Everything You Need to Know About Medicare Supplement Rate Increases
Are you curious if your Medicare Supplement rate will increase? If so, you are not alone. New statistics show that 70% of Medicare beneficiaries will see their premiums rise 7% in 2020. This article will examine the history of Medicare supplement rate increases, Medigap premium and which companies are currently providing the best rates. If you have a gotten a rate increase and want to look into saving some money, give us a call at 866-319-5886 for a FREE quote today.
Before we dive into how much Medigap plans cost and premium increases, let’s briefly look at the history of rate increases.
Medicare Supplement Rate Increase History
Over the past decade, Medigap premiums have risen moderately, in fact, significantly slower than the growth in Medicare spending per beneficiary.
The average Medicare supplement rate increase between 2001 and 2010 was at 3.8%. In comparison, a 5.4% increase was seen for the average annual Medicare spending per beneficiary, excluding Part D spending.
Medicare beneficiaries who purchased Medigap coverage has declined by 26% since 2001. In 2010 20% of all beneficiaries, over 9.6 million people, purchased Medigap coverage.
In 2010, 9.6 million Medicare beneficiaries – approximately 20% of all beneficiaries ‐ purchased Medigap coverage. The share of Medicare beneficiaries purchasing Medigap coverage has declined from about 26% in 2001.
Medigap premiums vary by plan type. The most popular plan types F and C, are known to have more than 50% enrollment. Plans M and N are newer plans that share a smaller Medicare out of pocket cost. However, these plans combined only total around 2% of total Medicare enrollees.
Average enrollment-weighted monthly Medigap premiums vary significantly across the states. In 2010 the state of Michigan had one of the lowest premiums, while New York averaged at the highest. One explanation for this mix of premium amount ranges could be the different plan types within a state. Although even when only looking at Plan F or Plan C, the variations in premiums persist. The average spending per capita at the state level is a strong predictor of Medigap premiums with a 10% difference in Medicare spending per beneficiary at the state level vs. a 6% difference in Medigap premiums.
It is a fact that variations at the state level in Medigap premium growth is related to state trends in Medicare spending per beneficiary.
Even considering the increase in Medigap premiums was moderate over the past decades, premiums for some of the beneficiaries increased at considerably greater rates than average. With an average of 10% of Medigap policies. 3% of the enrollment had average annual premium increases of more than 20% during and around 2010. These deviations in policy tended to be newer and experiencing massive positive or negative changes in enrollment.
How Much Do Medigap Plans Cost?
Medigap plan costs can vary greatly depending on many different variables, such as location and age. Premiums can cost anywhere from around $70/month to $270/month. You will generally receive a lower deductible with a higher monthly premium, and vice versa for lower premiums, you’ll have a higher deductible. The two most popular and cost efficient plans most customers look into are Plan G and Plan N Medigap plans.
How Medigap Premiums are Calculated
Age
One of the Medicare Supplement premiums determining factors is age. The reason for this is the Insurers believe that the older you are, the more likely and susceptible you are to becoming ill and claiming services; therefore, they price policies for more aged individuals accordingly.
Age is taken into consideration in two different ways. One is when you take out a Medicare Supplement premium, and secondly, as you age.
For example, if you take out your premium when first eligible, which is usually at the age of 65, you’ll pay less than someone who decided to wait until their mid 70’s. It is also expected for your Medigap premiums to rise as you age.
Location
Medigap premiums are determined as well by the location of where you live. For example, over the age of 65, men and women in New York tend to pay upwards of 68% more for their premiums than the country’s lowest premiums. Average wealth in any area is a deciding factor for insurance companies to take advantage of, thus charging what they believe residents can afford to pay.
Gender
Often women can receive discounts on Medicare Supplement premiums from health insurance companies. Reason being that women are known to live longer and, in return, will pay out more for their health coverage over the long term. For this reason, insurance companies can afford to reduce the monthly rate.
Insurance companies also stated that women tend to enjoy better health and make fewer claims due to being more risk-averse.
Smoking
Study after study indicates that smokers generally have more health complaints than nonsmokers. With all of this information, insurance companies know that they can charge more for smokers vs. nonsmokers’ Medicare Supplement plans. It is noted that smokers typically will pay 12% more for their monthly plan premiums than a nonsmoker would.
Marital Status
To help entice couples to take out a Medicare Supplement plan with the same health insurance provider, they are often given spousal/marital discounts. Both parties benefit from this discount as the insurance company now receives two new customers, and the married couple appreciates their discounted premiums. Discounts can be significant but do vary from provider to provider.
Insurance Company/Customer Relationship
Depending on the payment options available individual insurance companies will offer discounts for customers who utilize the insurance companies preferred payment option. It is also known that often customers can receive discounts on their premiums depending on how many policies they hold with the companies.
A few other ways, customers can get discounts on their premiums from their providers to include.
- You are opting to pay annually rather than monthly. It costs insurance companies more to process monthly payments. Therefore you can often get a discount if you opt for an annual payment plan.
- You are paying electronically. It will cost a company more money to process a paper check or credit card, rather than an electronic payment being made. Therefore some companies out there will offer a discount if you elect to pay electronically.
- Every organization recognizes that customer loyalty is one of the most significant things they can obtain from a customer. Loyal customers tend to remain customers for much longer than a casual customer. Not only do loyal customers stay on with a company longer, but they are also known for being responsible for 80 to 90 percent of positive referrals. Companies recognize this and will often have a loyal customer discount available. The criteria that determine eligibility for this type of deal vary by company to company.
- (Professional Tip) It is wise to look at the companies you already are using for something else and look at their Medicare Supplement Plan. It is also important to note that some companies will not offer this discount unless asked about it. So be sure to question this if it isn’t provided to you automatically.
Inflation
Inflation will always play a role in the cost of your Medicare Supplement plan premiums. This is due to the yearly rising of overall health care costs. Some insurance firms raise their prices more than others. This usually is determined by the individual company costs and loss ratios.
Top 4 Best Medicare Supplement Health Insurance Companies
Cigna
Cigna happens to be one of the most well-known providers in the United States for Medicare supplement policies. Offering competitive premiums and policies are currently available in 38 states. (Sidenote- some states will limit your supplement benefits available to you if you happen to qualify for Medicare due to a disability, so keep this in mind.)
- One of Cigna’s best offers is the Household Premium Discount plan available if you and your spouse both choose to sign on with policy.
- Cigna is known for its low prices but without sacrificing the quality of your policy. Cigna is known for complementing Medicare Parts A, B, and D and some less common Medicare plans.
- Some of Cigna’s higher plans offer international emergency coverage.
- Often you are free to keep your primary care physician if they accept Medicare, even if they don’t generally accept Cigna themselves.
Humana
Humana is a very stable supplemental insurance provider. Humana offers plans throughout the country.
- Humana offers policies for 9 out of 10 Medicare plans.
- Their website holds a wealth of knowledge, but it is easy to understand and can help you clarify what you are looking for in a coverage plan and estimate the monthly coverage cost.
- Policyholders can easily access a nurse over the phone to verify any health concerns and help you determine if you need to seek medical treatment with your doctor or a hospital.
- Humana offers human-assisted planning.
Blue Cross Blue Shield
Blue Cross Blue Shield is a corporation that provides insurance with over 30 established healthcare providers.
- 95% of hospitals and practices work with Blue Cross Blue Shield, with plans available in all 50 states.
- If you happen to live in a state that places restrictions on Medicare Supplemental policies, generally BCBS can assist.
- Blue Cross Blue Shield has a great search function on their website. This allows customers to find plan options and receive quotes almost instantaneously.
- Due to Blue Cross Blue Shield being associated with many healthcare providers, there is no need to switch doctors as long as your current doctor accepts Medicare already.
- Annual enrollment takes place automatically. This way, you never have to worry about losing coverage due to missing the enrollment date.
- Blue Cross Blue Shield offers many different ways to save and receive discounts on your plan. Some of these include quitting smoking, lowering your cholesterol level, setting up electronic payments, and coverage for you and your spouse, to name a few.
- Blue Cross Blue Shield is known for being one of the top competitors in the Medigap arena.
Aetna
Aetna’s plans cover more than many competitors, with 100% coverage for most costs on Medicare Plan A and B and up to 80% travel emergency coverage.
- International travelers appreciate Aetna’s plans for saving them money in the long-term by protecting against high-cost emergency bills abroad.
- Skilled nursing expenses are covered with most plans, usually an exclusion with standard Medicare supplement plans.
- You do have to call or see an in-person representative. You cannot access coverage online.
- If you decide to cancel your plan, be prepared to write a letter as this is an acceptable way of withdrawing your plan coverage. This can deter people from canceling coverage when they feel they should.
Lange Insurance Consulting
If you still feel a bit overwhelmed with Medicare supplement policies, United Medicare Advisors may help you choose a plan that best suits your personal needs.
Please note that United Medicare Advisors is not an insurance provider, but they can assist in showing you an extensive list of every policy provider that serves in your area.
Having connections with over 27 Medicare supplement insurance policy providers and a reliable system works in 45 states. More than likely, United Medicare Advisors will have the ability to help take away any confusion you might have when dealing with the overall enrollment process.
United Medicare Advisors has an online database of insurance that can help you get coverage rather quickly and help you save money and your time.
Medicare Supplement Rate Increase Wrap Up
Medicare supplement rate increases are only going to continue as healthcare costs continue to rise. Remember to consider your age, location, health habits, marriage, and other variables that can increase or decrease your Medigap plan cost.
Do your research, and learn what your options are and what types of plans offer what. Also, don’t forget that most companies offer discounts for certain things, so take a more in-depth look at comparing companies’ deals.
Lastly, if you find yourself still confused, reach out to us for additional support in plans and coverage options that are best suitable for your situation. Give us a call at 866-319-5886 or fill out our form for a free quote or additional information.