by Russell Noga | Updated July 28th, 2023
For millions of Americans, Medicare is a real lifesaver.
The government-sponsored health insurance plan provides insurance coverage for individuals who are aged 65 and older, as well as younger individuals who have been diagnosed with certain illnesses or diseases.
While Original Medicare, which includes Part A and Part B, covers a lot of the medical expenses, it doesn’t cover everything. For things like deductibles, copays, and coinsurance, as well as care and services that aren’t covered by Medicare, beneficiaries are required to pay for these expenses themselves.
The out-of-pocket expenses for Original Medicare can become expensive; not to mention, they can be unpredictable. That’s where Medicare Supplement Insurance (Medigap) can help.
If you’re thinking about purchasing Medigap insurance, there are a lot of factors that you’re going to want to take into consideration so that you can make the best choice for your individual needs. Cost is one of those factors.
To learn about the cost of Medicare Supplemental insurance, including how policies are priced, as well as additional information that will help steer you in the right direction, please continue reading.
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An Introduction to Medicare Supplemental Insurance
Original Medicare features two individual parts, and these parts cover different medical expenses.
Medicare Part A covers the cost of inpatient care and services, such as hospital stays, while Medicare Part B covers the expenses that are related to outpatient care and services, like doctor visits and durable medical equipment.
As mentioned, Original Medicare doesn’t cover everything, and that’s where Medicare Supplemental Insurance can help.
Medicare Supplemental Insurance, also known as Medigap, is supplemental insurance that covers some of the out-of-pocket expenses that Part A and Part B don’t cover.
There are 10 different Medigap plans, which are regulated by the federal government, and are sold by private insurers.
The 10 plans are named for letters and each lettered plan must offer the same standard benefits, as required by the US government, no matter what part of the country the policy is purchased or what insurers provide it.
For instance, all Medigap Plan N policies must offer the same benefits, whether the policy is purchased in Nebraska or New Mexico, and regardless of the insurance company that provides it. Private insurance companies can, however, offer additional perks, on top of the standard benefits that the policies they sell provide.
Medigap is an additional insurance policy. It doesn’t replace Original Medicare, but rather it fills in for some of the costs that Original Medicare doesn’t cover. Because Medigap and Medicare are two separate forms of insurance, you will need to pay a monthly premium for both.
How Much Does Medicare Supplemental Insurance Cost?
The insurance companies that sell Medicare Supplemental Insurance policies determine the rates that they charge, which means that prices vary.
There are several factors that affect the cost of Medicare Supplemental Insurance. These factors can include the following:
The Insurance Company
The private insurance company you purchase Medicare Supplemental Insurance from is one of the biggest factors that will impact the cost of your coverage. Some providers charge higher rates than others for the same policies; for example, Mutual of Omaha tends to charge higher rates for the policies they provide, while Aetna charges some of the lowest rates in the nation.
The insurance company you purchase the policy from does make a difference, however; for example, though Mutual of Omaha does charge higher rates, they have an excellent track record and one of the lowest customer complaint ratings in the Medigap industry.
Conversely, Aetna may charge lower rates, but the amount of member complaints is much higher than the market average.
The Medigap Plan
Another key factor that has a significant impact on the cost of Medicare Supplemental Insurance is the policy you purchase.
Remember, there are 10 different Medigap policies, and each policy provides different coverage. Policies that offer more comprehensive insurance – that cover more Original Medicare out-of-pocket expenses – will cost more than Medigap plans that cover fewer out-of-pocket expenses.
To illustrate, Medigap Plan G provides the most coverage for new Medicare enrollees, but the price for this coverage is higher than Plan A, which only offers the basic benefits that are required by the government.
It doesn’t matter which private insurance company you purchase your Medigap insurance from, you can expect the cost of your premiums to increase on a yearly basis. Insurance companies use one of the following methods to determine how much they will charge for premiums on the policies they offer:
- Issue-age. This is one of the most commonly used pricing methods. Companies that use this method base the premiums they charge on an applicant’s age when they apply and the price won’t increase as they age. In fact, the younger you are, the lower the price will be.
- Attained-age. With this pricing method, your age determines the cost of your premiums. While prices may be lower at first, as you age, they will increase.
- Community-rated. With this pricing method, the cost of Medigap insurance won’t increase as a result of your age; rather the prices increase as a result of other factors, such as inflation or the cost of healthcare. All policyholders within a community are charged the same rate, no matter their age.
Another key factor that will affect the cost of your Medicare Supplemental Insurance is your location.
The cost of living is higher in some states, so in these states, the cost of Medigap plans will be higher. For instance, if you purchase a plan in New York, the price will be higher than if you were to purchase the same plan in Idaho.
Your sex can also influence the cost of your Medigap insurance. Women live longer than men on average, and as such, the prices for their Medigap coverage tend to be lower than the same coverage for men.
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Russell Noga is the CEO of Medisupps.com, an online Medicare Agency and resource center helping Medicare beneficiaries learn about Medicare, Medigap and Part D drug plans, and Medicare Advantage plans since 2009. Russell is licensed in all 50 states and has been featured as a keynote speaker, and author of several publications, along with hosting the very popular Medisupps.com Youtube channel.