There are three federally approved pricing systems for Medicare Supplemental (AKA Medigap) plans. It is up to the company who is offering the Medigap coverage to select the pricing system to help cover the costs of Medicare.
3 Medigap Pricing Systems
1) Attained-age Rated:
Attained-age Medigap insurance policies are those that feature premiums based on your current age. They are less expensive when you are first enrolled at age 65, but they will increase each year as your age increases, as well as inflation and other factors will increase your rate. Most Medigap plans are priced using this attained-age system.
2) Issue-age Rated
Issue-age rated Medigap insurance policies premiums are based on your age when you purchase the policy. People that purchase an issue-age rated plan when they are 65 will pay less (and continue to pay less) than others who purchase the same issue-age rated plan at age 70. These plans will not increase as you get older, however inflation and other factors may increase your rate.
3) Community Rated:
Community rated Medigap insurance policies charge the same monthly premium for all members, regardless of their age or when they sign up. Identical rates are determined for everyone within a certain area no matter your age. Again these rates will go up with inflation and other factors
Do the Medigap Pricing Systems Matter?
All three pricing systems have strengths and weaknesses but the truth is the vast majority of plans are Age Attained. Some plans are officially listed as Community Rated but they offer a discount to younger members so they behave similarly to Age Attained plans.
Most Important Medigap Pricing Factor
Medigap’s age-rating is the most important factor. What this means is: some plans increase your cost each year until you hit 90 years old, while others stop increasing the plans cost at 75 years of age. You could end up paying a lot more on some plans over time than others.
If you want help comparing the pricing programs and understand how much these plans will cost click here to get an instant Medigap quote.