With 65 million Americans enrolled in Medicare, about one in five also hold a supplemental insurance plan to help pay costs that Parts A and B don’t cover. Deciding on the right Medicare supplement plan can feel overwhelming, but it doesn’t need to be. Simple facts about how Medicare supplement plans compare and how much they cost can help you choose the option that supports your health needs and fits your budget.
The average cost of Medicare supplement plans is $174 a month nationwide.
Factors influencing your price include where you live, which insurer you choose, and individual details like age and health status.
In addition to comparing costs, other considerations include coverage amounts, out-of-pocket costs, and insurance company pricing methods.
A standardized structure means you may compare the same plan at different insurance companies with the same benefits.
The ABCs of Medicare supplement plans
Medicare Supplement Insurance plans, also called Medigap policies, are designed to fill in coverage gaps with Original Medicare Parts A and B. Private insurance companies offer Medicare supplement plans that are part of a standardized structure created by the government (Plan A, Plan B, Plan C, etc.), so the benefits of each plan are the same with each insurer. With a range of pricing options that pay for expenses like deductibles, copayments, and coinsurance for hospital, nursing, and hospice care, you can choose a plan based on your needs.
Most states offer up to 10 plans that include two high-deductible options. You might consider a Medicare supplement plan if you want the financial security of more predictable expenses instead of the unknown and growing costs that come with healthcare.
Average cost of medicare supplement plans
Based on regional samples across all plans, premiums average about $174 per month nationwide. The same data also show that premiums may vary from $33 to $448. Why such a wide range? There are several reasons. Even though the government standardizes plan benefits, costs vary by the plan option and insurance company you choose. In addition, certain fixed factors will influence the amount you pay, like geographical area, age, tobacco use, and health status. Of course, plans with more benefits are more expensive, but the variety of choices allows you to select the plan that fits your needs and budget.
Even if you have health problems, you may buy any Medicare supplement plan sold in your state during the first six months after your 65th birthday.
Comparing Medicare Supplement plan costs
According to Medicare.gov, these are the pricing ranges available to three 65-year-old male nonsmokers living in various cities:
|Medicare supplement plan type||Monthly cost: San Francisco, CA||Monthly cost: Indianapolis, IN||Monthly cost: Atlanta, GA|
|Plan A||$102 - $175||$92 - $364||$120 - $213|
|Plan B||$143 - $201||$94 - $404||$171 – $359|
|Plan C||$170 - $260||$107 - $511||$172 - $446|
|Plan D||$133 - $229||$101 - $252||$144 - $357|
|Plan F||$155 - $282||$116 - $527||$152 - $457|
|High-Deductible Plan F||$32 - $76||$33 - $73||$48 - $69|
|Plan G||$132 - $213||$102 - $448||$127 - $361|
|High-Deductible Plan G||$35 - $65||$33 - $73||$45 - $87|
|Plan K||$53 - $123||$55 - $167||$67 - $129|
|Plan L||$87 - $123||$55 - $167||$87 - $207|
|Plan M||N/A||$78 - $197||$101 - $181|
|Plan N||$101 - $171||$80 - $436||$97 - $230|
Cheapest. Plan K offers the least coverage for as little as $53 a month.
Priciest. Plan F has the greatest coverage for as much as $527 a month.
Key point: Insurance company pricing methods
Regarding the insurance company you choose, it’s important to know which of three methods they use to set premium rates.
Community-rated. The same general premium for everyone in a particular area, regardless of age. A 65 and 75-year-old will pay the same amount for the same policy.
Issue-age-rated. Premiums are based on age at enrollment. A younger person pays less, and premiums won’t increase based on your age.
Attained-age-rated. Premiums increase with age. A premium may be lower at first compared to other companies but will increase annually.
Even though the benefits of each supplemental plan type are the same nationwide, the insurance companies available to Medicare enrollees vary by state. When comparing premiums between the insurance companies available in a certain area, smart buyers look beyond price and compare pricing methods to make an informed choice.
What personal factors influence plan cost?
The cost of Medicare supplement plans is more than a matter of policy options; certain personal factors also will affect how much you pay.
You may pay more if you:
- Enroll when you are older
- You smoke or use tobacco
- Live in a region with higher healthcare costs than other area
- Sign up without enrollment protections and need to complete a medical questionnaire
You can pay less if you:
- Enroll when you are younger
- Receive a household discount for multiple policies with the same company
- Select a high-deductible plan (F or G)
- Sign up online rather than by phone or with an agent
- We up automatic payments from your bank account or prepay for a full year
- Chose a Medigap Select plan with a more limited network of doctors
Do these situations describe you?
To help you understand how Medicare supplement plans work, here are several scenarios to illustrate the trade-offs between healthcare needs and expenses.
Marco is a healthy 65-year-old who wants additional coverage beyond Original Medicare. He chooses Medicare Supplement Plan A because it covers simple benefits like Medicare Part A coinsurance and hospital costs.
He’s comfortable that it doesn't cover Part B excess charges or skilled nursing facility care coinsurance.
Outcome. Marco pays a monthly premium for Plan A coverage, and when he needs medical care, he usually doesn't have any out-of-pocket costs beyond his premium.
More comprehensive coverage
Naomi sees her doctor regularly for several chronic health conditions and takes multiple prescription medications. Because of her health needs, she worries about the potential for high out-of-pocket costs with Original Medicare.
She selects Medicare supplement Plan F because it’s a comprehensive plan that covers all the gaps in Medicare coverage, including deductibles, copayments, and excess charges.
Outcome: Naomi pays a higher premium for Plan F but has peace of mind knowing that almost all her healthcare costs are covered. She has frequent out-of-pocket expenses, but they are predictable and manageable.
Ben chooses Medicare supplement Plan C since it covers Medicare Part A and Part B coinsurance and skilled nursing facility care coinsurance. He’s pleased with the cost and coverage.
A few years later, he developed a condition requiring frequent medical specialist visits. Facing the long-term impact of his changing healthcare needs, he realizes that Plan C doesn't cover Part B excess charges, which are becoming a significant expense for him.
Outcome. Ben decides to switch to Medicare supplement Plan G because it covers everything Plan C does except the Part B deductible. While he pays a slightly lower premium with Plan G, he must cover the Part B deductible independently. He’s comfortable with the trade-off since Plan G meets his new healthcare needs and can afford the Part B deductible.
Marie lives on a fixed income and seeks a balance between coverage and affordability. She chooses Medicare supplement Plan N because it covers most of the gaps in Original Medicare except for some copayments and the Part B excess charges.
Outcome. Marie pays a lower monthly premium for Plan N than the more comprehensive plans. When she receives medical services, she pays copayments for some office visits and the Part B deductible. Even though she pays more out of pocket at the time of service than with Plans F or G, the lower monthly premium supports her monthly budget.
The amount you pay for a Medicare supplement plan will be as unique as you are. In addition to your personal profile, the plan type you choose, where you live, and the insurance company you select influence your monthly premium.
The right Medicare supplement plan depends on your health status, budget, and personal preferences for managing healthcare costs. That’s why it’s important for you to compare the benefits, costs, and coverage options available to find the one that best meets your needs.