If Medicare Supplement Plans Are Standardized, Why Are Rates So Different?

If Medicare Supplement plans are standardized, why are rates so different? This is a common question we get regarding Medigap coverage. The plans are Federally-standardized, work the same way, can be used at any doctor/hospital that takes Medicare – there are literally no differences between one Plan F, for example, and another Plan F from a different company. So, why are Medigap rates so different?

The answer to this question can be explained in three distinct points:

  1. First and foremost, just like anything else on the free market, companies can set their own rates. Now, Medicare Supplement rates do have to be approved by the respective state departments of insurance. But, companies can file whatever rates they want – and if approved by the state, they can offer the plans at the approved rates to prospective applicants.
  2. Second, companies have different levels of administrative expenses. Some companies do much more direct-to-consumer marketing/advertising than others. This can make their costs for customer acquisition higher, and thus, it can make their rates higher.
  3. Lastly, different companies choose different pricing strategies – some are competitively priced in urban areas, some have better rates for females, some offer husband-wife discounts, some offer lower rates at age 65 and higher rates at older ages, etc. – but the rates they offer are up to the insurance company. It’s up to you to compare and make sure you are getting a good “deal” relative to the marketplace.

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Regardless of what company you choose, you should keep in mind the three standardized aspects of Medicare supplement plans – coverage, claims payments and doctor acceptance. These three factors are the same with any Medicare supplement company you choose.

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