Medicare Supplement Insurance Companies: Shopping for Medigap

• by Christian Worstell
• March 25, 2021
• Reviewed by John Krahnert

Medicare Supplement Insurance (also called Medigap) are private insurance plans that work with Medicare Part A and Part B (Original Medicare). A Medigap plan can help pay for certain Medicare out-of-pocket costs, such as deductibles, copayments and coinsurance.

Medicare Supplement Insurance companies are sold by private insurance companies, so plan availability and costs may vary depending on where you live.

You can visit MedicareSupplement.com to compare plans from Medicare Supplement Insurance companies that provide plans in your area.

What are Medicare Supplement Insurance plans?

Medicare Part A and Part B help cover certain hospital costs and medical care expenses. You are typically responsible for paying some costs, however, such as Medicare Part A and Part B deductibles and coinsurance. Medigap plans help pay for some of these out-of-pocket costs.

Let’s consider an example to help explain how Medicare Supplement Insurance works.

Imagine that you visit a doctor because of an illness, and your doctor accepts Medicare assignment — meaning they accept the Medicare-approved amount for service as payment in full.

Medicare Part B will typically reimburse your provider for 80 percent of the Medicare-approved amount for your services. You are typically required to pay the remaining 20 percent (after you meet your annual Part B deductible, which is $203 in 2021).

This remaining 20 percent is called your Medicare Part B coinsurance.

For the purpose of this example, let’s say your doctor bills Medicare $200 for your Medicare-approved services. This means you would be responsible for paying $40 out of pocket (20 percent of $200) for the appointment.  

If you had a Medicare Supplement Insurance plan that covers 100 percent of the Part B coinsurance, your plan would pay the $40, not you.

What does Medicare Supplement Insurance cover?

The Medigap plans comparison chart below illustrates the 10 types of standardized Medicare Supplement Insurance plans that are available in most states (Wisconsin, Minnesota and Massachusetts have different options).

Each standardized type of Medigap plan offers full, partial or no coverage for each of the following benefit areas: 

• Medicare Part A coinsurance
  While it’s not common to require a hospital stay long enough to incur Medicare Part A coinsurance charges, these costs can range up to $742 per day in 2021 for extended stays at hospitals and other inpatient facilities.
  
  
• Medicare Part B coinsurance
  Medicare Part B typically requires a 20 percent coinsurance payment for Medicare-approved services and items after you meet your Medicare Part B deductible.
  
  
• Medicare Part A deductible
  The Medicare Part A deductible is $1,484 per benefit period in 2021. The Medicare Part A deductible is not annual — you could potentially need to meet this deductible more than once in a given year.
  
  
• Medicare Part B deductible
  The Medicare Part B deductible is $203 per year in 2021.
  
  
• Medicare Part B excess charges
  Doctors who do not accept Medicare assignment reserve the right to charge up to 15 percent more than the Medicare-approved amount for services and items they provide. These costs are called excess charges.
  
  
• Medicare Part A coinsurance and copayments for hospice care
  Medicare Part A generally requires you to pay a copayment for prescription drugs used for hospice treatment. You are typically also responsible for hospice respite care coinsurance costs.
  
  
• Medicare Part A coinsurance for skilled nursing facility care
  Medicare Part A requires a coinsurance payment of $185.50 per day in 2021 for inpatient skilled nursing facility stays longer than 20 days.
  
  
• First three pints of blood
  Original Medicare does not provide coverage for the first three pints of blood used for a blood transfusion.
  
  
• Foreign travel emergency care
  In most cases, Original Medicare does not provide coverage for emergency medical care received outside of the U.S. Several Medigap plans cover 80 percent of emergency medical care received abroad.

How much does Medicare Supplement Insurance cost?

The average cost per month of Medigap plans sold in 2018 ranged from $57.16 to $218.75, depending on the type of plan.¹ The average cost of each type of Medigap plan can vary quite a bit from one plan type to another.

Factors such as age, gender, smoking status, health and where you live can also affect Medigap plan rates.

For example, the average cost of Medigap Plan F in New York was $334.92 per month in 2018. The average cost for Medigap Plan F in Iowa was $141.04 per month in 2018.¹

Learn more about Medicare Supplement Insurance rates in your state. 

There are three different age-related pricing models that Medicare Supplement Insurance companies use to determine their Medigap plan rates. Each type of cost model can affect the average price of a given plan. 

• Community-rated
  With community-rated Medigap plans, every member of the plan pays the same rate, regardless of age.
  
  
• Issue-age-rated
  With issue-age-rated Medigap plans, premiums are based on your age at the time you enrolled in the plan.
  
  You will typically pay less for an issue-age-rated plan if you enroll in the plan when you’re younger. Your premiums also won’t increase based on your age.
  
  
• Attained-age-rated
  Attained-age-rated Medigap plans set their premiums based on your current age. As you age, your Medigap plan premiums will gradually increase each year.

Medigap premiums can increase over time due to inflation and other factors, regardless of the pricing model your insurance company uses.

How do I choose the right Medicare Supplement plan for me?

There are a few things to consider as you compare Medicare Supplement Insurance plans form different insurance companies.

Find out which Medigap plans are offered in your area. Consider your health care coverage needs and decide which Medigap plan offers the combination of benefits that works for you.

A licensed insurance agent can help you compare the benefits and costs of Medigap plans available where you live.

Am I eligible for Medicare Supplement Insurance?

You may be eligible to enroll in a Medicare Supplement Insurance plan if you meet the following eligibility requirements:

• You are enrolled in Medicare Part A
• You are enrolled in Medicare Part B
• You are not enrolled in a Medicare Part C (Medicare Advantage) plan
• You are not enrolled in an employer or union group health insurance plan
• You reside in the area in which your desired Medigap plan is sold

Federal law does not require insurance companies to sell Medigap plans to individuals under the age of 65, even if they are eligible for Medicare because of a disability. 

The following states do require insurance companies to make at least one Medigap plan available to qualified beneficiaries under the age of 65:

• California (excluding those with End-Stage Renal Disease)
• Colorado
• Connecticut
• Delaware (only available for people with End-Stage Renal Disease)
• Florida
• Georgia
• Hawaii
• Illinois
• Kansas
• Louisiana
• Maine
• Maryland
• Massachusetts (only available for people with End-Stage Renal Disease)
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• New Hampshire
• New Jersey
• New York
• North Carolina
• Oklahoma
• Oregon
• Pennsylvania
• South Dakota
• Tennessee
• Texas
• Vermont (excluding those with End-Stage Renal Disease)
• Wisconsin

Keep in mind that insurance companies in other states (not on the above list) may also offer Medigap plans to people under 65. They are simply not required to do so under state law. If this is the case, you may not be able to buy a Medigap plan in your state if you are under 65.

If you are able to find a Medigap plan in your state, it may be considerably more expensive than it is for people 65 and older. Some states regulate how insurance companies price their Medigap plans for Medicare beneficiaries who are under 65.

Some of the states listed above might offer multiple Medigap policies to beneficiaries under 65. Some may even offer the same selection of plans that are available to those 65 and over.

Some states might only offer one type of Medigap plan to people under 65.

State laws regarding Medigap can vary considerably. Check with your state’s department of insurance to learn more about how Medigap is regulated where you live.

When can I sign up for a Medigap plan?

A good time to buy a Medigap plan is during your Medigap Open Enrollment Period (OEP), which begins as soon as you are at least 65 and enrolled in Medicare Part B.

During your Medigap Open Enrollment Period, Medicare Supplement Insurance companies can’t use your medical history or current health status to determine your eligibility for a Medigap plan or to charge you higher plan premiums.

Outside of your Medigap Open Enrollment Period, you may have what are called “guaranteed issue rights.”

Having a guaranteed issue right means Medicare Supplement Insurance companies cannot perform any medical underwriting in determining your Medigap premium. In other words, you cannot be charged more for a plan because of your health.

There are several circumstances that could qualify you for a Medigap guaranteed issue right.

Find Medigap plans in your area

A licensed insurance agent can help you compare plans that are sold by Medicare Supplement Insurance companies in your area.

¹ TZ Insurance Solutions LLC internal sales data, 2019. This data is based on the Medicare Supplement Insurance policies TZ Insurance Solutions LLC has sold. It is not a comprehensive national average of all available Medicare Supplement Insurance plan premiums.