Medicare Supplement plan premiums continue to rise year after year! These annual hikes are making some plans unaffordable and hard to maintain. Many people are experiencing financial strain from steadily increasing costs—even when their health has remained stable. The good news? If you’re relatively healthy, you may have the option to switch your Medicare Supplement plan and/or carriers to get a lower premium. There are also other affordable coverage options available that will still ensure you’re covered. Learn how you can reduce your monthly Medicare Supplement Premiums below.
Understanding Medicare Supplement Plans
Original Medicare (Part A and Part B) includes both hospital and medical coverage. But even with Original Medicare, you’re responsible for certain costs including:
- Part A deductible: The amount you pay before hospital coverage kicks in.
- Part B deductible: The amount you must pay before your medical coverage kicks in.
- Part B coinsurance: your portion is 20% of approved services after meeting the Part B deductible.
- Excess charges: in some states, doctors can bill above Medicare’s approved amount. This can be up to 15%
Medicare Supplement plans, also known as Medigap, fill these gaps and help pay for your portion of Original Medicare covered expenses. The amount the plan covers depends on the Medicare Supplement plan you purchase. In order of coverage, plans include Plan F, Plan C, Plan G, Plan N, Plan L, Plan K, Plan B, and Plan A. The closer you get to A, the less it covers and the lower the premium. While benefits are standardized by plan letter, premiums vary widely between insurance carriers. This is due to a variety of factors, but it is an opportunity to save if your current Medicare Supplement plan premium keeps rising.
Why Medicare Supplement Premiums Keep Increasing
We are all familiar with the continuing increase in healthcare costs. As the price of medical and prescriptions keep going up, so does the price of insurance to cover it. Carriers will obviously raise their rates to keep up with increasing medical costs and inflation. But this is not the only factor that affects prices each year. Carriers also must consider the following:
Overall Claim Experience
Even if you do not have an insurance claim or general costs to seek care stay stagnant (in a pretend world), there can still be a premium increase. Overall policyholder claims for a carrier can affect everyone’s premiums. Some insurance companies can get hit hard with more medical claims than others. When this happens, they can adjust their premium prices across the board.
Policyholder Risk Pool
A risk pool is comprised of a group of policyholders that are enrolled in a plan. Health insurance companies calculate premiums based on the overall risk of the individuals grouped in a plan. If the pool of policyholders in any given plan is shrinking, aging, or collectively unhealthy, then they will increase rates more. A good example of this is Medigap Plan F and Plan J. Plan F discontinued for anyone who turns 65 on or after January 2020. Plan J has been discontinued since 2010! This means that the risk pool of Plan F and Plan J has been shrinking and getting older each year. As a result, these rates have been increasing dramatically year after year. We have helped many Plan F enrollees change plans when their premiums hit over $400 per month!
Understanding these factors can help you find ways to save. As you can see, some carriers may need to charge higher premiums than others for the same exact plan to cover their risk. And some plans are excessively more expensive, without getting extra coverage.
How to Lower Your Medicare Supplement Premium
Now that we know how carriers determine their rates, we can dive into how you can save and reduce your Medicare Supplement premiums. Even if you remain healthy, your premium can still increase on your current plan. Sometimes significantly. This is especially true if you are on Plan F with any company!
Let’s dive into some cost savings strategies. Medicare Supplements do not have the same open enrollment times as Medicare Advantage plans. You can join or switch a Medicare Supplement plan at any time during the year. The only caveat is that you may have to go through underwriting if don’t have a guaranteed issue right. This is not an issue if you are relatively healthy.
Our first savings strategies assume you are relatively healthy and can pass underwriting. We will cover more options later in this article if you cannot get approved with underwriting.
Shopping Medicare Supplement Carriers
If you have been on your current plan for a while, then you may benefit from shopping other carriers. Your specific Medicare Supplement plan might be cheaper with a different company. This is true even if it was the cheapest option when you originally enrolled. Many people shop their car insurance every few years for this exact reason! Why not use the same strategy for your Medicare Supplement?
Remember, Medicare Supplement plans are standardized. The exact same plan must have the exact same coverage with every company. This makes shopping easy! You can shop different insurers to find a lower price for the same coverage. It is best to reach out to a licensed agent that is contracted with multiple carriers. They can help you compare your plan with all companies in your area. If there is a cheaper option, then you can switch anytime with underwriting or a guaranteed issue right.
Changing Medicare Supplement Plans
If you need to save even more or are on a plan that increased too much, then changing medigap plans may be a better option. Changing plans means going from a high letter medigap plan to a lower letter medigap plan. So going from Plan F to Plan G, Plan G to Plan N, Plan N to L, or even a bigger jump between plans. The coverage changes as you switch plans, but so does the premium.
If you take this savings approach, then you will still want to shop and compare all carriers as well. This way you are using both cost savings strategies together. You could save a significant amount if you are still on Plan F or Plan J! Since both of these plans were discontinued, they are getting hit with the biggest premium increases. This trend will continue to get worse. If you do have Plan F or Plan J, it is better to make this change sooner than later while you are still healthy enough to pass underwriting!
Who can avoid underwriting when switching plans?
Some carriers may allow you to switch to a lower Medigap plan without underwriting. This option varies by carrier and is not guaranteed. If your insurance company does allow this switch, it is usually a quick change request.
There is also something called “The Birthday Rule” for some states. If you live in one of 10 states listed below, then you can switch plans without underwriting each year around your birthday! This rule allows you to switch to a new carrier or a new plan, as long as the plan has the same or lesser coverage. You can do this as long as you already have a Medigap plan.
| California | Idaho | Illinois | Maryland | Oregon |
| Nevada | Louisiana | Kentucky | Utah | Virginia |
If you cannot pass underwriting and have expensive premiums, there are other options to consider below.
Other Medicare Cost Savings Options
We understand that not everyone can pass underwriting and need alternative options to lower premiums. If you are struggling with high Medicare Supplement premiums, you can consider switching to a Medicare Advantage plan during the Annual Enrollment Period. Many people initially choose Medigap coverage because they want flexibility to seek care without a network. But as Medicare Advantage plans have increased in popularity, more competitive plans have emerged. Mainly, there are now several Medicare Advantage PPO “look-a-like” plans that can compete with Medicare Supplements.
Medicare Advantage plans are usually low to $0 premiums and have maximum out-of-pocket to limit medical costs. A PPO plan lets you go to out-of-network providers so you can still maintain flexibility. This can help you reduce your monthly costs, while maintaining flexibility when seeking care. Medicare Advantage plans usually include extra benefits as well; including dental, vision, hearing aids, gym memberships, Part B giveback, and an over-the-counter allowance for toothpaste, vitamins, etc. All of this can add more savings.
Saving Money, But Ensure You are Covered!
Switching Medicare Supplement plans isn’t about chasing the cheapest option. You need to make sure any plan change still covers what you need the most. Both Medicare Supplements and Medicare Advantage plans must at least cover what Medicare covers, but the plans can still differ in premiums, deductibles, coinsurance/copays, and extra benefits. It is important to compare all options to find a plan that fits your health and budget needs. Using an independent licensed agent is the best way to get unbiased help and compare all plans and once.
Ready to explore your options? Speak with a local, licensed agent to see how much you could save today.
