Let’s start with an important comparison. Medigap supplements and milk. When it comes to milk, one brand of 2% milk is basically the same as another brand of 2% milk. Most of us could care less which brand of 2% we buy.
The same thing is true of Medigap supplements. For instance, the most popular Medigap plan, which is Plan G, is sold by a variety of carriers. As is the second most popular Medigap plan, Plan N.
The plans themselves are standardized by Medicare. With Plan G you pay the Part B deductible set by Medicare. In 2026 it’s $283. Ater that, 100% of your Part A and Part B medical expenses are covered. That’s what a Plan G is. A carrier cannot say let’s blow away the competition and make our deductible only $100. They have to go by what is standardized for a Plan G by Medicare.
Let’s clear up another common misunderstanding. With Original Medicare there are no doctor, hospital or other medical networks. It does not matter which carriers supplement you have, if a doctor takes Medicare at all, then any carrier’s supplement will be equally taken. The way it works is that doctors bill Medicare the entire amount and Medicare then collects, from your supplement carrier, you carrier’s share of the billed cost.
So, to summarize: A Medigap Plan G Supplement is the same Plan G supplement with every carrier. Medicare says so. Every doctor and hospital takes every carrier’s supplement equally. Again, Medicare says so.
Then how do you decide? I will answer it this way. If two side-by-side gas stations are posting different gas prices you would generally go with the one that has the better price.
With Medigap supplements there are two factors to consider with their cost. One is the current monthly premium of each carrier, which is easy to compare. The second factor is more challenging, which is projecting how much a carrier’s premiums are likely to go up in the future. This can be like projecting a stock, 50% smart analysis combined with 50% guess work.
Each year carriers submit for a rate price increase from the state insurance commission based upon how the costs for their pool increased. Historically, increases have been modest, typically in the 3% to 5% range. In the post covid years, however, we have seen much higher annual cost increases, usually double digit, sometimes even over 20%. Carriers submit for their rate increases at different times in the year so that you are often also comparing carriers who had already taken their cost increase this year with carriers who have not yet had an increase but who are going to.
Many carriers also offer discounts in their premiums based on their being two people in the same household having a Medigap policy with that carrier. Another very common discount is for simply living with another adult, a spouse or even a roommate. The idea being that their actuaries tell them that people who live with someone else have less medical issues and cost.
Women also pay around 15% less than men do. My female clients always say, “At last, something women pay less for.” There is one state, however, where women pay the same as men do because that state doesn’t allow gender discrimination by state law, ironically in that state working against woman. You can guess which state it is? Hint, it’s our most populace state.
People also pay higher premiums based upon your age. With most Medigap policies the premium amount will go up as you age, usually starting at age 68 or 69 with age increases being typically around 3% per year of age. This age-based increase is in addition to the inflationary increase. Note, in some states this age increase is not allowed.
Another item as an agent I take into consideration in choosing a carrier is the age of the member pool. Carriers will often change out their pool every 5-10 years. The newer the pool then, as a result, the younger the average age of the pool members, which results in lower annual rate increases.
Many people also like to consider the carrier themselves and the carrier’s reputation. How long have they been selling Medigap supplements? Are they a well-known company? What is their financial strength and even what is their Moody rating?
Much like with picking stocks, there are many factors that go into picking a carrier for your Medigap supplement. This is where the skills of an experienced agent, and agency, come to the forefront.
