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This article was first posted October 1, 2026. Note: America's Fall festival of "skim, scam, and fraud", the Medicare open enrollment period, begins October 15th. A 35% "skim rate" on Medigap Plans? It's only 15% on Medicare Advantage and 20% on Obamacare. (Though insurers screw you out of even more with corporate fraud and price gouging on generic drugs.) I recently found an interesting tidbit of information on my Medigap plan. Of course, I already knew that Medigap insurers literally do nothing for the 20% average "skim rate" they collect from policyholders. When I called the Washington State Insurance Commissioners office in the months before I turned age 65 for information on consumer complaints for the Medigap insurers that operate in the state, the analyst said, "We get very few complaints on Medigap, because there's not much a Medigap insurer can do to cause you to complain. All the benefit administration and accounting is done by CMS, and they tell the Medigap insurer how much to pay. About the only time we receive a complaint is when a customer cancels a policy and the insurer is slow in stopping the automatic debit from the customers checking account for the monthly premium. As a result, you can safely choose the company with the lowerst premium -- **they're all the same.**" In August, I got a letter from my Medigap insurer informing me that they were not going to debit my checking account for the premium payment this month because they had run afoul of the "minimum Medical Loss Ratio" requirements enforced by CMS. That's an MLR of 65%, a 35% skim rate*. medicaremarketinsights.com - Best medicare carrier kpi medical loss ratio mlr {{ Under federal law, the minimum required medical loss ratio (MLR)—sometimes referred to as the minimum loss ratio or NLR—for Medigap (Medicare Supplement) plans is **65% for individual policies** and **75% for group policies**. This means insurers must spend at least that percentage of premium revenues on direct medical claims and quality improvement rather than administrative costs or profits, or issue a refund. \[[1](medicaremarketinsights.com - Best medicare carrier kpi medical loss ratio mlr), [2](einsuranceplace.com - Medical loss ratio), [3](pmc.ncbi.nlm.nih.gov: Medigap Reform Legislation of 1990: A 10-Year Review] }} Now, I have the insurer with the lowest premium offered in the state. How much are the insurers charging much higher premiums screwing their customers out of? Medigap should be just a box you check on the Gov't website, when you sign up for Medicare since the Gov't is already doing all the work for you. It's outright theft that the bipartisan culture of corruption in Washington is allowing a for-profit insurer to collect a 20% to 35% toll on work your taxpayer dollars are already funding. What to conclude from this insight? If you can afford to do so, it's always going to be cheaper to self insure or as insurance professionals call it, "retain the risk". For example, in Washington State you have the choice between the lowest cost standard Plan G for $233/month (WA State Health Care Authority) and a high deducible ($2,950 for 2026) Plan G for $48/month (United American). The difference in annual premiums is $2,220. Over the course of the year, you would need Medicare reimbursements of about $11,000 to generate $2,220 of co-pays. Only 10% of Medicare beneficiares have annual Medicare reimbursements of $11,000 or higher, so you'll likely save money with the high deductible plan if you can afford the $2,950 annual deductible. Of course, if you're in that small percentage of seniors generating $11,000/yr of Medicare reimbursements year-in, year out, then the standard Plan G may be a better deal for you. The other benefit is that with the high deductible plan, the insurance company has a smaller pot of your money to skim from -- 35% of a $233/month premium is $980/year, While 35% of a $48/month premium is only $201/year. That $679 is better off in your pocket than lost to excessive Executive Compensation with the insurer. Resources for more information. Washington State 2026 Medigap premiums |
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