Facing questions about Medigap premiums and increase? We think it is important that you understand the factors influencing Med Supp pricing before enrolling. Here is the bottom line: Medigap monthly premiums can increase over time. We explain how and why.

Medigap premiums can increase. Don’t be caught off-guard.

What Are Medigap Premiums?

Medigap premiums are just insurance jargon for the amount of money you must pay every month to keep your insurance active. Some would call it your monthly bill. Each insurance provider can determine your initial premium using factors like location, age, and, in some cases, your current health. Although plans are standardized, prices can vary significantly between insurance companies so it’s important to review prices before enrolling in a plan.

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How are Medigap Premiums Calculated?

Medigap plans can charge based on three methods listed below. Our Medigap instant quote tool will show you how each insurance plan is calculated on the results page.

  • Attained-Age Rated Medigap Plan: Your premium rises as you age based on a pre-determined rate sheet. If you enroll at 65, a $120 rate could increase to $132 at 69, and $156 at 72. Most insurance providers in the United States use this method. The age-attained rate sheet doesn’t factor in Rate Action increases that we explain below.
  • Issue-Age Rated Medigap Plan: Your premium is determined by your age when you enroll. If you sign up at 65 with a $140 premium, it will not increase as you get older. But if you join at 72, your premium could begin at $195. It will be higher than someone who started at 65 but it too won’t increase due to age. Rate Actions can still increase your premiums, but your monthly price will not go up because of your age. Issue-age-rated plans are very rarely offered by insurance providers.
  • Community-Rated Medigap Plan: Everyone in the community pays the same rate regardless of age. Whether you join at 65 or 72, your premium stays the same. Again premiums under this scheme can still go up due to Rate Actions as we will explain in the next section.

Most insurers use Age-Attained pricing, but some offer Community Rated policies. While this looks appealing in theory, community-rated plans often start off so high that most providers include a discount for younger members. This discount goes away as you get older so community-rated plans often behave like attained-age plans since most members see their price increase as get older.

What are Medigap Premium Rate Actions?

As we referenced above, no matter how your Medigap rate is initially calculated, plans can still increase due to what the industry calls “Rate Actions.” This is basically when an insurance company goes to the insurance commissioner in your state and claims, “The monthly premiums we get from all our members on a specific plan are not covering the medical claims they are submitting.” Basically, they are asking permission to increase the premium of your Medigap plan. If the insurance commissioner agrees with this claim, your rate can go up! This is in addition to the scheduled increase by age as we mentioned above. So technically your plan can go up twice in one year. 1) An increase for getting a year older and 2) An increase for the Rate Action.

Several elements contribute to a Rate Action. Escalating healthcare expenses, shifts in the insurance market, and external elements all play a role (Source). One of the primary factors impacting Medigap premium increases is inflation. Annual adjustments by insurers are made to account for rising healthcare costs. Moreover, annual rises in Medicare deductibles and related expenses can prompt insurance companies to request a Rate Action. Discover the new costs associated with Medicare in 2024 here.

While it is not uncommon to see Rate Actions every year, not all insurance providers do them annually. In a few cases, prices can even go down! We have been collecting rate action data for the last few years here at Senior65.com and the industry average is about 5%. If you are interested in learning if/how a certain plan increases its rates, give us a call at the number above.

Can Medigap Premium go up Based on my Health?

Once approved, your price will not increase based on your individual medical use. Whether you only go once a year for a wellness visit or you spent the last year in the hospital, your premiums will be treated the same. The Rate Action mentioned above is for everyone on your same Medigap plan so you will not be singled out for your personal medical claims. Note: If you applied outside your initial open enrollment period, your premium could start higher due to pre-existing conditions.

Can Medigap Premiums Increase Based on my Income?

While certain Medicare products adjust premiums based on income, such as Part B, Part D, or MAPD plans due to something called IRMAA, Medigap premiums remain unaffected by your income. To learn more about it, read our article ‘Are Medigap Premiums Based On How Much Money You Make?‘ here.

Why are Medigap Premium Increases Important?

It goes without saying that nobody wants to pay more each year for the same item. That being said, your MedSupp price WILL go up over time, so you need to factor that in when selecting a plan. Also, if your insurance company increases costs faster than its competitors, it may be very hard to switch Medigap plans depending on your state. This is where we come in. We can help you select the right plan now and give you tools to know if your plan will be a good value in the future. There is no fee or cost for our help.

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When selecting a Medigap plan, consider its coverage, the insurer’s rate increase reputation, and the advertised cost. If you’re feeling overwhelmed by so much information and options, reach out to our agents at 800-930-7956 for free assistance.