What Does Medigap Cost?

Understanding the costs of Medicare Supplement Insurance

If you’re eligible for Medicare and thinking about enrolling in a Medigap plan, it’s important to understand the costs. Medigap — also known as Medicare Supplement Insurance — helps pay for some covered services not included in Original Medicare. These plans are sold by a private insurance company, and the cost can vary based on several factors.

What are the main costs of Medigap?

When you buy a Medigap plan, you’ll pay for:

• Part A and Part B premiums
  • If you or your spouse turned 65 and worked for 10 years, Part A is usually premium-free.
  • You will pay a monthly premium for Part B.
  • Medigap plans do not cover the Part B deductible or Part B premiums.
• Medigap premiums
  Your Medigap premiums are separate from what you pay for Original Medicare. These premiums are set by each private insurance company and can vary widely.

How do insurance companies set Medigap premiums?

There are three main pricing methods used to set Medigap plan costs:

• Community-rated (no-age-rated)
  Everyone pays the same monthly premium, regardless of age.

• Issue-age-rated
  The premium is based on your age when you buy the plan. It won’t go up just because you’re getting older.

• Attained-age-rated
  Your premium is based on your current age, so it increases as you get older.

Ask the private insurance company how their plans are priced before you buy.

Other costs to consider with Medigap

• Part B deductible
  As of 2020, Medigap plans can no longer pay the Part B deductible if you became eligible for Medicare on or after January 1, 2020.
• Copayments and coinsurance
  Depending on the type of Medigap plan you choose, you may still be responsible for certain costs like copayments or coinsurance.
• Medical underwriting
  If you apply for Medigap outside your Medigap Open Enrollment Period, you may go through medical underwriting. This means your health history could affect what you’ll pay — or whether you’re approved.

When is the best time to buy Medigap?

The best time to enroll is during your Medigap open enrollment period. This 6-month window starts when you are both age 65 or older and enrolled in Part A and Part B. During this time, you can buy any Medigap plan offered in your state without medical underwriting.

Why do Medigap costs vary so much?

The cost depends on the type of Medigap plan, where you live, your age, the pricing method used and which private insurance company you choose. Even though the benefits for each plan type are standardized, the monthly premium can be different.

Compare plans carefully and ask questions to understand how much you’ll pay now — and in the future.

Find a trusted advisor to determine the best option for you.