States with the Most Expensive Medigap Plans

States with the Most Expensive Medigap Plans
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States with the Most Expensive Medigap Plans

States with the Most Expensive Medigap Plans
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Saving for retirement has become more complex and expensive in recent years. According to recent trends, the expense to retire has nearly doubled within the last 25 years. It has even been advised for millennials to consider having over $1 million saved by the time of retirement.

A factor many people may not realize to incorporate into their retirement budget are Medigap plans. Because Medicare does not cover every health cost, retirees typically need to save for supplemental medical plans, known as Medigap, to help cover costs traditional Medicare does not. 

Medigap plans are sold by private companies. A Medigap plan can be altered to fit an individual's specific need, some even offer services such as medical care when traveling outside of the US.

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However, the cost of Medigap fluctuates depending on what state you reside in. By knowing what state you will retire in, it will help you determine how to save for those coming years after work. 

10 Most Expensive States for Medigap Plans

Note: Many Medigap policies are age-related, therefore the older you are, the more you pay. Therefore, these projections are based on a 65-year-old beneficiary. Costs may vary depending on when coverage was purchased - if it was purchased during the Open Enrollment Period, insurance companies can't increase rates based on their health history. Averages are also taken from monthly cost projections for Medigap’s Plan G. 

  1. New York: New York has the highest costing Medigap plans in the country. New York has Guaranteed-Issue year-round, as well as community ratings. These mixed with a high cost of living equals the most expensive Medigap plans. Plan G in New York will have an average monthly cost of $270.  

  2. Maine: Premiums in Maine do not depend on age, therefore those under 65 will qualify for the same premiums as those over 65. Individuals are also able to switch to a different policy with the same or fewer benefits at any time of the year. Maine also follows community rating laws. Because of these rules, Maine offers some of the highest Medigap premiums.  Plan G in Maine would have an average monthly cost of $205 a month. 

  3. Connecticut: Medigap plans in Connecticut are Guaranteed Issue year-round. They also follow community rating laws in this state. Plan G in Connecticut would cost about $200 monthly. 

  4. Minnesota: Similar to many states on the list, Minnesota follows community rating laws. Minnesota offers different options for supplemental insurance rather than traditional plans. You can customize your policy to be similar to Plan G and pay about $190 each month. Many in Minnesota choose Medicare Advantage Plans, making the pool of Medigap policyholders smaller, therefore increasing the rates. 

  5. Vermont: Although Vermont is considered one of the healthiest states, the cost of living is about 15% higher than the national average, increasing Medigap rates. Vermont also follows community rating laws. In Vermont, Plan G has an average monthly cost of about $180.

  6. Washington: For those with pre-existing conditions in Washington, there is only a 3 month waiting period instead of the average 6 months in other states. Washington also follows community rating laws, and policyholders can buy or switch plans at any time. The average monthly cost of a Plan G plan here would be $170 a month. 

  7. Florida: Florida requires carriers to use issue-age rating methods, however, carriers can choose to follow community rating laws if they prefer. Florida has a higher than average cost of care for beneficiaries, therefore, also increasing the cost of Medigap coverage. The cost of Plan G in Florida would be about $170 per month. 

  8. Massachusetts: Massachusetts is one of the three states that follows its own rules for Medigap plans. Therefore, they have their own plan names rather than traditional options. The cost of living here is one of the main factors contributing to the higher costs of Medigap plans. Their 1A plan is the most comparable to Plan G and it would cost about $160 per month. 

  9. California: With California being the third most expensive state in the country, it should be no surprise that their Medigap rates reflect this. California does not have community rating rules, however, they do have the “Birthday Rule” that factors into higher rates. The “Birthday Rule” is a policy that individuals have open enrollment every year for 30 days after their birthday. One can expect to pay $155 for Plan G.

  10. Arkansas: Arkansas follows community rating rules, and it is also the third most unhealthy state. These are two main factors that have driven up their Medigap rates. Plan G in Arkansas would cost you about $150 per month. 

Other States’ Medigap Average Annual Cost

Note: Many Medigap policies are age-related, therefore the older you are, the more you pay. Therefore, these projections are based on a 65-year-old beneficiary. Costs may vary depending on when coverage was purchased - if it was purchased during the Open Enrollment period, carriers can not rate participants based on health. Averages are also taken from the annual cost projections for Medigap’s most popular plan, Plan F. 

Alabama

- Average annual Medigap cost prediction: $1,627

Alaska

- Average annual Medigap cost prediction: $1,851

Arizona

- Average annual Medigap cost prediction: $1,714

Colorado

- Average annual Medigap cost prediction: $1,623

Delaware

- Average annual Medigap cost prediction: $1,730

Georgia

- Average annual Medigap cost prediction: $1,579

Hawaii

- Average annual Medigap cost prediction:  $1,310

Idaho

- Average annual Medigap cost prediction: $1,519

Indiana

- Average annual Medigap cost prediction: $1,668

Illinois 

- Average annual Medigap cost prediction: $1,788

Iowa

- Average annual Medigap cost prediction: $1,468

Kansas

- Average annual Medigap cost prediction: $1,608

Kentucky

- Average annual Medigap cost prediction: $1,670

Louisiana 

- Average annual Medigap cost prediction: $1,897

Maryland

- Average annual Medigap cost prediction: $1,865

Michigan

- Average annual Medigap cost prediction: $1,736

Mississippi

- Average annual Medigap cost prediction: $1,790

Missouri

- Average annual Medigap cost prediction: $1,565

Montana

- Average annual Medigap cost prediction: $1,526

Nebraska

- Average annual Medigap cost prediction: $1,651

Nevada

- Average annual Medigap cost prediction: $1,904

New Hampshire

- Average annual Medigap cost prediction: $1,704

New Jersey

- Average annual Medigap cost prediction: $1,892

New Mexico

- Average annual Medigap cost prediction: $1,464

North Carolina

- Average annual Medigap cost prediction: $1,574

North Dekota

- Average annual Medigap cost prediction: $1,564

Ohio

- Average annual Medigap cost prediction: $1,627

Oklahoma

- Average annual Medigap cost prediction: $1,702

Oregon

- Average annual Medigap cost prediction: $1,468

Pennsylvania

- Average annual Medigap cost prediction: $1,687

Rhode Island

- Average annual Medigap cost prediction: $1,812

South Carolina

- Average annual Medigap cost prediction: $1,625

South Dakota

- Average annual Medigap cost prediction: $1,611

Tennessee

- Average annual Medigap cost prediction: $1,617

Texas

- Average annual Medigap cost prediction: $1,860

Utah

- Average annual Medigap cost prediction: $1,596

West Virginia

- Average annual Medigap cost prediction: $1,596

Washington DC

- Average annual Medigap cost prediction: $1,677

Wisconsin

- Average annual Medigap cost prediction: $1,495

Wyoming 

- Average annual Medigap cost prediction: $1,747

Frequently Asked Questions

Why is Medigap more expensive in certain states?

Many factors impact a state's Medigap rates. However, in regards to the 10 states discussed within this article, 8 of them have community ratings. The other 2 have high costs of living, which naturally increases the cost of plans. However, even if you hava the same plan as someone who lives in their neighborhood, the cost may still vary exponentially. Here are factors that affect Medigap plans:

Location

  • As previously discussed, location plays a major role in the price of Medigap plans and can significantly differ depending on where you reside. For example, a 65-year-old woman living in New York with Plan F will pay around $306 on monthly premiums. If the same woman lived in Texas, she would pay $123 on monthly premiums for the same plan. 

Age

  • Medigap carriers have different rating methods that may use a person's age to determine their rates. Many times, enrolling at the age of 65 will come out cheaper than enrolling at the age of 75. 

Gender

  • Many individuals may be unaware that gender can be a determining factor in the price of Medigap rates. Women tend to pay $10 - $30 less on premiums since women tend to be healthier than men on average. Florida and Texas are a couple of states that follow this pattern. However, not all states use gender to determine rates. For example, in New York, both men and women can expect to pay the same amount for the same plan. 

Tobacco Use

  • Individuals who consume tobacco, whether through chewing, vaping, or smoking, can expect to pay 10% more in premiums than the average policyholder. This is because those who consume tobacco are at a higher risk of incurring medical problems.  

Household Discounts

  • Carries will often offer discounts to those living within the same household. If a carrier offers this discount, individuals can expect to pay 5% - 15% less than average on policies. 

Method of payment

  • Most carriers periphery their policyholders to pay monthly, therefore they will charge an individual who chooses to pay quarterly, semi-annually, or annually. Many carriers will also discount premiums paid electronically, as it is more cost-efficient for them than paying via credit card. 

Time of enrollment

  • The time of year that you enroll is the most significant factor that impacts the cost of your premiums. The optimal time someone should enroll is during your Open Enrollment Period. During this time frame, a carrier is unable to deny you coverage or increase premiums due to pre-existing health conditions. However, outside of the Open Enrollment Period, carriers can deny individuals coverage, increase your premiums due to health conditions, and even make you go through medical underwriting.  

Rate locks

  • Certain carriers will offer a 12-month rate lock. You can benefit from enrolling months before your effective date to prevent any price increases. 

Rate increase history 

  • Before enrolling, you need to research the carrier you are enrolling with. It is especially important to know about a carrier’s rate increase history. Other important things you should look for are carriers with financial ratings of at least an A or higher, as well as carriers that are at least 5 years old. 

How can you find out how much Medigap costs in your state?

Many factors determine the cost of an individual's Medigap plan. In fact, a Medigap plan can range in cost anywhere between $50 to $350 monthly depending on the letter plan. The best way to know your options and make sure you are paying the best price is to fill out an online rate form to get in contact with an agent.

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