Medigap Plan With The Lowest Premium

Should you select a Medigap plan with the lowest premium?

Our guidelines for selecting a Medigap plan with the lowest premium changed when Idaho updated laws regulating insurance companies in this business. 

Prior to this change (3/1/2022), we placed emphasis on 8 variables when choosing a company to do business with. 

These included the company’s AM Best Rating (nothing below A…some exceptions like if the company has been in the Medigap business for many years and pass the other criteria, consider them); the number of policies in force (at least 10,000), the year over year increase in the number of policies in force, the company’s ‘medical loss ratio’ and its direction for the past 3-years, commitment to the market and success in this business (are they nation wide or regional) and are expanding their marketplace size, etc.  We recognize these measurables are ‘rear view mirror’ and may not hold true for the future.  We feel starting out with the right company just makes sense.

With the ‘birthday rule’ now in place in Idaho, we have similar concerns about who we do business with, but to a degree, a lesser extent.

Why? Because now you can change companies annually during the ‘birthday window’. No more underwriting requirement if you want to change companies and get the same plan. If you want to move up to a more comprehensive plan, you will have to pass underwriting. If that is not an issue for you, you can change companies (and plans) as often and when you wish.

Should you select an Idaho Medigap plan with the lowest premium?

We consider the companies in the 1st quadrant 25% of all companies (when sorted in lowest premium sequence). Companies we pick from this group are solid financially and have a solid history in the business. If you work with a broker that is licensed with these insurance companies, they can help you finalize your decision and help with the enrollment process. Enrollment can be made over the phone, and it takes, maybe 15 minutes.

Does this pool of low premium companies change during the year?

It can. New companies can enter the Idaho market. When they do, they often have low premiums. Typically, their goal is to grow the size of their customer base. Their target market includes people new to Medicare as well as others already on Medicare (want to switch companies to get a lower premium).

Existing companies can apply for annual premium increases. During 2021, some Idaho plan premiums went up 10 – 20%. When your current premium is $200, a 20% increase may motivate some to change companies and get the same plan at a lower rate. We are here to help them.

Some brokers that specialize in Medicare and Medigap insurance keep track of this information.

We suggest you consider working with a broker that resides in Idaho and has been in the Medigap business for several years. They should be aware of all companies offering Medigap plans and their history in this business. We can help you with this.

Monthly Premiums for Community Rated Medigap plans in Idaho vary widely for each specific plan.

Why such a wide variance?

This can easily be a reflection of each company’s business goals as well as their cost structure for the Medigap side of their of business. What do these terms mean?

Business Goals

Business goals simply mean a company’s objectives when competing with other companies in this market niche.

Some companies may want to grow their market share by targeting all Medicare beneficiaries. These companies may differentiate theirs elves from their competitors on their monthly premiums and the ‘extras’ they offer. Their image/reputation as a business leader at a national level is also another variable.

Some local/regional companies are dominant in the pre-65 Idaho health insurance marketplace. These companies may place more emphasis on moving these people to their Medicare products when they retire. Some of these people may ignore other companies offering Medigap plans and end up overpaying for their plan initially and for years to come (they do not compare their current premium  to their other choices).

Some companies in this business have a cost structure which requires non-competitive premiums. These companies are easy to identify when we look at their annual medical loss ratio (above 80 for a few years) and the trend in number of policies issues (declining year after year).

From our point of view, companies in the 2nd, 3rd and 4th quadrant of premiums should be ignored.

Let’s concentrate on the companies offering a Medigap plan with the lowest premium including those with the attractive ‘extra’ benefits to policy holders.

We find them in the 1st quadrant.

What does the company’s ‘cost structure’ mean?

Maybe the most important figure to be aware is the company’s ‘medical loss ratio’. 

The higher this figure (typically above .8), the higher the annual premium increase may be. 

This figure can be higher for companies new to the market.  Hopefully, this will go down during the next few years.  If you are with a company in this situation and their monthly premium is lower than other high quality companies, you might consider staying with them until it makes sense to change companies. 

If a company has been in the Medigap business in the Idaho market for several years and their medical loss ratio is above .8, it simply means the company is paying out more in claims than anticipated.  If this company has a higher premium than other high quality companies, it may be time to make a change. 

Marketing Hype

Be aware some companies offering these products tout their ‘customer satisfaction’ level’ as a reason for doing business with them.

When we step back and consider this, we reference national surveys. We encourage you to do the same.

The report found here should give you a comfort level customer service is seldom a differentiator when selecting a company.

Why?  Because the overall national satisfaction level is high.

There are over 300 companies offering these products in the US (reference the current Medical loss ratio report for Medicare supplement plans to see this figure).   A company that has been in the business for years and has a large and growing policy holder base is good evidence they pay attention to their reputation and customers.

What are the ‘extras’?

Some companies do offer a ‘household discount’, a gym membership, and similar attention getters.

We look at the net out of pocket premium cost of companies offering a ‘household discount’ and/or other attractive extras. When the discount(s) is factored in, are they the lowest net out of pocket cost plan available for you?

If a gym membership is important to you, we suggest all plans offering this extra be compared on net price and consider the company with the lowest premium. We can help you with this too.

How does Idaho’s birthday rule come into play?

This new Idaho law was effective 3/1/2022. It permits existing Medigap policy holders to switch insurance companies and get the same (or less comprehensive plan) without going thru underwriting. This window of time opens up on the policy holder’s birthday. This window remains open for 63 more days.

Right now, if an existing Medigap policy holder is paying more than $220 for a Plan G, $260 for a Plan F, $165 for a Plan N, and more than $240 for Plan C we suggest you call us.  If you have a Plan J and are spending more than $280/month, we suggest you switch to a Plan F. 

Be aware that if a person wants to switch to a more comprehensive Medigap plan, they will have to answer health history questions on the application. That application can be denied by the company based on these answers.

It is our belief that many Idaho residents enrolled in in the same Medigap plan for 10+ years should consider checking into this.

Should a Medigap policy holder switch their plans annually?

That is up to the individual.

Remember, all of the above variables can change annually. This means the monthly premium a person pays this year may be noticeably different next year. Other companies may save you meaningful money if you change companies and get your current plan.

Here are some examples of when this may be practical.

1. When the difference between the policy holder’s current premium is noticeably higher than offers from other companies. We have noticed this since starting our business in 2012. If your neighbor has the same plan as you (but with a different company), but you are paying $75/month more, would you brag about it?
2. When a company has a high annual rate increase and there are lower premiums available from other companies. Annual rate increases in 2024 from some companies  were in the 10 – 14% range.  Policy holders experiencing increases higher than this range should be checking their options. They should be doing this annually during their birthday window. Why pay more for the same coverage? We suggest you keep the premium difference in your pocket.
3. When new companies can enter the Idaho market with meaningfully lower premiums. Some of these companies may be new to the Medigap business. Others may have a long and successful history in this business. Be aware, on a comparative basis, Idaho is not a large market for insurance companies offering Medigap plans. Why? Because the number of people enrolled in Medicare isn’t attractive enough for some companies to enter our market. Eventually, some of these companies may choose to do so. When they do, they catch our attention.  We like experienced companies in the Medigap business with an AM Best rating of A- (or higher) and have attractive premiums when compared to other companies already in our Idaho market.

Why you should consider working with an Idaho based broker that focuses on Idaho Medigap plans

We watch this market on a regular basis and update our recommendations based real-time marketplace changes. We can do much of this work for you and notify you when there are opportunities to save on your premium. It takes about 15 minutes to complete an application (over the phone).

Contact us if you are an Idaho resident and want help. We look forward to helping you when you are ready.

This page was last modified on Feb 15, 2025 @ 9:55 AM