Medigap Insurance Companies

Medicare was developed in the 1960s to provide senior citizens and disabled individuals with health care they could actually afford. At the time private insurance companies could not provide these population groups with affordable rates for health care, so the government stepped in to create Medicare. The program is fully funded by the federal government. The Centers for Medicare and Medicaid Services (CMS) guides the Medicare program and derives its funding from income tax on all employed individuals in the United States.

Over time, health care costs have skyrocketed and gaps have begun to appear in the coverage provided by Medicare. These gaps exist when beneficiaries have expenses that outpace the amount which Medicare is willing to reimburse for those services. In order to counter these gaps and help seniors avoid paying high costs out of pocket, Medigap insurance plans were developed as extra coverage that seniors could purchase to help with extra costs related to their medical care.

Medigap insurance plans are not run in the same fashion that Medicare Part A and B are conducted. The CMS contracts with private insurance companies who directly administer the plans that the CMS has developed. Currently there are 10 Medigap plans available for seniors to choose from. These plans include:

  • Plan A
  • Plan B
  • Plan C
  • Plan D
  • Plan F
  • Plan G
  • Plan K
  • Plan L
  • Plan M
  • Plan N

These plans are offered by private Medigap insurance companies and can vary depending upon the state a beneficiary lives in. No company is required to provide all the policies to its beneficiaries, but is instead free to pick and choose the plans they will provide in their region or state.

Although Medigap insurance companies do not have control over the content of any plan, a privilege which goes to the CMS, they do have control over the pricing of the plans. There are three general pricing strategies used by Medigap insurance companies that determine the monthly premiums that beneficiaries will pay. These strategies include:

  • Community Rated Pricing: Everyone with the same plan pays the same price regardless of age. Prices only changed based upon inflation and other outside factors.
  • Issue Age Rated Pricing: Individuals pay a premium based upon their age when they purchase the plan. The younger an individual is, the lower the premium. Prices will not go up because of age, but will increase due to inflation and other factors.
  • Attained Age Rated Pricing: Premiums are determined based upon an individual’s age at the time of purchase and goes up as the beneficiary ages. Inflation and other factors can also lead to premium increases.

Medigap insurance companies vary from state to state and not all companies operate in every state. The best way to find the companies that offer Medigap policies in your area is to go to the official site of Medicare. Here individuals can enter basic information about themselves along with their ZIP code, and receive a list of Medigap insurance companies in their area.

Currently there are roughly 187 different companies that offer Medigap insurance policies in the 50 states and Washington D.C. The following are just a few of the major companies that offer Medigap coverage in various states:

  • AARP Medicare Supplemental
  • Aetna Life Insurance Company
  • American Family Mutual Insurance Company
  • Bankers Fidelity Life Insurance
  • Blue Cross and Blue Shield
  • State Farm Mutual Insurance
  • United of Omaha Life Insurance Company
  • USAA Life Insurance
  • Western Mutual Insurance Company

Medigap insurance companies operate under the direction of the CMS, making it easier for Medicare beneficiaries to search for policies available in their area. When searching for a company and a plan, seniors need to keep in mind the cost of any policy they choose, not only now but in the future. It is important for beneficiaries to select a policy from a provider that will give them all the extra coverage they need in order to avoid high out of pocket costs.