become interested in supplemental Medicare insurance.
A Medicare Supplement plan (aka, Medigap) is additional insurance that helps pay some of the A deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share...., A copayment, also known as a copay, is a set dollar amount you are required to pay for a medical service...., and Coinsurance is a percentage of the total you are required to pay for a medical service. ... that’s baked into Original Medicare. Some supplements have out-of-pocket limits, meaning they will pay all your covered medical expenses once you’ve paid a certain amount, but most plans cover one or more of the gaps straight across the board.
With Medicare supplements, the cost is a function of the gaps you want to have covered. The more expansive the coverage, the more the plan will cost. For this reason, it’s important that you know what costs Medicare expects you to pay, and which ones you are most likely to incur, so you can choose the right amount of coverage.
With Original Medicare, there are nine costs that beneficiaries pay out-of-pocket. These include deductibles, copayments, and coinsurance. Most of these Out-of-pocket costs (aka, out-of-pocket medical expenses) are costs that a beneficiary must pay because their health insurance does not cover them. Out-of-pocket costs are found in the deductibles, copayments, and coinsurance outlined in each health... can be covered with a Medigap plan.
Medicare Deductibles, Coinsurance, Excess Charges, Blood… Oh, My!
Most of your Medicare costs can be broken down into deductibles, coinsurance or copayments, excess charges, and the cost of blood. Medicare Part A is hospital inpatient coverage for people with Original Medicare, whereas Part B is medical coverage for doctor visits, tests, etc.... (your hospital insurance) and Medicare Part B is medical coverage for people with Original Medicare. It covers doctor visits, specialists, lab tests and diagnostics, and durable medical equipment. Part A is for hospital inpatient care.... (your medical insurance) work differently, so it’s important to understand the costs in each. Here’s an overview for you (2020 rates).
Medicare Part A 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 $1,408.
Medicare Part A coinsurance: This is a daily copayment that starts on the 61st day of inpatient treatment. All Medigap plans cover this cost. It’s $352 per day for the 61st through the 90th day. From the 91st day on it’s $704 per day.
Medicare Part A Hospice care coinsurance or copayment: Medigap plans cover the parts of hospice that Medicare doesn’t. As a result, in most cases, you typically incur no costs.
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 after a stay in the hospital when ordered by your doctor. But, Medicare only pays for the first 20 days. After that, you’ll pay $176 per day.
Medicare Part B deductible: The Part B deductible is $198 per year. You’ll pay this amount before Medicare begins covering its share of your doctor visits, lab work, and physical therapy. Be aware that anyone turning age 65 after 31 December 2019 cannot buy a plan that covers this deductible, which includes Medigap Plan F and Plan C
Medicare Part B coinsurance and copayments: All Medigap plans cover some parts of 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. This can be critical in the case of high-cost treatments for dialysis, cancer, etc.
A Medicare Part B excess charge is the difference between a health care provider’s actual charge and Medicare’s approved amount for payment....: Medicare allows healthcare providers to accept Medicare’s assigned rates for each healthcare service. Providers may also choose to charge an excess charge of up to 15% more than the assigned rate. For services like surgery or diagnostic imaging, excess charges can be very pricey. Some Medigap plans cover it and some don’t.
Foreign travel emergency: Medicare covers you anywhere you go in the USA, including its territories, but it does not cover foreign travel emergencies. However, some Medigap plans do. Plans that offer the foreign travel benefit cover 80% of your expenses, up to $50,000, after you pay a small deductible.
How Much Does Supplemental Insurance Cost?
One of the most frequent questions we get is, “What is the average cost of supplemental health insurance for seniors?”
Medigap, also known as Medicare supplement insurance, is a group of standardized plans that help cover the gaps in Original Medicare health insurance. And, unfortunately, stating an average cost of Medicare supplemental insurance wouldn’t do much good. Plans average anywhere from $50 to $300 or more per month, depending on where you live and the amount of coverage you need. So, if your question is, “how much is Medigap per month?“, you will need to get a quote.
Before you ask for rates, let’s explore questions about the price of Medicare supplemental insurance 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, what is the best Medigap plan for me?
Those are the questions we’ll help answer and offer additional resources.
Do I Really Need Supplemental Insurance With Medicare?
Let’s start our discussion by addressing the elephant in the room. Is a Medicare supplement plan really necessary, and, if so, why?
As you may already be aware, Original Medicare only covers about 80% of your major medical costs. The remaining 20% of all Medicare-approved costs are the beneficiary’s responsibility. These costs, which include deductibles, copayments, and coinsurance on the healthcare services you use can be paid in several different ways, including:
- Medicaid (if you qualify)
- Medicare Savings Programs (QMB, SLMB, QI)
- Employer Group Health Coverage
- VA Benefits
- TRICARE for Life (for military retirees)
These are the most common ways people cover their major medical costs when they have Medicare. If you don’t qualify for one of the benefits listed above, then you self-pay out of pocket, or you buy a Medigap plan.
If you’re thinking about the self-pay option, think twice. This is a very risky proposition. While you can probably swing the cost of regular doctor visits, the cost of advanced diagnostic (e.g., an MRI scan) or hospitalization due to a critical illness or injury, is enough to send most people to bankruptcy court. Compare how much is Medigap per month vs. self-pay and it won’t be difficult to see which costs less.
Think about it. Could you afford to pay 20% of the cost of cancer treatment or a hip replacement? A 2013 cost-effectiveness study reported a total cost of $40,102 for first-line mesothelioma treatment. That’s just the treatment, which does not include your inpatient care. The average cost of a hip replacement in the United States is almost as costly at $32,000.
Most of us simply can’t afford to pay 20% of those kinds of costs out-of-pocket. That’s what makes it necessary to buy supplemental Medicare insurance. As with car insurance, we really don’t have a choice.
How Much Coverage Can I Get with a Medigap Plan?
Now that we’ve talked about the need for supplemental insurance, let’s discuss how Medigap plan coverage works. As its name implies, Medigap covers the gaps in Original Medicare. These gaps include deductibles, copayments, coinsurance, blood, and foreign travel. Medigap covers these gaps through 10 different plans. Each plan is standardized and given a letter code (A through N). This makes Medigap super easy. Simply pick the plan with the outpatient, inpatient, nursing facility, and travel coverage you want and go shopping here or on Medicare.gov to find an insurer in your area that offers the plan.
The plan with the most coverage is Medicare Plan F. This plan offers full coverage on 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. However, be aware that this plan is only available to people who turned age 65 before 1 January 2020. The same is true with Plan C (not to be confused with Part C, which is what Medicare.gov calls Medicare 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)....).
After Plan F, If 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... offers the most coverage, and it’s available to everyone turning age 65 with Guaranteed-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 is identical to Plan F, with one exception, it does not cover the Medicare Part B (medical insurance) annual deductible. But, most people save enough on their annual premium payments to pay the deductible themselves and pocket some savings.
Another Medigap plan that’s growing in popularity, because it offers good savings, is Medicare 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.... This Medigap policy is great for healthy people aging into Medicare because it allows you to pay some of the minor costs, but it offers full coverage on the major costs.
For example, with a Medigap Plan N policy, you pay up to $20 to see your doctor (copay) and up to $50 to use the emergency room. You also pay any excess charges. These are costs above and beyond Medicare’s standard reimbursement rates that your doctor can charge (up to 15%) if they don’t accept Medicare Assignment. Other than that, Plan N covers what Plan G covers, and you pocket the savings.
Here’s something else to know about Plan N. If you are healthy (i.e., no underlying health conditions), and typically only see your doctor for your annual exam, your out-of-pocket expenses could be very low with this health plan. The reason is that preventative health care costs are covered 100% by Medicare. That means, some years, you may never even pay your annual Part B deductible. Why pay for a higher premium plan if you don’t need it?
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, as an example, do not cover everything that plans F and G cover. However, all policies with the same letter offer the exact same benefits, no matter which insurance company you buy from. 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 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 pay 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 monthly premiums than other plans. However, these low premiums come with a high deductible. With these plans, you pay a significant amount out of pocket before the Medigap 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, but be sure to discuss it with your insurance agent first.
The plans are:
- High Deductible Medicare 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....
- High Deductible Medicare Plan G
How can I save money on a Medigap plan and still be covered for all major medical costs?
We just talked about how a Plan N Medicare supplement can save you money, but it’s not the only plan with cost-sharing. Plan K and Plan L are also options. With these two plans, you share a percentage of your Part A and Part B costs, but they protect you from catastrophic costs with a maximum out-of-pocket limit.
Shared cost plans, like K and L, work for healthy people who can afford to take a little financial risk and for people who are good at saving for their healthcare costs. For example, if you rarely see a doctor and can absorb Plan K’s $5,880 annual deductible in your budget before the plan starts paying, then it could be an option. Likewise, if you put $100 per month or more into a savings account specifically for your healthcare costs, then a shared-cost plan could work for you because you’re basically putting the money you save on premiums into savings.
Saving on a Medigap plan comes down to understanding both your health and financial needs. Many people, especially the good savers, like the high deductible plan options on Plan F and Plan G. If you choose one of the high-deductible options, you pay all Medicare-covered costs (coinsurance, copayments, deductibles) up to the deductible amount ($2,370 in 2021) before your policy kicks in and starts paying 100%.
For healthy people who know how to put money away, the $2,370 isn’t scary because they know that they can save that amount of money by putting just $100 away each month. And, by the way, that’s about how much you’ll save each month on a high deductible policy.
If you are not a healthy individual, and you’ve had one or more hospital stays over the past few years, a shared cost plan could end up costing you a lot more in the long run. The difference in $50 or even $100 per month in premiums might seem like a lot, but that $600 to $1,200 per year will look like a good deal when you’re reaching into your pocket for $2,370.
Understanding the Cost of Medicare Supplement Plans
Now that you know Medicare supplement plans are standardized, and that you can choose the coverage you want, it’s time to learn about the cost of Medicare supplement plans (i.e., how the monthly premium is determined).
Many people ask questions like, “How much does Medicare Supplement Plan G cost?” It makes sense that Plan F and Plan G are the most expensive plans because they have the most coverage, and people want to know the cost of Medicare supplement plans. But, the pricing is different for everyone.
Insurance carriers have more than one way to rate their plans for an initial premium and rate increases. Also, insurance companies must factor in the number of people in their insurance pool, including their demographics. As a result, rates can differ wildly even when the same coverage is offered in the same local area. That’s why it is difficult to give the average cost of supplemental Medicare insurance.
When a private insurance company (e.g., AARP, UnitedHeathcare, Aetna, Cigna, etc.) has more members it generally has better financial stability, rates are lower, and rate increases don’t come as frequently in comparison to smaller companies with a smaller member pool.
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 the insurance company has to raise their rates even more to cover costs.
As mentioned above, insurance companies have different ways of rating their policies. The rating methods basically determine when a rate will increase. These rating methods include issue age, attained age, or 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. Here at MedicareWire, we offer a complimentary service that shows you rates from all carriers that offer policies in your area.
Call 1-855-728-0510 (TTY 711) and speak with a licensed Medicare insurance agent. There’s no obligation, and they offer more plan options than any other national agency.
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 use the Medicare Part D plan option. You can purchase a Medicare Part D is Medicare's prescription drug plan program. Plans are offered by private insurance companies and cover outpatient prescriptions.... plan during your initial enrollment period or the upcoming Medicare In 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 — from October 15 through December 7 each year
Medicare Supplement Enrollment
Contrary to popular belief, Medicare supplements are not part of Medicare’s Annual Election Period (AEP), which happens each Fall. You can enroll in a Medigap policy anytime you have both Medicare Part A and Part B. This is the only eligibility requirement for Medicare beneficiaries to apply for coverage. However, there are some important rules to know about, specifically your guaranteed issue period. We have an entire article related to Medicare supplement enrollment.
A Final Thought About The Cost Of Supplemental Insurance For Medicare
Enrolling in the best Medicare supplement plan for you is all about balancing risk vs. reward. The risk is those big 20 percent gaps that Medicare does not cover. The biggest being the 20 percent gap in your inpatient care in a hospital setting and a nursing facility. Plans F, G, and N cover these out-of-pocket costs completely. If your health isn’t excellent, playing around with these costs can get very expensive.
If you have a chronic condition that is not prone to hospitalization or frequent visits to a specialist, and you need to save some money, then you should explore cost-saving options with your insurance agent. Plan N does not cover Excess Charges, like Plan G, but it costs a lot less. Also, don’t forget that Medicare covers your annual preventive care visits.
The reward in choosing the best Medigap plan for you is that you get to keep a little more money in your pocket. But, please consider this simple advice. Is saving a few dollars now worth the potential risk of being denied a plan with more coverage later? You see, unlike Medicare Advantage plans, which can’t turn you down, Medigap insurance carriers can. If you don’t pass their medical underwriting process, they will not issue you a policy.
Get the most coverage you can without being wasteful.
Citations & References
- How to compare Medigap policies | Medicare
- Talk to someone | Medicare
- Medicare.gov: the official U.S. government site for Medicare | Medicare
- MACRA: MIPS & APMs | CMS
- 2020 Medicare Parts A & B Premiums and Deductibles | CMS
- TRICARE For Life | TRICARE
- VA Health Care And Other Insurance | Veterans Affairs
- Home | State Health Insurance Assistance Programs