Seniors Increasingly Choose Lower Cost Medicare Supplement Plan Options

A new report finds that seniors opting for Medicare Supplement insurance coverage are increasingly choosing plans with lower costs. During the first six months of 2022, 38% of seniors who turned 65 and opted for Medicare Supplement, often referred to as Medigap, selected Plan N, according to the report. That compares to 36.5% in 2021. Medicare Supplement plan options are becoming increasingly important.

While Medigap Plan G remained the favorite choice among seniors joining Medicare, the percentage selecting this coverage dropped from 55% in 2021 to just over half (51%) for the first half of 2022. A more recently introduced lower-cost option, High Deductible Plan G, was selected by around 6% of the seniors.

The new data comes from an analysis of Medicare insurance statistics gathered by the American Association for Medicare Supplement Insurance (AAMSI). The organization worked with an independent organization, MedicareFAQ,  to analyze over 3,000 individuals who enrolled between January and June 2022.

Medigap Plan N Savings Potential

First introduced in 2010 as a way to offer lower-cost plan choices, Medigap Plan N is an option available in most states. The plan covers 100% of Medicare Part B coinsurance costs, with the exception of a $20 copay for office visits, a $50 copay for emergency room visits and potential excess charges the patient must pay for.

Offered by numerous insurance companies, premiums for Plan N offer potential savings. For example, a Chicago-area woman turning 65 could pay as little as $81 per month. The highest cost among the 25 different insurers offering coverage is $199 per month.

The same woman considering Medigap Plan G coverage could find costs ranging from $110 to $240 per month. While Medicare plan benefits are generally identical for each of the particular plan letters, insurers set their own rates. In addition, some offer discounts when both spouses or partners obtain coverage, reducing costs by as much as 15 percent. 

Why Seniors Are Increasingly Selecting Medicare Supplement Plan Options With Lower Cost Options

Advertisers spend hundreds of millions of dollars on television ads promoting Medicare plans. Many of these plans are touted as having no cost. Ads typically refer to the best Medicare Advantage (Medicare Part C) plans. Increasingly these plans also make available a bevy of additional no-cost benefits ranging from eye and dental care to free transportation to doctor visits.

By comparison, Medicare Supplement insurance plans are not free, but they do offer certain benefits that can make them more attractive than Medicare Advantage. And, in certain parts of the country, few Medicare Advantage plan options exist. Still, when the perception exists that Medicare insurance can be free, consumers can be expected to seek lower-cost options.

High Deductible Plan G Offers Significant Savings

High Deductible Plan G (HDG) is a relatively new option for Medicare beneficiaries. It is only available to those who turned 65 or went on Medicare on or after January 1, 2020. The plan comes with a high deductible ($2,490 for 2022) but is highly appealing to those looking to save money. It can be especially beneficial for those who don’t anticipate many medical needs during the year.

Fewer Medicare Supplement insurers tend to offer HDG plans. In Chicago, you can find plans from only 12 different insurers. A 65-year-old woman living in Chicago will find HDG premiums ranging from $32 to $68 per month. These plans work with regular Medicare Part A and B. As with all Medigap plans, you can use any doctor or hospital that accepts Medicare.

Two Ways to Reduce the Cost of Medicare Supplement Plans

Consumers might not know how many different insurers offer Medigap policies in their area. For example, a Chicago-area senior has over 25 different insurers offering Plan G coverage. By comparison, only five insurers offer Plan G or N coverage in Manhattan, New York. Only two currently offer High Deductible Plan G for metro New York. While a Chicago woman turning 65 could find Plan N coverage for as low as $88, in New York City the least expensive plan will cost $209 per month.

The first way to reduce what you’ll pay is to spend the time to shop and compare. In places where many insurers offer coverage, no single insurance call center or agent will ever represent all the available companies. Thus, it is up to a prospective buyer to ask for a list of company names the agent can offer you.