Medicare in Vermont

Vermont's Medigap plans are community rated, but only for enrollees who are at least 65. For those under 65, plans are guaranteed-issue but much more expensive

At a glance: Medicare health insurance in Vermont

How high is Medicare enrollment in Vermont?

2020 Medicare enrollment datesNationwide, nearly 62 million people are enrolled in Medicare, which amounts to about 18.7  percent of the total U.S. population enrolled in Medicare. But 148,537 Vermont residents – well over 23 percent of the state’s population – were covered by Medicare as of late 2019. Vermont’s median age is the second-highest in the nation, so it makes sense that the state has a higher-than-average share of its residents enrolled in Medicare.[/hio_quesition]

Most people become eligible for Medicare when they turn 65, but Medicare also provides coverage for nearly 10 million disabled Americans under the age of 65. Nationwide, about 16 percent of Medicare beneficiaries are under age 65, which is the same as the percentage in Vermont.

Medicare Advantage in Vermont

Nationwide, a third of all Medicare beneficiaries had Medicare Advantage plans as of 2017. But in Vermont, just 9 percent of the state’s Medicare beneficiaries enrolled in Advantage plans.

Nationwide, private Medicare coverage (not counting supplemental plans like Medigap and Part D) accounted for nearly 36 percent of all Medicare beneficiaries as of late 2019. But in Vermont, private plan enrollment remained much lower, with just 18,228 Medicare beneficiaries — about 12 percent of the state’s total Medicare population — enrolled in private plans. The other 88 percent of Vermont’s Medicare beneficiaries had opted instead for coverage under Original Medicare.

Medicare Advantage plans are provided by private insurers, so plan availability varies by area. But plan availability is very uniform throughout Vermont, with each of the state’s 14 counties having either 11 or 13 Medicare Advantage plans available for purchase in 2020 (up from just seven or nine per county in 2019).

Medicare beneficiaries can switch from Original Medicare to Medicare Advantage, and vice versa, during the annual election period each fall (October 15 through December 7), with coverage effective January 1. There is also a Medicare Advantage open enrollment period (January 1 to March 31) during which people who are already enrolled in Medicare Advantage plans can switch to a different Medicare Advantage plan or drop their Medicare Advantage plan and enroll in Original Medicare instead.

Medigap in Vermont

Original Medicare does not have a cap on out-of-pocket costs, so people with chronic conditions can incur substantial out-of-pocket costs. Employer-sponsored plans or Medicaid serve as supplemental coverage for more than half of all Medicare beneficiaries nationwide, but for those who don’t have access to those plans, Medigap plans (also known as Medicare supplements or MedSupp plans) are an important part of having full coverage. Medigap plans are designed to supplement Original Medicare, covering some or all of the out-of-pocket costs (for coinsurance and deductibles) that people would otherwise incur if they only had Original Medicare on its own.

There are 12 insurers that offer Medigap plans in Vermont. And according to an AHIP analysis, there were 49,686 Vermont Medicare beneficiaries with Medigap plans as of 2016, which was about 40 percent of the state’s Original Medicare population (Medigap plans cannot be used with Medicare Advantage coverage).

Medigap plans are standardized under federal rules, so Plan A offers the same benefits regardless of which insurer offers it, as does Plan G, Plan K, etc. (premiums vary significantly from one insurer to another, as do things like customer service and additional benefits beyond the standardized benefits, such as a 24-hour nurse hotline). But Medigap standardization means that plan comparisons are easier than they are in other insurance markets.

In most states, Medigap plans can be priced using attained-age rating (rates increase as the enrollee gets older), issue-age rating (rates are based on the age the person was when they enrolled), or community rating (rates do not vary based on age). Vermont does not allow Medigap insurers to use attained-age rating (see Section 15(F) of the state statute), and a Kaiser Family Foundation analysis indicates that Medigap insurers are required to use community rating in Vermont, as long as the enrollee is at least 65 years old; rates for a given plan only vary based on whether the enrollee is under 65 or 65+ (Vermont is also one of only two states where insurers offering non-Medicare individual market coverage are also required to charge the same price regardless of how old an enrollee is).

Under federal rules, people are granted a six-month window during which they can enroll in a Medigap plan regardless of their medical history. This window starts when they’re at least 65 and enrolled in Medicare Part B. Federal rules do not, however, guarantee access to a Medigap plan if you’re under 65 and eligible for Medicare as a result of a disability.

To address this, the majority of the states have implemented rules ensuring at least some access to Medigap plans for people who are under age 65, and Vermont is among them. Vermont requires Medigap insurers to make all of their plans available to all Medicare beneficiaries, regardless of age, during the first six months after the person is enrolled in Medicare Part B.

Although Medigap plans are guaranteed-issue for people under 65 during their six-month enrollment window, insurers can charge higher premiums for people under 65. As an example, rates for Medigap Plan A for a person who is 65+ range from $115/month to $192/month in 2020. But for an applicant who is under age 65, premiums for Medigap Plan A in Vermont range from $112 to $423 per month.

Disabled Medicare beneficiaries have access to the normal Medigap open enrollment period when they turn 65. At that point, they have access to any of the available Medigap plans, at the standard age-65+ rates.

Disabled Medicare beneficiaries have the option to enroll in a Medicare Advantage plan instead of Original Medicare, as long as they don’t have kidney failure. Medicare Advantage plans are otherwise available to anyone who is eligible for Medicare, and the premiums are not higher for those under 65. But Advantage plans have more limited provider networks than Original Medicare, and total out-of-pocket costs can be as high as $6,700 per year for in-network care, plus the out-of-pocket cost of prescription drugs.

Medicare Part D in Vermont

Original Medicare does not cover outpatient prescription drugs. Many Medicare beneficiaries have supplemental drug coverage from an employer or Medicaid, but for those who don’t, Medicare Part D is an important part of having full coverage. Medicare Part D was created under the Medicare Modernization Act of 2003, and can be purchased on a stand-alone basis or as part of a Medicare Advantage plan with integrated Part D coverage.

As of late 2019, 95,134 Vermont Medicare beneficiaries had stand-alone Part D prescription drug plans, and another 15,860 had Part D coverage integrated with their Medicare Advantage coverage. In total, about 75 percent of Vermont’s Medicare beneficiaries had Part D coverage, either as a stand-alone plan or as part of an Advantage plan.

For 2020 coverage, there are 25 stand-alone Part D plans available in Vermont, with premiums ranging from $13 to $128 per month.

Medicare spending in Vermont

In 2017, Original Medicare spent an average of $7,694 per beneficiary in Vermont, based on data that were standardized to eliminate regional differences in payment rates (the data did not include costs for Medicare Advantage enrollees). The national average that year was $9,533 per enrollee, so Medicare spending in Vermont was 21 percent lower than the national average. Only four states — Alaska, Hawaii, Oregon, and Montana — had per-beneficiary spending lower than Vermont’s.

For perspective on the range of spending, average per-beneficiary costs for Original Medicare were highest in Louisiana, at $11,399, and lowest in Hawaii, at $6,441.

You can read more about Medicare in Vermont in our state Medicare guide. You can also contact the Vermont State Health Insurance Program (they have several regional offices), with questions related to Medicare coverage in Vermont.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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