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Average Cost of Medigap Plan Insurance

Despite substantial taxpayer subsidies, the average out-of-pocket costs for health care for households with at least one member on Medicare has been increasing for years. The average out-of-pocket spending for health care, including Medicare supplement premiums, or Medigap premiums, is between 12.9 and 16.4 percent of total household budgets, as of June 2011, according to the Kaiser Family Foundation.

  1. Medicare Supplement Overview

    • Medicare doesn't cover everything. Medicare Part A has significant deductibles and limitations, for example, that beneficiaries would have to make up out of their own pockets in the event of a hospitalization. These costs can add up to thousands of dollars, unless the individual purchases a Medicare supplement, or Medigap, insurance policy. The beneficiary is simply trading the possibility of a large deductible payment for gaps in Medicaid coverage for the certainty of a higher premium. Although monthly out-of-pocket costs are higher, premiums are much easier to budget for than having to pay the full deductible for Medicare Part A.

    Types of Medigap Plans

    • The benefits of different types of Medigap plans are standardized across the country by law. There are several different kinds of plans, each providing a different mix of benefits and coverages. These standardized plans are designated A through N, and every company selling them must cover the same things in the plan. Premiums vary widely, nationwide, depending on the type of plan and the market in which the plan is sold.

    Average Costs

    • Generally, you should expect to pay between $85 per month and $250 per month for Medigap coverage, depending on where you live and the type of plan you select. Some markets, such as New York, have higher premiums than others, even though coverage is identical with another plan in Nebraska. You must enroll in both Medicare Part A and Part B to get a Medigap plan. Part A is free, but there is a premium for Part B -- typically $96.40 per month, so be sure to add both the Part B premium and your Medigap premium to your monthly budget.

    Determining Costs in Your Area

    • Because premiums vary so widely, region by region, you will want to learn what Medicare supplemental coverage costs in your own zip code. You can get a price breakdown on authorized plans sold in your own zip code on the Medicare.gov website (see Resources).

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