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Medicare Supplemental Insurance Information >> Medigap Cost

Medigap Cost

The cost of Medigap policies can vary widely. There can be big differences in premiums that insurance companies charge for exactly the same coverage. As you shop for a Medigap policy, be sure you are comparing the same Medigap policy (for example, compare a Plan A from one company with Plan A from another company).

Each insurance company sets its own premiums. It is important to ask how an insurance company prices Medigap policies. How they set the price affects how much you pay now and in the future. Medigap policies can be priced or "rated" in three ways.

Type of Pricing How it's Priced What Pricing May Mean for You Examples
Community-rated (also called No-Age-Rated) The same monthly premium is charged to everyone who has the Medigap policy, regardless of age. Premiums are the same no matter how old you are. Premiums may go up because of inflation and other factors. Mr. Smith is 65. He buys a Medigap policy and pays a $165 monthly premium.

Mrs. Perez is 72. She buys the same Medigap policy as Mr. Smith. She also pays a $165 monthly premium because with this type of policy, everyone pays the same price, regardless of age.

Issue-Age-Rated Policies The premium is based on the age you are when you buy (are "issued") the Medigap policy. Premiums are lower for younger buyers and won’t change as you get older. Premiums may go up because of inflation and other factors. Mr. Han is 65. He buys a Medigap policy and pays a $145 monthly premium.

Mrs. Wright is 72. She buys the same Medigap policy as Mr. Han. Since she is older at the time she buys it, her monthly premium is $175.

Attained-Age-Rated Policies The premium is based on your current age (the age you have "attained") so your premium goes up as you get older. Premiums are low for younger buyers, but goes up as you get older and can eventually become the most expensive. Premiums may also go up because of inflation and other factors. Mrs. Anderson is age 65. She pays a $120 monthly premium. Her premium will go up every year.
  • At age 66, her premium goes up to $126
  • At age 67, her premium goes up to $132
  • At age 72, her premium goes up to $165

Mr. Dodd is age 72. He buys the same Medigap policy as Mrs. Anderson. He pays a $165 monthly premium. His premium is higher than Mrs. Anderson’s because it is based on his current age. Mr. Dodd’s premium will go up every year.

  • At age 73, his premium goes up to $171
  • At age 74, his premium goes up to $177

Other Factors that May Affect your Cost:

  • By Discounts: Insurance companies may offer discounts to females, non-smokers, and/or married people.

  • By Medical Underwriting: Some insurance companies may use medical underwriting. This means that you must answer medical questions on an application. Fill the application out carefully and completely. The insurance company uses this information to decide whether to sell you a Medigap policy, how much they will charge you, and whether you will have to wait for coverage to start. Some companies may add a waiting period for pre-existing conditions if your state law allows. Insurance companies can’t use medical underwriting if you are in your Medigap open enrollment period or if you have special rights (called Medigap protections) to buy a Medigap policy.

  • If you buy a high-deductible option: Insurance companies may offer a "high-deductible option" on Medigap Plan F. If you choose this option, you must pay the first $1,900 (the deductible in 2008) in Medigap-covered costs before the Medigap policy pays anything. This amount can change each year. High-deductible policies often have lower premiums, but if you need a lot of Medicare-covered health care services, supplies, and equipment, your out-of-pocket costs will be higher, and you may not be able to change to another Medigap policy. In addition to the $1,900 (in 2008) deductible that you must pay for the high-deductible option for Plan F, you must also pay deductibles for

    1. Prescription drugs* and

    2. Foreign travel emergency ($250 per year for Plan F).

  • If you buy a Medicare SELECT policy: Medicare SELECT is a type of Medigap policy sold by some insurance companies in some states. If you buy a Medicare SELECT policy, you are buying one of the 8 standardized Medigap Plans A through L. Medicare SELECT policies require you to use specific hospitals and, in some cases, specific doctors to get full insurance benefits (except in an emergency). Generally, Medicare SELECT policies cost less than other Medigap policies. If you have a Medicare SELECT policy and you don’t use a Medicare SELECT hospital or doctor for non-emergency services, your costs will be higher. You will have to pay some or all of what Medicare doesn’t pay. Medicare will pay its share of approved charges no matter which hospital or doctor you choose.

*Prescription drug coverage is no longer available.

Source: Medicare.gov (The Official U.S. Government Site for Medicare)

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