AHIP: More Medicare Beneficiaries Have Medicare Supplement Insurance

More Medicare beneficiaries are purchasing Medicare Supplement insurance, as the share of individuals with the additional coverage option grew from 38 percent to 41 percent in 2021, an AHIP report found.

The State of Medicare Supplement Coverage report reflects 2021 data from the National Association of Insurance Commissioners (NAIC) and the California Department of Managed Health Care and 2020 data from the Medicare Current Beneficiary Survey (MCBS).

Medicare Supplement, also known as Medigap, provides additional coverage for Medicare beneficiaries and can protect them from out-of-pocket costs that Medicare does not cover.

After decreasing slightly in 2020, Medicare Supplement enrollment grew by 1.4 percent or around 200,000 beneficiaries in 2021. However, this increase fell below the consistent growth rate of 3 to 4 percent observed in the three years before the COVID-19 pandemic.

More Medicare beneficiaries are purchasing the additional coverage option, the report found. From 2017 to 2021, the share of Medicare beneficiaries with Medicare Supplement increased from 35.4 percent to 40.9 percent. This figure is also up from 38.7 percent in 2020.

As Medicare enrollment is projected to continue growing through 2030, Medicare Supplement enrollment likely will, too, researchers said.

According to MCBS data, 54 percent of all Medicare beneficiaries without additional coverage, such as Medicaid, Medicare Advantage, or employer-sponsored insurance, had Medicare Supplement in 2020.

A larger share of beneficiaries with Medicare Supplement were 75 years or older (42 percent) compared to the general Medicare population (36 percent).

In addition, 11 percent of beneficiaries with Medigap had annual household incomes below $20,000, while 24 percent had annual incomes below $30,000. However, Medicare beneficiaries with Medigap were 2.3 times less likely to experience problems paying medical bills compared to those without (3 percent versus 8 percent).

As of December 2021, 9 percent of companies offering Medicare Supplement policies covered beneficiaries in 41 or more states or territories, 51 percent covered individuals in 2 to 40 states or territories, and 40 percent of companies covered individuals in a single state or territory.

In December 2021, 86 companies offered Medicare SELECT policies for around 490,000 Medicare beneficiaries. These policies are the same as Medigap plans, except they require policyholders to use provider networks to receive benefits.

Plan G and Plan N policies grew in popularity, with 75 percent of Medicare Supplement companies offering Plan G policies in 2021, up from 73 percent in 2020. Similarly, 67 percent of companies had Plan N policies in 2021, up from 64 percent in 2020.

The majority (98.8 percent) of Medigap policies in 2021 were standardized plans. Among these plans, Plan F had the highest number of beneficiaries despite its market share falling from 46 percent in 2020 to 41 percent in 2021.

Plan G accounted for 32 percent of enrollment in 2021 compared to 27 percent in 2020, the report noted. Plans F, G, and N accounted for over 80 percent of total Medicare Supplement enrollment, while Plans E, H, I, L, and M together comprised less than 1 percent of all standardized policies.

Plans G, D, M, and N were the only plans with enrollment increases in 2021. Plan G, which covers all Medicare deductible and coinsurance amounts except for the Part B deductible, saw a 21 percent increase in enrollment. This marks the fastest growth rate in 2021.

Enrollment in Plan D, which is similar to Plan G but does not cover excess charges for Part B services, increased by 20 percent, up from the 2020 growth rate of 2 percent.

Plan N, a new standardized plan with predictable cost-sharing amounts, saw a 2 percent enrollment growth, while Plan M, the smallest Medicare Supplement plan, saw a 20 percent increase in enrollment.