Medicare Mysteries: What Is the Average Cost of Supplemental Insurance for Medicare?

Medicare Mysteries: What Is the Average Cost of Supplemental Insurance for Medicare?

Currently, Medicare covers 44 million Americans. And that number is expected to rise to 79 million by 2030. If you are among these, you know what an important decision it is to select the right plan that will meet your health needs.

If you expect to enroll in original Medicare but have concerns about coverage and out-of-pocket costs, you may be considering a Medicare supplement plan. These allow you to keep all the benefits of original Medicare while expanding coverage and assisting with out-of-pocket costs.

The average cost of supplemental insurance is difficult to determine because it is based on many factors. And the stakes are high since the most advantageous time to enroll in a supplement plan is right after you sign up for Medicare.

Fortunately, there are reliable ways to navigate these plans to see which one you should choose. The information below will help point you in the right direction.

What are Medicare Supplement Plans?

Medicare is a federal health program with different components that provide distinct health benefits. While there are other qualifying factors, most people become eligible for Medicare by turning 65.

In general, Medicare Part A covers hospital inpatient care. It also includes skilled nursing, hospice care, and some in-home healthcare programs. Medicare Part B covers doctor visits, lab testing, and preventive services.

Part D is the prescription drug component of Medicare. And Part C comprises “Medicare Advantage” plans, which are private insurance plans that take the place of Part A and B (and sometimes Part D).

Like Medicare Advantage, Medicare supplement insurance plans are offered by private insurance companies. But, unlike Advantage plans, they do not replace original Medicare. They act as an add-on, or “supplement,” to these plans.

What Are the Advantages of Supplement Plans?

Medicare supplement plans fill in the payment and coverage “gaps” in Medicare Part A and Part B. For this reason, they are sometimes called “Medigap” plans. This includes both coverage and out-of-pocket costs, like deductibles, copays, or coinsurance costs.

They also offer extra benefits, including long-term coverage. Basic Medicare provides a limited number of days for hospital stays, skilled nursing facilities, rehabilitation centers, or in hospice care. Medigap plans provide additional time in these facilities.

With original Medicare, you can see almost any provider who accepts it. Generally, Medicare supplement plans allow you to stay with these doctors.

This is a huge perk over Medicare Advantage plans, that require you to see in-network physicians and specialists. In short, Medicare supplement combines the benefits of original Medicare with the expanded coverage of a private insurance plan.

When Can You Buy Supplement Plans?

This is a very important question that has a lot to do with the average cost of supplemental health insurance. Open enrollment for Medicare supplement plans is six months from the time you enroll in Medicare.

Beyond this enrollment period, you can still sign up for these plans, but you will be subject to underwriting by the insurance company. This means they will require a medical exam and can deny coverage or increase rates based on the results.

Although some states have laws that make it easier to switch to Medigap outside the open enrollment period, there are limited federal guaranteed-issue rights for these plans. So, there is a huge advantage in signing up for supplemental plans during the initial open enrollment period.

How to Determine the Average Cost of Supplemental Insurance

Medicare supplement plans have a wide range of coverage and costs. How much coverage you select with impact premiums. The other factor is the type of rating system associated with a particular plan.


There are 10 different Medicare supplement insurance plans categorized by the letters A to N (some past plans have gone away). With a few exceptions, all states standardize benefits and rates that correspond to each of these plans. But the plans themselves vary in coverage.

For instance, all Medicare supplement plans cover Medicare Part A coinsurance and hospital costs. Some plans cover 100 percent of Part B coinsurance and copayments, while others cover only part.

There is a large discrepancy in coverage for skilled nursing coinsurance costs. Some plans cover 100 percent, while others cover none. Similarly, some plans cover all Part A and Part B deductibles, while others cover little or none.

These are the details you will want to pay attention to when selecting a plan. And do not only take into account what you need right now but anticipate what health services you might need down the road. Of course, no one can predict the future. But be honest about prospective health needs, based on your family history and lifestyle.

Rating Systems

There are three different types of rating systems you will encounter with Medicare supplement plans.

A community rating means that everyone who purchases a particular plan pays the same premium every month. Over time, the company can increase its premium based on inflation or market factors. But they cannot increase it based on your age.

An issue-age rating is a premium based on your age when you buy the plan, with the lowest available rates being when you are 65. Like community rating plans, the premium will not increase based on your age, regardless of when you purchase them.

Finally, the attained-age rating applies to premiums based on your current age. These tend to have much lower premiums when you are 65, but can quickly go up as you get older.

Whenever you are signing up for a Medicare supplement plan, be sure to ask what rating system the plan has. As you can see, this will be a big factor in determining the average cost of supplemental insurance.

Final Considerations

As stated, the best time to sign up for Medicare supplement plans is soon after you enroll in original Medicare. But herein lies the dilemma: the average cost of Medicare supplemental insurance may be a determining factor in whether you go with original Medicare in the first place.

This means you must plan ahead and know your options going in. A good way to explore the best Medicare supplement plans in 2021 is to through online search tools. These use basic information, such as your age and zip code, to break down the options you have. It’s a good way to begin narrowing down your options.

Remember that many of the basic rules of health insurance apply to Medicare supplement plans as well. For instance, much like with other private insurance plans, higher-deductible plans will have lower premiums, and vice versa.

But, there are differences as well. For example, Medicare does not offer family medical insurance plans. So, explore the advantages of selecting a different Medicare supplement policy from your spouse.

Find the Right Medicare Supplement Plan

Now that you know how to begin calculating the average cost of supplemental insurance you can start searching for plans. Don’t wait until the last minute. Do your research, so you can be confident that the plan you choose will benefit you now and in the future.

We hope this information was helpful to you. Be sure to take a look at some of our other healthcare-related posts, as well as others on business, education, lifestyle, travel, and much more.

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