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How Do Medigap Premiums Vary?

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By Daniel Petkevich
Apr 12, 2023

You May Not Pay the Same Premium as Your Friend

Your friend informs you that they've enrolled in a Medigap plan for a premium of $110, piquing your interest as you are also considering enrolling in the same plan. However, upon checking, you realize the same plan will cost you $145. This discrepancy can lead to confusion and raise questions about the factors that contribute to the varying premiums of Medigap plans.

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Let's find out whether Medigap premiums vary, identify the factors that influence its pricing, and understand how insurance companies arrive at the cost of your plan.

What's a Medigap Plan? Can Medigap Premium Amounts Vary?

A Medigap plan, also known as a

Medicare Supplement plan

, is a type of private health insurance policy designed to help cover some of the costs not covered by Original Medicare, such as deductibles, copayments, and coinsurance.
Medigap plans work alongside Original Medicare and are sold by private insurance companies. This means you need to have Medicare Parts A & B to be eligible to enroll in a Medigap plan.
These plans are standardized by the federal government and come in ten options (in most states), identified as Plans A, B, C, D, F, G, K, L, M, and N. Each plan offers a unique level of coverage to accommodate different healthcare needs.
It's important to note that some states, such as

Wisconsin

,

Massachusetts

, and

Minnesota

, have been granted federal waivers permitting them to offer different sets of standardized plans.
To enroll in a Medigap plan, you will typically have to pay the plan premium and the Part B premium, as well as any deductibles, copays, and coinsurances associated with your chosen plan. However, the Medigap plan premiums may differ from one person to another. For example, a friend in a different state may pay a different premium amount for your Medigap plan.

What Factors Impact the Cost of a Medigap Plan?

Medigap plans

are regulated by the government but are sold by private insurance companies that set the premium amount. The premium amount can vary depending on various factors, such as:
  • Insurance Company — different companies may charge different premiums for the same Medigap plan.
  • Plan Type — plans that offer more comprehensive coverage may cost more than those that provide less coverage.
  • Age — premium amount may increase with age.
  • Gender — some insurance companies may charge different premiums based on gender.
  • Location — premiums can vary by state and even by region within a state.
  • Health Status —individuals with pre-existing medical conditions or those deemed at higher risk may be charged higher premiums.
  • Smoking Status — some insurance companies may also charge higher premiums to tobacco users.

How Do Insurance Companies Determine Their Medigap Premium Pricing?

We have seen the various factors that impact the cost of a Medigap plan. Now let's dive deeper to uncover how these factors influence your Medigap premium.

1. Your Insurance Company

The Medigap plan premium can vary depending on the insurance company. Various factors, such as administrative costs, underwriting expenses, and profit margins, can influence the premium for the same Medigap plan offered by different insurance companies.
Each insurance company has its own health questions and criteria to determine who they accept for a Medigap plan. Some insurers may loosen their underwriting process to attract more policyholders but may charge a higher premium. On the other hand, insurance companies with more stringent health questions may offer lower premiums.
Furthermore, some insurance companies offer discounts to policyholders who meet specific criteria, such as being a non-smoker. You may also be eligible for discounts if you pay your premiums yearly or use electronic funds transfer to make automatic payments from your checking account or credit card.
Additionally, you may receive a discount if you have multiple policies with the same insurance company.

2. Your Plan Type

The Medigap premiums generally increase as the level of coverage provided by the plan increases.
Plans with more comprehensive coverage typically have higher premiums compared to those with less coverage. For example, plans that offer less coverage, such as Plan K or Plan L, usually charge lower premiums than Plan G, which provides more coverage and charges more.
It's important to note that Medigap plans with high deductibles typically have lower premiums than their standard counterparts. However, you'll need to pay a higher deductible before your coverage starts.
Additionally, some insurance companies offer Medicare SELECT policies, which may have lower premiums, but have network restrictions to receive full coverage.

3. Your Age

Medigap plans can be priced or "rated" in 3 ways:
  • Community-rated (No Age-Rated)
    • With this type of Medigap policy, everyone pays the same premium, regardless of age. For example, Mr. Derek and Mrs. Paul both pay $160 for the same Medigap policy, even though Mrs. Paul is older.
  • Issue-age-rated (Entry Age-Rated)
    • Premiums are based on your age when you first buy the Medigap policy. Younger buyers typically pay less than older buyers. For example, Mr. Dan pays $145 because he bought the policy at age 65, while Mrs. Willey pays $175 because she bought the same policy at age 72.
  • Attained-age-rated
    • Premiums are based on your current age. They increase as you get older. At first, premiums for this type of policy may be lower, but they will increase over time. For example, Mrs. Henry's premium is $120 when she first buys the policy at age 65, but it increases each year. Mr. Bob, who buys the same policy at age 72, pays $165, and his premium also increases each year as he gets older.
It's important to note that in each of the above cases, the premium amount can increase due to inflation or other factors.

4. Your Gender

Did you know that your gender could affect your Medigap rates? Some insurance providers may offer reduced rates on Medicare Supplement plans for female policyholders.
As women tend to have better health and file fewer claims on average than men, female beneficiaries generally pay around $10-**30 less** in monthly premiums than their male counterparts.

5. Your Location

The cost of Medigap plans can vary depending on your location. Insurance companies use various factors to calculate Medigap premiums, such as local healthcare service costs, cost of living, and state-specific insurance regulations.
For example, in states like New York and Connecticut, Medigap premiums can be significantly higher compared to other states, often ranging between $260 to $300 per month. This is because these states have year-round open enrollment, allowing applicants to enroll in a Medigap plan without undergoing medical underwriting or answering health-related questions.
On the other hand, Medigap plans in Florida are known to be among the most expensive in the United States. This could be attributed to the state's large population of seniors, resulting in insurance carriers charging higher premiums to meet the increased demand for healthcare services.
Furthermore, there are some states like Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont where laws prohibit

excess charges

. As a result, in these states, a Plan N may be more desirable than a Plan G, as it offers similar coverage at a lower monthly premium.

6. Your Health Status

Medigap premiums are generally not impacted by your health status, provided you enroll during your initial enrollment period or have

guaranteed issue rights

. During this period, insurance companies must offer Medigap policies to all applicants, regardless of their health status. They cannot charge higher premiums based on pre-existing conditions or medical history.
However, if you enroll in a Medigap policy after your initial enrollment period has ended, you may need to undergo medical underwriting. This means that the insurance company can consider your health status when determining your premium.
If you have pre-existing conditions or other health issues in this instance, you may be charged a higher premium or even denied coverage altogether.

7. Your Smoking Status

Due to the increased health risks associated with tobacco use, insurance carriers often charge tobacco users higher premiums. If you smoke, vape or use tobacco products, you can anticipate paying up to 10% more on your monthly Medigap premium than a non-tobacco user.

Compare Plans for Optimum Coverage at Minimum Cost

Medigap Plans are a valuable resource for covering the gaps left by Original Medicare. However, it is important to note that enrolling in a Medigap plan involves paying a plan premium, which can vary based on a variety of factors, including plan type, age, gender, location, health status, and the insurance company. By carefully considering these factors and comparing multiple plans, you can make an informed decision and

find a Medigap plan

that maximizes your healthcare coverage at an affordable cost.

Comparing Medigap plans

and determining their costs based on various conditions can be complex. But

our Medicare advisors

can help you make an informed decision when selecting a plan that meets your healthcare needs and budget. With their comprehensive knowledge of each plan, they can provide expert guidance. Call us at 1-888-376-2028 to ensure that you choose a plan that offers maximum coverage at an affordable cost.

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Join the Fair Square Medicare Newsletter to stay informed on cost savings, changes to Medicare, and other valuable healthcare information.

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Virgil Insurance Agency, LLC (DBA Fair Square Medicare) and www.fairsquaremedicare.com are privately owned and operated by Help Button Inc. Medicare supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. This is a solicitation of insurance. A licensed agent/producer may contact you. Medicare Supplement insurance is available to those age 65 and older enrolled in Medicare Parts A and B and, in some states, to those under age 65 eligible for Medicare due to disability or End-Stage Renal disease. Virgil Insurance Agency is a licensed and certified representative of Medicare Advantage HMO, HMO SNP, PPO, PPO SNP and PFFS organizations and stand-alone PDP prescription drug plans. Each of the organizations we represent has a Medicare contract. Enrollment in any plan depends on contract renewal. The plans we represent do not discriminate on the basis of race, color, national origin, age, disability, or sex. Plan availability varies by region and state. For a complete list of available plans please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov. © 2024 Help Button Inc

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