Medigap Premiums Rise as Medicare Advantage Plans Fall, 4th Year in a Row

A new MedicareWire report shows the rising cost of Medigap supplemental Medicare insurance, while the average Medicare Advantage plan premium is expected to decrease for the fourth straight year.

As the 2021 Medicare Open Enrollment season nears, a new MedicareWire report shows the rising cost of Medigap supplemental Medicare insurance, while the average Medicare Advantage plan premium is expected to decrease for the fourth straight year.

Earlier this week, ABC affiliate featured the MedicareWire report, which shows how the level of coverage, combined with a person’s age, zip code, and use of tobacco all influence monthly premiums of Medicare Supplement policies.

“This isn’t the case with Medicare Advantage plans,” says David Bynon, publisher at MedicareWire. “Although the county you live in does influence monthly premiums and the availability of Advantage plans, age, use of tobacco, and pre-existing conditions are not factored into what you pay.”

During the annual open enrollment period, Medicare beneficiaries can join a Medicare Advantage plan, known as Medicare Part C, without going through medical underwriting. This is not the case with Medicare supplemental insurance, which generally only has guaranteed-issue protections when a beneficiary turns age 65.

Medicare’s Annual Election Period (AEP), which runs from 15 October through 7 December each year, is expected to see a record number of Medicare Advantage plan enrollments. The increase is due, in part, to the number of baby boomers aging into Medicare, but is also a result of increasing supplemental insurance costs.

Original Medicare, which is divided into two parts, A and B, generally only covers about 80% of a Medicare beneficiary’s major medical costs. These costs do not include routine care for such things as vision, hearing, and dental, and only recently started covering some alternative medicine treatments, like acupuncture. Plus, traditional Medicare does not cover a beneficiary’s outpatient medications. This, too, is an additional cost that most Medicare Advantage plans include.

Like Original Medicare, supplemental insurance policies are not permitted to cover the aforementioned routine medical and prescription benefits. “This is a further reason for the price sensitivity of Medigap plans,” Bynon explains, “and exactly why so many healthy baby boomers are opting for Advantage plans that offer routine care.”

Many retiring baby boomers are already accustomed to receiving health coverage through their employer’s group health coverage. As most group health plans use the shared-cost HMO (health maintenance organization) model, these beneficiaries are already comfortable sharing costs, even if they are not self-reporting better health.

For many seniors, Medicare Supplement insurance is completely out of reach due to their health situation. According to Bynon, “Before 2021, people with end-stage renal disease (ESRD) could not enroll in a standard Medicare Advantage plan. Where available, ESRD patients were permitted to enroll in a Medicare Special Needs plan. However, as of 1 January 2021, this restriction is lifted. Under the terms of the 21st Century Cures Act, people with ESRD can enroll in Medicare Advantage plans, and the Centers for Medicare and Medicaid Services (CMS) expects as many as 40,000 people will do so. This epic change is especially beneficial to people under age 65 who are living with ESRD. This population does not share the same guaranteed-issue right to Medigap coverage as 65 and over beneficiaries.”

According to the Kaiser Family Foundation, “The share of Medicare beneficiaries in Medicare Advantage plans varies across counties from less than 1% to more than 60%”. The huge disparity is due, in part, to the availability of Advantage plans vs. Medigap plan premiums. Rural counties generally have fewer Advantage plans, while in dense urban areas plans are plentiful.

MedicareWire offers tools and free services to help seniors find the best Medicare health insurance for their personal health and financial situation. The company’s Medigap Finder ( tool, for example, helps seniors compare Medigap insurance plan quotes without exposing their personal information to an insurance sales organization.

Release ID: 88977287