Most Medicare beneficiaries would agree that it’s tricky enough just to figure out what you’ll be paying for Medicare Parts A, B and D. Then, just when you think you’ve got it covered, you learn that Medicare doesn’t cover everything, and you’ll probably need some additional coverage to pay for your deductibles and the 20% of outpatient expenses that you are responsible for.
Estimating these costs ahead of time is an important part of your retirement planning. The cost for Medigap insurance varies based on a number of factors, so let’s take a look at those.
First, there’s the plan itself that you choose.
Fortunately, for all of us, Medicare standardized the Medigap plans back in 1990. This makes it easier to compare costs between carriers. Still, there are 10 different standardized plans and one high deductible option. When looking at costs, the plans with the highest premiums will typically be Medigap Plans F and G. That’s because these two plans have the most coverage, leaving you with little to no out-of-pocket spending.
If you are someone who wants a lower monthly premium and doesn’t mind doing some more cost-sharing on medical services as you go along, Plans K and N are options to consider. Both of these plans offer considerably lower premiums because you have fewer benefits. You are responsible for more cost-sharing on the back end.
Next, there’s your demographic information.
The monthly rate that you’ll pay for your Medicare supplement is affected by several factors. These include age, gender, tobacco usage, type of policy, when you enroll and eligibility for household discounts.
For example, a female, non-tobacco user aged 65 will tend to have lower rates than a male the same age or an older individual. She might also be able to further lower that rate if she lives with or is married to someone who is also on Medicare or who has a supplement policy with the same carriers.
Each carrier sets their own eligibility rules for these discounts, so ask your Medicare insurance broker to explain which carriers in your area offer the most attractive criteria or household discounts for your individual needs.
Lastly, your zip code also affects what you will pay for Medigap plans.
The cost of healthcare in your zip code or area impacts the rate that insurance companies charge for their plans. This results in dramatic differences in price in some states versus other states.
Here at my agency, we have a quote engine that we use to pull rates for Medicare beneficiaries in any area of the country. I ran some quick figures to give you an idea of the estimated low-end range of premiums that you might pay in different areas of the country. For these examples, we’ll use a male, non-tobacco user who is aging into Medicare at 65, and we’ll review prices for the three plans that are generally the most popular sellers with clients nationwide as well as at my own agency.
Fort Worth, Texas
In Texas, we are lucky to have fairly affordable Medigap rates. Our 65-year old male non-tobacco user can find rates in these ranges:
Plan F: $149 – $180/month
Plan G: $116 – $134/month
Plan N: $94 – $120/month
To be clear, there are some carriers in this zip code that are charging more than this for these plans. However, since the plans are standardized, the benefits are the same for each plan letter no matter whom you purchase from. There is no need for you to spend more.
Keep in mind as well that eligibility for household discounts might also lower these rates.
Los Angeles, California
The golden state is a bit more expensive than Texas.
Plan F: $169 – $190/month
Plan G: $142 – $172/month
Plan N: $113 – $150/month
Our retiree in Florida will pay a pretty penny for Medigap.
Plan F: $275 – $336/month
Plan G: $255 – $300/month
Plan N: $198 – $248 /month
Based on these prices, it’s easy to see why Florida has such a high population (42%, per a report by KFF.org) of seniors opting for Medicare Advantage plans. These private plans generally have networks of providers and often considerably lower premiums than Medigap plans. There are even some plans with a $0 premium, which means you pay nothing more for the plan than what you are already paying for Part A and B.
However, you’ll pay for services as you go along, so there may be more back-end spending than you would incur on Medigap. It’s important to verify that your doctors are in the network before enrolling in a plan.
Additional Medicare Costs To Consider
It’s important for all beneficiaries to realize that Medicare premiums are the not the only costs they should be preparing for in retirement planning. Every year, we meet dozens of people new to Medicare who are astonished to find that Medicare does not provide for long-term care. This is something you should plan to pay for privately, either through personal funds or with a long-term care policy.
There are also several types of care and equipment that Medicare may pay for but doesn’t always pay for, such as home health care and medical equipment. Often, these items have stipulations or requirements that you must meet or that your doctor must prescribe in order for those things to be covered.
Lastly, as we mentioned earlier, there are routine dental, vision and hearing costs to consider. While Medicare will pay for treatment of injuries and illnesses, like glaucoma or cataracts, it doesn’t pay for eye exams or teeth cleanings. Individuals needing coverage for these items can find standalone plans available from a variety of insurance companies in every state.
Written By: Danielle Kunkle
Original Date: Feb 6 2018