Key Factors Affecting Premiums for Medicare Supplement Plans

As healthcare costs rise, retirees face increasing financial pressure to cover medical expenses. With healthcare costs expected to continue climbing, paying out-of-pocket expenses like Medicare co-insurance and deductibles can strain budgets. Enrolling in a Medicare Supplement Plan, or Medigap, offers a solution by helping cover those additional costs not paid by Original Medicare.

Medigap, available through private insurers, supplements Original Medicare (Part A and Part B) by covering co-insurance, deductibles, and some travel-related emergencies. It does not, however, cover long-term care, dental, vision, hearing aids, or private-duty nursing.

Some Medigap plans may also reimburse prescription drug costs. Unlike Medicare, which is managed federally, Medigap policies are sold by private companies. To qualify, you must be enrolled in Medicare Part A and Part B; those with Medicare Advantage plans are ineligible.

What impacts Medigap costs?

Premium rates vary widely by provider and location. Understanding what influences these costs is essential for choosing the right plan and finding the best price.

Continue reading to learn more.

Type of Medicare Supplement Plan

Private insurers set their own premiums for Medigap plans. Most states follow standardized plans, except Massachusetts, Minnesota, and Wisconsin. Common features include:

Coverage for hospice co-insurance and co-payments

First 3 pints of blood transfusions

Co-insurance and co-payments for Parts A and B

Some plans, like Medigap Plan G, offer additional benefits such as full Part A deductible reimbursement, skilled nursing coverage, and foreign travel emergency expenses, but typically at higher premiums.

Insurance Provider

Premium costs differ among insurers. For example, some providers offer discounts for non-smokers. Comparing benefits is vital before selecting a plan. Additionally, premiums can fluctuate over time based on the insurer’s pricing methods. The main pricing structures include:

Issue-age-rated – Premiums are determined by age at application, remaining stable afterward.

Attained-age-rated – Premiums increase as the policyholder ages.

Community-rated – Premiums are based on the region, with everyone paying the same regardless of age.

Economic factors like inflation can impact all price types.

Application Period

Applying during the 6-month Medigap open enrollment period beginning at Medicare Part B activation ensures guaranteed acceptance without medical underwriting. Applications outside this window may involve health assessments and increased premiums or coverage denial due to pre-existing conditions.

Leading Medigap Providers

Humana

Blue Cross Blue Shield

Cigna

United American

Mutual of Omaha

Continental Life

Anthem

Manhattan Life

Transamerica

UnitedHealthcare Medicare Solutions

Most Affordable States for Medigap Plans

Maine

Idaho

North Dakota

Oregon

Montana

Georgia

Virginia

Iowa

North Carolina

Vermont

Costliest States for Medigap Plans

Alaska

Massachusetts

Texas

Maryland

Wyoming

New York

Nevada

California

Mississippi

Rhode Island