How Are Medigap Premiums Priced? Medigap Plans Explained

A Medigap premium is the monthly amount you pay a private insurance company for a Medigap policy. Medigap plans help with some costs Original Medicare leaves behind. You usually keep paying your Medicare Part B premium as well.

Medigap plans are standardized by letter. In most states, a Plan G from one company covers the same benefits as a Plan G from another. Only Plans A, B, D, G, K, L, M and N (and high-deductible Plan G) are sold to people newly eligible for Medicare. Plans C and F (and high-deductible F) are available only to people who became eligible before January 1, 2020. Plans E, H, I and J were discontinued and are not sold today. Massachusetts, Minnesota and Wisconsin standardize Medigap differently.

Because the benefits match, the price becomes the main difference. Companies may set it using one of three common methods: community rated, issue age rated, or attained age rated. Where you live, your age, and sometimes your health or tobacco use may also play a part. Rules differ by state, so confirm current details with Medicare.gov or your State Health Insurance Assistance Program (SHIP).

Many people begin by choosing a plan letter, then asking several companies for a quote on that same letter. Because the benefits are standardized, this lets them compare prices side by side. Some also look at a company's history of rate changes, not only today's price.

The three rating methods work differently. Community rated plans generally base the price on where you live, not on your age. Issue age rated plans generally base it on your age when you first buy the policy. Attained age rated plans generally base it on your current age, so the premium tends to rise as you get older.

Some companies offer discounts, such as a household discount for couples living together, or discounts for certain payment methods. Availability varies by company and state. Many people also weigh Medigap against Medicare Advantage. Medigap offers any provider nationwide that accepts Medicare, no networks or referrals, and predictable cost-sharing. Its trade-offs include generally higher monthly premiums, possible medical underwriting outside open enrollment or guaranteed issue, a separate Part D plan for drugs, and no routine dental, vision or hearing. Medicare Advantage often has lower premiums, an annual out-of-pocket maximum, extra benefits, and drug coverage in many plans. Its trade-offs include networks, prior authorization and copays. Neither is right for everyone.

A Medigap agent may help you sort through these differences without pressure. A licensed agent can often get quotes from several companies for the same plan letter. This may save you time compared with contacting each company yourself.

A conversation with an agent is generally a friendly, no-rush chat. You may be asked about your age, ZIP code, tobacco use, current coverage and when you became eligible for Medicare. Have your Medicare card handy if you can. Call 1-800-MEDIGAP for more information.

Good questions to ask include these. Is this rate community, issue age or attained age rated? How has this company's pricing changed over time? Are there household or other discounts? Would I need to answer health questions? Is this the right time for me to enroll? An agent can explain, but cannot promise acceptance or savings.