Report Finds Cost of Medigap Insurance Increasing As Advantage Plans Decrease

A new MedicareWire report shows the cost of private Medicare insurance has remained flat or decreased, while the average cost of Medicare supplements insurance is steadily increasing.

A new MedicareWire report shows the average cost of Medicare supplement insurance is steadily increasing while Medicare Advantage premiums are decreasing. Many seniors are faced with policy increases as high as 15 percent, the report finds.

On the Medicare Advantage side, the average monthly plan premium is decreasing 11 percent to $21.00 for the 2021 plan year, from an average of $23.63 in 2020. Since 2017, the average monthly Medicare Advantage premium has decreased by an estimated 34.2 percent. This is the lowest that the average monthly premium for a Medicare Advantage plan has been since 2007.

With Medicare supplement rates climbing, many seniors are comparing their coverage with Medicare Advantage and switching to the private option because they feel it is more affordable. “This is where many seniors get into trouble,” says David Bynon, founder at MedicareWire. “What most people don’t realize is that many costs, particularly hospitalization, can be far more expensive under Medicare Advantage.”

To help seniors find an affordable Medicare supplement, MedicareWire is offering a new service that helps people find the lowest-cost Medigap plans available in their area.

More information can be found at:

A recent recent report from the Kaiser Family Foundation backs up Bynon’s claim that Medicare Advantage is not always the most affordable option. Kaiser found that half of all Medicare Advantage enrollees would incur higher costs than beneficiaries in traditional Medicare for a 5-day hospital stay.

Designed to help fill the coverage gaps in the government’s healthcare program, often called original Medicare, Medigap plans are generally considered the premium health insurance option for seniors. But most people find these types of plans difficult to understand and more costly than their Medicare Advantage alternative. Compounding the issue is a lack of price transparency. Most insurance carriers will not disclose their premiums until they capture a prospect’s personal information.

The experts at warn that even though Medicare Advantage plans may appear to cost less, particularly those with a zero-dollar monthly premium, many plans have an out-of-pocket limit as high as $7,550 per year, and the cost of hospitalization can be excessively high.

The confusion over the true cost of original Medicare and a Medigap plan vs. a Medicare Advantage plan is responsible for many beneficiaries making bad coverage decisions. Many experts believe there a general lack of understanding of shared costs with Medicare Advantage plans.

With original Medicare and a supplemental policy, the majority of a beneficiary’s major medical costs are paid in advance through monthly premiums. Conversely, with a Medicare Advantage plan, beneficiaries pay the lion’s share of their costs when they use health care service.

More than half of all Medicare Advantage plans charge in excess of $1,500 for a 5-day hospital stay, while original Medicare, without additional coverage, costs just $1,452 (2021 Part A deductible). This cost is for inpatient hospitalization services alone and does not include the copay and coinsurance costs for the beneficiary’s physician, lab services, diagnostics, medications, and more. So, even though the monthly premiums on Medicare Advantage plans are decreasing, the overall cost to be in a plan is increasing.

“Most seniors can find an ideal balance of cost and coverage for their major medical with a Medigap Plan N policy,” says Bynon. “This plan leaves policy-holders with a small copay when they see their doctor or use the emergency room.” Beneficiaries in this plan also pay Part B excess charges and the annual deductible.

In most areas of the country, a Plan N policy starts at less than $100 per month. Many seniors feel this modest cost allows them to budget their health care costs and avoid huge, unexpected bills in the event of hospitalization or a serious chronic health condition.

Most retirees have a fixed budget, making a $100 per month premium for a Plan N seem high when compared to a zero-dollar Medicare Advantage plan. This is where many experts say people get into trouble when making their Medicare elections. By making steady, predictable payment every month, senior in traditional Medicare, supplemented with a Medigap plan, avoid the unexpected costs that come with hospitalization, skilled nursing care, or home health care.

Full details can be found on the URL above.

Release ID: 88985027