Medicare Supplement Insurance (Medigap) Costs
Key Takeaways
- When Original Medicare (Parts A and B)Original Medicare is a fee-for-service health insurance program available to Americans aged 65 and older and some individuals with disabilities. Original Medicare is provided by the federal government and is made up of two parts: Part A (hospital insurance) and Part B (medical insurance). doesn’t cover all healthcareHealthcare is the industry dedicated to maintaining or improving health and well-being. costs, Medicare Supplement Insurance (Medigap)Medicare Supplement Insurance (Medigap) is designed to provide coverage that Original Medicare (Parts A and B) does not. Medigap policies are purchased in addition to Original Medicare and have their own monthly premiums you’ll need to pay. plans are available to help cover cost gaps in coverage.
- Offered by private health insurance companies, approved by Medicare.
- Medicare supplement costs have different rate structures called “ratings.”
What is Medicare Supplement Insurance (Medigap)?
Original Medicare (Parts A and B) covers the majority of your healthcare needs, but it’s not intended to cover everything. If you rely on Original Medicare alone, there are gaps in your coverage, which may lead to significant out-of-pocket expenses from medical treatments and extended hospital stays.
Medicare Supplement Insurance (Medigap) is health insurance sold by private carriers to cover costs in these gaps.
Also known as letter plans, Medigap policies range from essential coverage, Plan A, and increases alphabetically to the most comprehensive Plan J (although this plan is no longer available to new beneficiaries). Plans K and L also cover a portion of the Part A and B deductiblesA deductible is an amount you pay out of pocket before your insurance company covers its portion of your medical bills. For example: If your deductible is $1,000, your insurance company will not cover any costs until you pay the first $1,000 yourself. . In contrast, Plan N focuses on Plan A deductibles. For more information on each plan, check out our Medigap coverage guide.
In most states, Medigap policies are standardized by the federal government, which means each plan must provide the same coverage in each state. However, insurance carriers can calculate the rates for plans differently. We put together a breakdown to help answer, “How much does Medicare supplemental insurance cost?”
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How Much Does Medigap Cost?
To be eligibleSome health plans require you to meet minimum requirements before you can enroll. for a Medigap plan, first, you must be enrolled in Original Medicare (Parts A and B). When you combine Medicare Part AMedicare Part A is hospital insurance, which covers the care you receive while admitted to a hospital, skilled nursing facility, or other inpatient facility. Medicare Part A is part of Original Medicare. and Medicare Part BMedicare Part B is medical insurance that covers Medicare-approved services — such as medically necessary treatment and preventive services — and certain other costs, like durable medical equipment. Medicare Part B is part of Original Medicare. with a Medigap plan, you pay a monthly premiumA premium is a fee you pay to your insurance company for health plan coverage. This is usually a monthly cost. for Medigap, as well as any Original Medicare premiums.
How is the cost of a Medicare supplement policy determined?
Insurance companies use one of three formulas, or rating systems, to determine the supplemental insurance cost.
- Community rated: Everyone in the state pays the same price for the same letter plan, regardless of age. For example: Bob and Linda both sign up for Plan A, and both pay $50 per month for their Medicare supplement costs.
- Issue-age rated: The policyholder’s age determines the price. Prices are higher the older you are when you sign up. For example: Linda signed up at the age of 65. She pays $50 per month for her Medigap costs. Bob waited until he turned 70. He pays $75 per month for the same plan.
- Attained-age rated: These plans are the most affordable when the purchaser is close to age 65, but costs increase over time. These plans can become the most expensive option of the three. For example: Bob bought a policy at the age of 65 for $100 per month. His monthly premium has increased each year, and he now pays $200 at the age of 75.
What is Medicare SELECT?
Some states offer a low-cost version of their Medigap plans, which is called Medicare SELECT. The low cost comes from the limited network of healthcare providersA healthcare provider is a person or organization that is licensed to give healthcare (i.e. a doctor or a hospital). and hospitals that are covered. If you must receive care that’s out-of-networkOut-of-network refers to doctors, hospitals and other providers that do not have an agreement to treat your health insurance company’s clients. Visiting an out-of-network provider typically means more out-of-pocket costs and less coverage. , you’ll be responsible for all the costs not included in your coverage.
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Are There Any Hidden Costs?
Insurance companies and providers must give a clear description of Medigap costs, including coverage limitationsLimitations are restrictions on your health insurance coverage. Either your plan won’t cover a service, or there may be cost limits on the coverage. . Your Medigap costs will be higher if you put off enrolling when you’re first eligible.
Your open enrollment period includes guaranteed issueIf you have guaranteed issue rights, insurance companies are required to sell you a Medigap (Medicare Supplement) policy without any additional conditions. rights, which means you cannot be denied coverage because of your medical history.
If you wait to sign up for Medigap after your OEP, you may not have the same rates or coverage levels.
How Do I Buy Medigap?
You can purchase a Medigap policy directly from an insurance carrier or work with a licensed insurance agent to evaluate Medigap plans and shop for the best rates. Consider your heathcare needs, medical history, and current Medicare status to make sure you get the coverage you need, when you need it.
Refer to our Medigap enrollment guide for further information.
What personal information should I have with me during enrollment?
To enroll in a Medigap plan, you’ll need to provide some basic information:
- Name
- Current address
- Phone number
- Social Security number
- Identification documents (birth certificate, driver’s license, or passport)
- Payment information
You’ll also want to make a list of all the medical services you currently need, or you think you may need in the future. This will help you or your enrollment specialist figure out what kind of gaps you need to fill.
What’s the difference between Medicare Supplement (MediGap) and Medicare Advantage?
You can choose either a Medicare Supplement or Medicare Advantage plan, but you cannot be enrolled in both plans at the same time.
- Medicare Advantage Plan (Part C)Medicare Advantage (Medicare Part C) is health insurance for Americans aged 65 and older that blends Medicare benefits with private health insurance. This typically includes a bundle of Original Medicare (Parts A and B) and Medicare Prescription Drug Plan (Part D). is an alternative to Original Medicare (Part A and Part B). With Medicare Advantage, you receive Part A and Part B coverage through your plan along with extra benefits.
- Medicare Supplement (MediGap) plans help cover gaps in Original Medicare. These usually include out-of-pocket expenses such as copaymentsA copayment is the fixed amount you pay directly to your provider for medical services or prescription drugs covered in your plan. For example: If your plan includes a copayment of $20 for office visits, you’ll pay $20 to your doctor whenever you have an appointment. , co-insuranceCoinsurance is the percentage of your medical costs that you pay after you meet your deductible. Your insurance company pays the remaining amount. For example: If you have a $1,000 medical bill and your coinsurance is 20%, you’ll pay $200. Your insurance company will cover the final $800. , and deductiblesA deductible is an amount you pay out of pocket before your insurance company covers its portion of your medical bills. For example: If your deductible is $1,000, your insurance company will not cover any costs until you pay the first $1,000 yourself. . Private health insurance companies provide Medigap plans under state and federal regulations.
Are prescription drugs covered by Medigap?
Medigap plans do not provide prescription drug coverage. If you enroll in a Medigap plan, you will also need to enroll in a Medicare Prescription Drug Plan (Part D)
Does it cost extra to enroll with an agent?
Find the Medicare Plan that works for you.
Sources
- How to compare Medigap policies. Medicare.gov
- Costs of Medicare Rates. Medicare.gov.
This website is operated by GoHealth, LLC., a licensed health insurance company. The website and its contents are for informational and educational purposes; helping people understand Medicare in a simple way. The purpose of this website is the solicitation of insurance. Contact will be made by a licensed insurance agent/producer or insurance company. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. Our mission is to help every American get better health insurance and save money.
Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.