Increases in Medigap Premiums Outpacing Social Security COLAs

Sep 3, 2019 / Amanda Chase, Horsesmouth Assistant Editor

According to a new survey by The Senior Citizens League, premiums for Medicare supplemental insurance, known as Medigap, grew more than twice as fast as Social Security cost-of-living adjustments (COLA) in the past year. About 41 percent of survey participants who are covered by a Medigap policy report robust premium increases in the past 12 months of at least 6 percent or more, particularly for individuals who were covered by a policy for more than two years.

“The Social Security COLA for 2019 is 2.8 percent, far lower than the rate that Medigap policies appear to be growing,” says Mary Johnson, a Social Security and Medicare policy analyst for The Senior Citizens League. The disparity between growth in the COLA and Medigap premiums is likely to be worse in 2020. “Inflation is lower this year, and we are estimating that the COLA is likely to be around 1.7 percent,” Johnson says. “Nevertheless, we anticipate that Medigap premiums will continue to grow several times faster for a number of reasons.”

About one quarter of all Medicare beneficiaries are covered by Medigap polices. Out-of-pocket costs under Medicare are considerable, and most beneficiaries supplement their coverage either by purchasing a Medigap policy or joining a Medicare Advantage plan. Unlike Medicare Advantage, however, Medigap enrollees in most states are not able to switch to another Medigap policy during fall open enrollment, because insurers are not required to cover pre-existing conditions outside of the individual’s initial enrollment period. Seventy-two percent of survey participants support extending guaranteed coverage for pre-existing conditions to Medigap, allowing Medigap enrollees greater freedom to switch to other, less costly, Medigap plans.

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