Medical health insurance by Medicare gives essential monetary protections for 67 million Individuals. Nonetheless, individuals with Medicare can face substantial cost-sharing necessities for Medicare-covered companies, and in contrast to most medical insurance insurance policies, Medicare has no restrict on out-of-pocket spending. Many Medicare beneficiaries have modest incomes and little financial savings to attract on to pay for costly medical care, and medical debt is a priority for a couple of in 5 (22%) older adults. In gentle of those details, the Medicare complement insurance coverage market, often known as Medigap, performs a key function in serving to beneficiaries afford medical care by limiting their publicity to catastrophic out-of-pocket medical prices.
This transient presents details about Medigap, together with the traits of Medicare beneficiaries with a Medigap coverage, variation in Medigap enrollment by state, and Medigap premiums. This evaluation relies on information from the Nationwide Affiliation of Insurance coverage Commissioners (NAIC) compiled by Mark Farrah Associates (MFA), by the tip of 2023 (the latest yr of annual information) and the Facilities for Medicare & Medicaid Providers (CMS) Medicare Present Beneficiary Survey 2022 Survey File information. See strategies for extra data. A companion transient Medigap Might Be Elusive for Medicare Beneficiaries with Pre-Current Circumstances analyzes federal and state assured subject guidelines and the way they influence beneficiaries’ entry to Medigap.
Key Takeaways
In 2022, 12.5 million, or 4 in 10 (42%) individuals in conventional Medicare had a Medigap coverage. In comparison with all conventional Medicare beneficiaries in 2022, conventional Medicare beneficiaries with a Medigap coverage usually tend to be White, have larger incomes, and report higher well being. Amongst conventional Medicare beneficiaries, a smaller share of beneficiaries beneath age 65 with disabilities have a Medigap coverage in comparison with beneficiaries ages 65 and older (7% vs 46%), due partly to a scarcity of Medigap assured subject protections beneath federal legislation for these beneath age 65.
The share of conventional Medicare beneficiaries with Medigap varies by state, starting from 9% in Hawaii to 67% in Iowa. States with larger Medigap enrollment are usually within the Midwest and plains states, the place comparatively fewer beneficiaries are enrolled in Medicare Benefit plans.
Medigap Plan G, which is probably the most complete Medigap coverage obtainable to new policyholders, was the most well-liked plan sort in 2023, accounting for 39% of all policyholders, or practically 5.3 million individuals. Half F, which has the identical advantages as Plan G but in addition covers the Half B deductible, has the second largest share of Medigap policyholders in 2023 (36% or practically 4.9 million individuals), though it has not been obtainable to new beneficiaries since 2020.
The common month-to-month premium amongst present Medigap policyholders was $217 in 2023, or $2,604 for a full yr of protection, in line with KFF evaluation of NAIC information from MFA.
Medigap premiums fluctuate by state and by coverage sort. For instance, in 2023, the common month-to-month premium for individuals enrolled in Plan G was $164 ($1,968 for 12 months), however this different from a low of round $140 in D.C., Hawaii, and New Mexico to $236 in New York.
Overview of Medigap
Medicare beneficiaries can select to get their Medicare Half A and B advantages by the normal Medicare program or a Medicare Benefit plan, similar to a Medicare HMO or PPO. Among the many practically 60 million individuals enrolled in Medicare Half A and B in 2022, half (50%) of Medicare beneficiaries had been in conventional Medicare. Most conventional Medicare beneficiaries had some type of extra protection that helps to cowl the cost-sharing necessities beneath the profit design of conventional Medicare, similar to Medigap, employer-sponsored retiree advantages, or Medicaid.
Medigap is non-public supplemental medical insurance that helps cowl Medicare Half A and Half B cost-sharing necessities, together with deductibles, copayments, and coinsurance. Medigap is a key supply of supplemental insurance coverage for individuals in conventional Medicare with out employer-sponsored retiree advantages or Medicaid (Medigap doesn’t work with Medicare Benefit). In 2022, 12.5 million Medicare beneficiaries, or 42% of all conventional Medicare beneficiaries, had a Medigap coverage.
By serving to to cowl Medicare’s cost-sharing necessities, Medigap insurance coverage limits the monetary publicity of Medicare beneficiaries and gives safety towards catastrophic bills for Medicare-covered companies. Medigap insurance policies additionally make well being care prices extra predictable by spreading prices over the course of the yr by month-to-month premium funds and cut back the paperwork burden for beneficiaries related to medical payments. Based on KFF evaluation, conventional Medicare beneficiaries with Medigap are much less prone to report cost-related issues than comparable Medicare Benefit enrollees or conventional Medicare beneficiaries with out supplemental protection.
Traits of Folks with Medigap
A bigger share of conventional Medicare beneficiaries with Medigap than conventional Medicare beneficiaries general are White (94% vs 86%), have incomes of $40,000 or above (54% versus 47%), and report their well being as glorious, excellent, or good (88% versus 82%) (Determine 1; See Appendix Desk 1 for a comparability of Medigap enrollee traits to beneficiaries with different forms of protection).
Medicare beneficiaries with pre-existing medical situations or who’re beneath age 65 and qualify for Medicare primarily based on having a long-term incapacity could have problem buying a Medigap coverage. Federal legislation affords a one-time, six-month Medigap open enrollment interval for beneficiaries ages 65 and older once they age on to Medicare, however federal and state legal guidelines place very restricted restrictions on the observe of medical underwriting exterior of this preliminary open enrollment interval. Furthermore, the assured subject proper beneath federal legislation doesn’t lengthen to Medicare beneficiaries beneath age 65 who qualify for Medicare on the premise of getting a long-term incapacity. That is one cause why a a lot smaller share of conventional Medicare beneficiaries beneath age 65 and older have a Medigap coverage in contrast with individuals age 65 and older (7% versus 46%). As well as, individuals beneath age 65 usually tend to don’t have any supplemental protection in comparison with individuals 65 and older (17% vs. 10%) and extra prone to qualify for Medicaid (65% vs. 10%). Whereas most states (36 states) transcend federal legislation and require Medigap insurers to supply a minimum of one coverage to individuals beneath age 65 throughout an preliminary open enrollment interval, premiums in these states fluctuate and could also be larger for individuals beneath age 65 (see part beneath Premium Guidelines Differ Throughout States That Require Insurers to Provide at Least One Medigap Coverage Kind to Folks Below Age 65 for extra particulars).
Moreover, Medigap premiums might be pricey (as mentioned in additional element beneath), making it harder for individuals with decrease incomes to afford a Medigap coverage. This, together with comparatively excessive supplemental protection beneath Medicaid, may very well be a think about decrease enrollment of Black and Hispanic Medicare beneficiaries in Medigap relative to Medicare Benefit, since Black and Hispanic beneficiaries have decrease revenue and belongings in comparison with White beneficiaries. Black and Hispanic beneficiaries are additionally extra prone to report comparatively poor well being and have larger prevalence charges of sure continual situations that will be labeled as pre-existing situations by Medigap insurers, which may additionally make it troublesome for people in these teams to acquire Medigap, significantly exterior of assured subject durations when medical underwriting shouldn’t be allowed.
Medigap Enrollment Varies by State
Medigap enrollment varies broadly by state: from 9% of conventional Medicare beneficiaries in Hawaii to 67% in Iowa, primarily based on KFF evaluation of 2023 NAIC information (Determine 2, Appendix Desk 2). In eleven states, greater than 50% of Medicare beneficiaries in conventional Medicare have a Medigap coverage. States with larger Medigap enrollment are usually within the Midwest and plains states, the place comparatively fewer beneficiaries are enrolled in Medicare Benefit plans.
What Are the Totally different Varieties of Medigap Insurance policies and What Advantages Do They Cowl?
There are 10 various kinds of Medigap insurance policies (labeled A by N), every having a unique, standardized set of advantages (Appendix Desk 3).
Plan G is the most well-liked Medigap coverage, accounting for 39% of all policyholders, or practically 5.3 million individuals, in 2023 (Determine 3). Plan G is probably the most complete coverage obtainable to new policyholders, overlaying the Half A deductible and all value sharing for Half A and B lined companies, however not the Half B deductible. Plan G has turn out to be the most well-liked plan since plan F, which covers all the identical advantages as Plan G in addition to the Half B deductible, can now not be bought to new beneficiaries who turned 65 on or after January 1, 2020 as a consequence of a change in legislation (Plan C is also now not obtainable as of that date as a result of it additionally lined the Half B deductible). Plan F has the second largest share of Medigap enrollment, overlaying 36% of Medigap policyholders or practically 4.9 million individuals. Plan N has the third largest share of Medigap enrollment, overlaying 10% of policyholders or practically 1.4 million individuals. Plan N is just like Plan G, besides that there are Half B copayments for some workplace visits and a few emergency room visits, and it doesn’t cowl Half B extra expenses.
Who Can Purchase a Medigap Coverage and When?
Federal legislation gives assured subject protections for Medigap insurance policies throughout a one-time, six-month Medigap open enrollment interval for beneficiaries ages 65 and older, which begins the primary month of Medicare Half B protection, in addition to for sure qualifying occasions. A few of these qualifying occasions could embody cases when individuals involuntary lose sure forms of supplemental protection, similar to when an employer cancels retiree protection or when a Medicare Benefit plan discontinues protection of their space. The federally assured one-time, six-month Medigap open enrollment interval doesn’t lengthen to beneficiaries who qualify for Medicare beneath age 65.
Beneficiaries even have assured subject rights throughout specified “trial” durations, similar to the primary yr that adults ages 65 and older are in Medicare Benefit. Throughout that point, older adults can strive a Medicare Benefit plan, and in the event that they disenroll throughout the first yr, they’ve assured subject rights to buy any Medigap coverage that’s bought of their state.
Throughout these outlined durations, Medigap insurers can’t deny a Medigap coverage to any qualifying applicant primarily based on components similar to age, gender, or well being standing. Additional, throughout these durations, Medigap insurers can’t fluctuate premiums primarily based on an applicant’s pre-existing medical situations or exclude protection for a pre-existing medical situation (i.e., medical underwriting).
Nonetheless, beneath federal legislation, Medigap insurers could impose a ready interval of as much as six months to cowl companies associated to pre-existing situations if the applicant didn’t have a minimum of six months of prior steady creditable protection. For qualifying occasions that set off assured subject rights, individuals ages 65 and older in Medicare usually have 63 days to use for a Medigap coverage.
States can select to determine Medigap shopper protections that go additional than the minimal federal requirements. 4 states – Connecticut, Massachusetts, Maine, and New York – require Medigap insurers to supply insurance policies both constantly all year long or as soon as per yr to Medicare beneficiaries age 65 and older with out regard to their medical situations. Different states have additionally expanded on the federal minimal requirements to permit beneficiaries to buy Medigap on a assured subject foundation after sure qualifying occasions or for beneficiaries beneath 65 with disabilities to buy Medigap throughout an preliminary open enrollment interval. (For extra data on qualifying occasions and extra Medigap protections, see Medigap Might Be Elusive for Medicare Beneficiaries with Pre-Current Circumstances for extra particulars.)
Premiums Differ Throughout Medigap Insurance policies
States set up sure guidelines for Medigap insurers, together with tips on how to set premiums. Premiums could also be primarily based on components similar to a policyholder’s age, smoking standing, gender, and residential space, even throughout open enrollment and assured subject durations.
Premium prices are one of many major issues for individuals with Medigap. KFF focus teams point out that whereas most beneficiaries with Medigap are glad with their protection and like a lot of its parts, together with protection of most or all of Medicare’s cost-sharing necessities, comprehensiveness of their protection, management over their well being care, and skill to see any supplier they need (by advantage of being in conventional Medicare reasonably than Medicare Benefit), some individuals famous their premiums had been costly or value greater than they want.
There are three completely different ranking techniques that may have an effect on how Medigap insurers decide premiums: group ranking, issue-age ranking, or attained-age ranking.
Neighborhood ranking: The identical premium is usually charged to everybody, no matter age or gender. Premiums could go up due to inflation and different components, similar to smoking standing and residential space, however not as a consequence of age.
Difficulty-age ranking: The premium relies on the age of the beneficiary once they buy the Medigap coverage. Premiums are decrease for individuals who purchase at a youthful age and won’t change as they become old, however premiums could go up due to inflation and different components, similar to smoking standing and residential space, however not as a consequence of age.
Attained-age ranking: The premium relies on a beneficiary’s present age, so the premium goes up as they become old. Premiums are decrease for youthful consumers however improve as they become old, which implies that premiums often is the least costly at first however can finally turn out to be the most costly. Premiums may go up due to inflation and different components, similar to smoking standing and residential space.
States can impose laws on which of those ranking techniques are permitted or required for Medigap insurance policies bought of their state. Presently, 9 states (AR, CT, ID, MA, ME, MN, NY, VT, and WA) require premiums to be group rated amongst policyholders ages 65 and older (Appendix Desk 4). 4 states – Arizona, Florida, Georgia, and Missouri – allow issue-age ranking however prohibit attained-age ranking, whereas the vast majority of states (37 states and D.C.) permit any ranking system.
Premium Guidelines Differ Throughout States That Require Insurers to Provide at Least One Medigap Coverage Kind to Folks Below Age 65
There are 36 states that require insurers to make a minimum of one form of Medigap coverage assured subject throughout an preliminary open enrollment interval for beneficiaries beneath age 65, which isn’t a federal requirement. In these states, guidelines fluctuate as as to whether the identical premiums are required for individuals beneath ages 65 and folks ages 65 and older.
Amongst these 36 states, 21 states restrict how a lot insurers can cost in premiums for beneficiaries beneath age 65. (Determine 4, Appendix Desk 5). The remaining 15 states don’t have any specified guidelines on premium prices.
Common Medigap Premiums Amongst Present Policyholders
The common month-to-month Medigap premium throughout all present Medigap policyholders (together with individuals beneath 65, individuals who smoke tobacco, and people who find themselves in a excessive deductible or SELECT plan) was $217, starting from $191 in Alaska to $267 in New York in 2023 (Determine 5, Appendix Desk 4).
Common premiums additionally fluctuate significantly relying on the coverage sort. For Plan G, the most well-liked and complete plan obtainable to new enrollees, the common month-to-month premium amongst present policyholders in 2023 was $164, and ranged from $140 in Washington D.C. and $141 in Hawaii and New Mexico to $236 in New York (Determine 6, Appendix Desk 4). For Plan F, the plan with the second highest enrollment (however now not obtainable to new enrollees as of 2020), the common premium amongst present policyholders is $274, starting from $214 in Vermont to $313 in New York. The distinction in premiums could also be due partly to the truth that Plan F covers the Half B deductible, which Plan G doesn’t cowl, however may be associated to different components, as described beneath.
Within the 5 states with the most costly month-to-month premiums on common in 2023 for Plan G, 4 states (NY, CT, ME, WA) require group ranking, whereas the fifth (FL) solely permits issue-age ranking. Additional, the three states with highest premiums – New York, Connecticut, and Maine – have steady or annual assured subject protections. For Plan F, nonetheless, whereas the state with the very best month-to-month premium is New York, the 4 states with the following highest premiums (IN, NE, MD, and WV) will not be group rated and do not need assured subject protections.
General, for common Medigap premiums throughout all present policyholders, there may be not a transparent relationship between states with group ranking guidelines or assured subject protections and having larger premiums. For instance, New York has the very best common month-to-month premium, whereas Maine is barely above the nationwide common, and Connecticut and Massachusetts are concerning the nationwide common. Variations in common premiums throughout states might be as a consequence of a number of components, together with Medigap ranking necessities, assured subject necessities, the variety of Medicare beneficiaries, the traits of the Medicare inhabitants, Medicare Benefit penetration, urbanicity of the county, and well being care value and utilization patterns. Attributable to limitations within the information, we’re unable to guage variations in common premiums throughout gender, age, or smoking standing.
“New or Modern” Advantages in Medigap Insurance policies
Based on federal pointers, Medigap insurers could provide insurance policies that cowl “new or progressive” advantages which are cost-effective, along with the standardized Medigap advantages supplied in a given coverage. These new or progressive advantages can embody imaginative and prescient, dental, and listening to advantages, entry to a 24/7 nurse telephone line, entry to Silver Sneaker health advantages, and different wellness advantages. Medigap insurance policies that embody these kinds of extra advantages usually have barely larger premiums than the usual model of the coverage.
The scope of those advantages varies throughout coverage sorts and insurers. For instance, some insurance policies embody protection of particular dental companies, similar to 100% protection of dental diagnostic evaluations, preventive companies, and diagnostic radiographs (x-rays), and 80% of some restorative companies from in-network dentists, although they might not cowl extra complete dental companies. For different insurance policies, reasonably than dental insurance coverage, enrollees can obtain reductions off of nationally contracted charges for a variety of dental companies that aren’t lined by conventional Medicare, together with cleanings, exams, fillings and crowns, from in-network dentists.
These advantages, which aren’t obtainable usually in conventional Medicare, could also be supplied to assist Medigap insurers compete for enterprise with Medicare Benefit plans, practically all of which supply dental, imaginative and prescient, and listening to, in addition to different further advantages. KFF focus teams present that the supply of additional advantages in Medicare Benefit plans, similar to dental and imaginative and prescient, is a serious consideration when beneficiaries make their Medicare protection decisions. Furthermore, KFF’s evaluation of tv advertisements from 2022 confirms that messaging about further advantages is a crucial instrument to draw enrollees, and had been talked about in additional than 90% of advertisements selling Medicare Benefit. Dental protection was probably the most marketed further profit (included in 84% of advertisements), adopted by protection of imaginative and prescient (63%) and listening to (56%) companies.
Strategies
This evaluation makes use of information from Well being Protection PortalTM, a market database maintained by Mark Farrah Associates, which incorporates data from the Nationwide Affiliation of Insurance coverage Commissioners (NAIC). We used the “Medicare Complement Market Knowledge” report (accessed June 14, 2024) for this evaluation. For the evaluation of Medigap enrollment and premiums, territories, together with Puerto Rico, are excluded. For Medigap enrollment general, information reported to the Division of Managed Well being Care in California (536,659 beneficiaries in 2023) is included in general California enrollment counts, however this information shouldn’t be included for evaluation of enrollment by coverage sort. For the evaluation of common premiums amongst present Medigap policyholders, solely information that’s reported to the NAIC is included as a result of information from the California Division of Managed Well being Care doesn’t embody details about premiums or coverage sort. For that evaluation, KFF excluded insurance policies which have unfavourable or zero {dollars} in premiums. Premiums for present policyholders embody those that smoke tobacco and people with excessive deductible or SELECT insurance policies.
For traits of Medicare beneficiaries with Medigap versus these with Medicare Benefit, KFF used the Facilities for Medicare & Medicaid Providers (CMS) Medicare Present Beneficiary Survey 2022 Survey File information. Knowledge excludes beneficiaries with Half A solely or Half B just for many of the yr or Medicare as a Secondary Payer. Individuals of Hispanic origin could also be of any race however are categorized as Hispanic; different teams are non-Hispanic.
