Medicare Supplemental Cost

Medigap policies cover the copayments, coinsurance fees and deductibles that Medicare requires each patient to pay, but only for medical services covered by Medicare. Medigap policies do not cover medical services not included under Medicare Part A and/or Part B. Medigap polices are only issued with traditional Medicare (Part A and Part B), and are not available with private Medicare Advantage plans.

For an overview of all the Medicare options, see How Much Does Medicare Cost.

Typical costs:

• There are 10 standardized Medigap plan categories that private insurance companies can offer. Each plan is identified by a letter -- A, B, C, and so on -- and Plan A is the most basic. All plans with the same letter name must provide exactly the same benefits -- so every Plan A must offer identical coverage regardless of the premium.
• Although the coverage is standardized by plan category, premium costs vary widely between insurance companies and even within the same insurance company by region. Premiums for Medigap plans might cost $300-$6,200 or more a year, depending on the insurance company, what's included under the plan and local rates. Search the Medicare Plan Finder tool[1] by zip code for Medigap plan availability and pricing in a specific area.

• A person must have traditional Medicare (Part A and/or Part B) to buy a Medigap policy. Because Medicare Part A and B only cover a portion of the total health care costs, a supplemental Medigap policy is the only way to get relatively comprehensive coverage through the traditional Medicare plans.
• As long as the premium is paid, an insurance company cannot cancel a Medigap policy, even if the person develops major health problems. Medicare.gov charts the circumstances when insurance companies cannot legally deny Medigap coverage[2] to an individual.
• Medigap plans must comply with state and federal laws, and some states dictate which plans can be offered in their area. Some states allow Medicare Select Medigap policies, which cost least but require patients to go to specific doctors and hospitals. Insurance companies are allowed to choose which Medigap policy they sell, but if they offer any Medigap policies they have to also offer the basic Plan A.
• Some Medigap policies were previously allowed to include coverage for prescription drugs, but no new Medigap policies can be sold that include prescription drug coverage. For information about what type of drug coverage is available, see How Much Does Medicare Part D Cost.

• Anyone buying a Medigap policy must also pay any premium charges for Medicare Part A and Part B. Medicare Part A is free for most people. See How Much Does Medicare Part A Cost. The standard monthly premium for Medicare Part B in 2012 is $99.90, but it can be $139.90 -$319.70 a month if total income is more than $85,000 for a single person or $170,000 for a married couple. See How Much Does Medicare Part B Cost.

• Find out if retiree health insurance is available through a former employer or union. Retiree health insurance may cost less than a Medigap policy and include benefits such as prescription drugs.

• Medicare.gov explains how to compare Medigap policies[3] . California Health Advocates lists questions to consider[4] before choosing a Medigap policy.
• Not all Medigap plans are offered in every state. Medicare.gov provides a Medigap Policy Search tool[5] listing details of local Medigap plans available by zip code or by an individual's Medicare information.
• Medigap policies can only be bought in conjunction with Medicare Part A and B, and only at certain times, which vary by state. The nonprofit Medicare Rights Center explains Medigap enrollment times[6] based on state rules and whether the person is younger or older than 65.
• When choosing a Medigap plan, it's important to understand how insurance companies set premiums based on location or age. With "no-age-related" or "community-rated" plans, the premium is tied to location rather than age, and remains the same as the person gets older; with issue-age-related policies, the premium is always based on the age the person was when first buying the policy (although there will be increases for inflation); and with an attained-age-related policy the premium is initially set by the age the person is when they purchase the policy, but the premium will increase as the person gets older. Attained-age-related premiums will typically be the lowest at the time of initial purchase, but cost the most over a lifetime.

1.  www.medicare.gov/find-a-plan/questions/medigap-home.aspx
2.  www.medicare.gov/find-a-plan/staticpages/learn/rights-and-protections.aspx
3.  www.medicare.gov/supplement-other-insurance/compare-medigap/compare-medigap.html
4.  www.cahealthadvocates.org/medigap/questions.html
5.  www.medicare.gov/find-a-plan/questions/medigap-home.aspx
6.  www.medicareinteractive.org/page2.php?topic=counselor&page=script&slide_id=1654#top

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