Medicare Supplemental Coverage (Medigap Plans) 2020 premium information

With the new year, 2020, some changes came with Medicare and for those who opted for Supplemental Coverage, or Medigap Plans, the biggest one was the fact that new retirees could not purchase a Plan F policy when enrolling into the program.

The significance is due to the fact that though a Medigap Plan F policy was and is one of the more expensive policies a retiree can have, these policies provide full coverage throughout life, which includes covering the Part B Deductible.

Though the Part B Deductible may not seem that important as of now, with a cost of $198.00 per year in 2020, it is expected to inflate at a rate just under 6.00% for the next 8 years according to the Medicare Board of Trustees (MBT).

By 2028 that Part Deductible is projected to be at $315.00 per year and may, unfortunately, continue to grow at that rate.

Thankfully, new beneficiaries of Medicare in 2020 still have the option of a Medigap Plan G policy, which is typically less expensive than a Plan F policy, but the key again, that Medicare Part B Deductible is not covered.

To throw gas on the fire though, as these Medigap Plan F polices were closed to new retirees, the premiums for a Medigap Plan G policy on a national level increased by over 6.00% from 2019.

Florida led the way with a statewide average increase of over 25% in premiums for all ages, while 8 other states experienced over 10% premium increases.

Only 3 states, all “Community Rated” policies experienced a statewide decrease in premiums which were Minnesota (-5.12%) Washington (-2.03%) and Vermont (-0.35%)

For retirees who were already enrolled into Medicare prior to 2020, reside in an “Attained Age” state and already purchased a Medigap Plan G policy, on a national level their premiums increased by over 6.5%.

Again, the state of Florida (25.37%) led the way with increases in premiums while Pennsylvania (16.13%), Texas (15.93%), California (14.77%) and Michigan (13.46%) followed the way.

The bright spots in this change were Rhode Island (0.89%) and North Carolina (1.15%) who had lower than average increase in premiums while another 8 states stayed under a 3.00% rate of inflation.

Historically, Medigap policies have increased on average by just under 4.00% with a step-up in premium cost for age being another 2.20% or greater on a national basis.

Please note that for states that are considered to be “Community Rated” (AR, CT, MA, ME, MN, NY, VT, WA) these step-ups in premiums due to age do not exist.

The trend, though, thanks to the MBT projecting the Part A Deductible to increase on average by 3.57% annually for the next 8 years, does not bode to well for these Medigap Plan G policy premiums remaining low for too much longer.

Planning for retirement, especially your health coverage can be quite complicated as well as expensive. It is highly recommended that you meet with an experienced financial professional who understands the Medicare system fully well before you reach the age of 65 or retirement.

To highlight the significance of why it is prudent to meet with a financial professional, in the state of Rhode Island, for example, there are over 25 different policies one can choose from. The cheapest monthly premium for a non- smoker female can be as low as $110 a month while the most expensive is over $325.00 a month.They both cover the exact same things.

The other key in determining which Medigap Plan is right for you is which Insurance Provider has a proven track record of maintaining its premium over long periods of time. That cheapest policy ($110.00 a month) may have higher than average step-up in premiums each year while that most expensive policy may never increase throughout your retirement.

 

The data within this article combines all Medigap Plan G policies offered within each state except for USAA as it is only offered for those who have served our country. The data also blends the premiums for both Non-Smokers and Smokers and can be significantly cheaper for those who choose not to smoke.

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