MEDIGAP PLAN PREMIUMS: WHAT THEY ARE AND HOW THEY ARE DETERMINED
What is Medigap? And what is a Medigap premium? These are questions we hear all the time from people who need to sign up for Original Medicare and want to know how a Medigap plan might help them manage their healthcare expenses. Fortunately, Medigap premiums work similarly to other types of insurance coverage.
If you’re already considering Medigap plan coverage, you’re doing the right thing. Preparing ahead of time for your post-retirement healthcare coverage takes a huge weight off your shoulders and allows you to start preparing your budget.
Let’s take a look at what you need to know about choosing a Medigap plan based on its premium.
WHAT IS MEDIGAP?
Medigap — officially called Medicare Supplement insurance — is a type of healthcare insurance that supplements Original Medicare. You buy a policy separate from Medicare to fill in coverage gaps that exist.
A Medigap plan can cover deductibles, copayments, coinsurance, and other out-of-pocket costs related to hospitals or doctors. Each plan has a different set of coverage limits, so Medigap Plan premiums can vary widely.
WHAT IS A MEDIGAP PREMIUM?
The Medigap premium is what you pay annually or monthly to keep your plan active. It’s similar to car insurance or life insurance. The insurance company charges you a fixed rate every month in exchange for covering everything it promises to pay.
The difference between Medigap plans and car insurance is that the only difference is the premium. If you want Medigap Plan G, every insurance company that offers it provides the same level of healthcare coverage. Consequently, you only have to compare premiums within the same plan.
But what is a Medigap plan premium and how much will a Medigap plan cost?
HOW MUCH DO MEDIGAP PLANS COST?
Since every insurance company sets its own Medigap plan costs, it’s impossible to know what you’ll pay without doing some research. Comparison shopping is the best way to know your options based on your age, gender, and location, as well as anything else the insurance company takes into consideration.
A recent Forbes article compared Medigap Plans F, G, and N in three different cities based on their average premiums. The numbers showed wide discrepancies across the board.
In Fort Worth, Texas, Medigap Plan F ranged from $149 to $180 per month, while the same plan in Miami, Florida, cost between $275 and $336 per month. That’s a pretty big difference.
Meanwhile, Medigap Plan N was nearly twice as expensive in Miami as it was in Los Angeles, California. For L.A. natives, Plan N started at just $113 per month.
WHY DO INSURANCE COMPANIES CHARGE DIFFERENT PREMIUMS?
We’ve answered two important questions:
- What Is Medigap?
- What Is a Medigap Premium?
Now, we need to dig a little deeper to better understand what you’ll pay for a Medigap plan.
Every insurance company has its own method for determining how much to charge for each Medigap Supplemental insurance plan it offers. Some companies charge more than others based on their individual criteria.
A smaller company, for instance, might charge higher premiums than a larger business to cover its overhead and to make sure it doesn’t overextend itself.
WHAT IS A MEDIGAP DISCOUNT?
Some insurance companies offer what is called a household discount. It means that two or more people in the same household have Medigap plans through that same insurer.
It’s kind of like the bundles insurance companies offer for car and homeowners insurance. If you’re willing to use the same insurer, you get a discount on both products.
Keep in mind, though, that different states handle household discounts in different ways. When you’re comparison shopping to learn what you’ll pay for Medigap, get quotes from every company that interests you to find out how the household discount will apply.
Household discounts typically range from 5 to 12 percent.
HOW CAN YOU SHOP FOR MEDIGAP PLAN OPTIONS?
What is Medigap comparison shopping? It means getting quotes from multiple insurance carriers so you know you’re receiving the best deal. Since premiums can vary widely between insurers, you don’t want to choose the first name to get your attention.
Use Ensurem’s Medigap Quoter to get your individual quotes based on your age, gender, tobacco use (which we’ll cover more), and the plans in which you’re interested. Within one minute, you’ll have several plans from which to choose.
CAN TOBACCO USE INCREASE MY MEDIGAP PLAN COSTS?
Tobacco users are considered higher risks for insurance companies. If you smoke or use tobacco, you’ll pay a higher premium than non-smokers.
Of course, smoking carries other risks and costs. If you quit smoking today, you reduce your chances of developing lung cancer and other smoking-related disorders. Additionally, you won’t pay as much for Medigap, and you won’t be paying for cigarettes anymore, either.
Consider how much you pay for cigarettes, chewing tobacco, or other tobacco products. Add them up to find out how much you spend in a year. The number might shock you into quitting even if you weren’t considering the option.
What is Medigap? And what is a Medigap premium?
Medigap is a way to save money on out-of-pocket healthcare expenses, and a Medigap premium is what you pay every month to keep your coverage active.
If you’re interested in applying for a Medigap plan, conduct your comparison shopping through Ensurem. We offer almost instant quotes based on where you live and other criteria so you don’t have to spend hours on the phone with insurance agents.
Knowing as much as you can about your Medicare Supplement options will make you better equipped for retirement. You can plan your budget based on your monthly and out-of-pocket expenses.