Medicare Supplement (Medigap) Rate Increases

Fill out the Customized Quote Form or Call (614) 402-5160 to lower your premiums

Do Medicare Supplement Plans Increase?

The simple answer is YES.  Your rates will go up.  Why and when they go up is not as simple.  Rates can vary not only because of your age when you first purchase the policy, but also because of things like inflation and claims experience, and because, every year, you get older. First, you need to understand the three types of premium rating systems.  Most of the time, you won’t have a choice of what kind of rating system is offered in your state.

How Are Medicare Supplements Priced?

A Medigap (Medicare Supplement) can be priced in three ways, but they can all go up because of inflation or excess claims.  This is what makes it so confusing.  If you’re new to Medicare, you may be under the impression that if you buy an Issue Age plan, your rates will never increase.  That’s a misnomer.  Like the Attained Age and Community Rated plans, Issue Age plans increase almost every year too.

3 Types of Medicare Supplement Pricing: Community, Attained Age and Issue Age

What Is An Issue Age Medicare Supplement?

Issue Age Medicare Supplements are uncommon but are available in a few states.  For example, all Medicare supplements offered in New Hampshire are Issue Age policies.  There aren’t any companies that offer attained age plans in New Hampshire.  Issue Age plans are typically priced higher to begin with since there aren’t any scheduled age increases.

Rates for Issue Age plans are also gender specific, and a man is always a higher premium than a woman at the same age.    Issue Age policies do not go up in prices solely because you get older.

Four states mandate companies offer Issue Age rated plans:

• Florida
• Arizona
• Georgia
• Missouri

What Is A Community Rated Medicare Supplement?

Community rates plans don’t distinguish between male and female.  The cost is the same regardless of gender or age.  Think of it a blended rate, or an average of males and females at an average age.

If a company offers a “discount” for joining their company at a younger age, it’s nothing more than a marketing strategy that brings their rates in line with the other plans by lowering the discount you get as you get older.  The discounts are reduced by an average of 2% to 3% per year until age 81 when the discount ends.

Eight states mandate that companies offer Community Rated plans:

• Arkansas
• Connecticut
• Maine
• Massachusetts
• Minnesota
• New York
• Vermont
• Washington

What Is An Attained Age Medicare Supplement?

Attained Age Medigap plans are the most common amongst the Medicare Supplement companies.  Rates are gender specific.  Male rates are higher than Female rates.  The premiums on this type of pricing platform increase every year on your annual contract renewal date because you become one year older than the year before.  Most companies will not start increasing the rates until age 67 or 68, and sometimes 69.  After that, the premiums will increase an average of 2% to 4% per year.  Some companies stop increasing rates after age 80, while others will continue.

If the state is not listed above under Community or Issue Age, they offer Attained Age policies.  These states will also allow the companies to offer Community Rated or Issue Age plans, but they rarely do.

 3 Other Reasons Medigap Premiums Increase

No matter which type of Medigap Plan you purchase, whether it’s a Community, Attained Age or Issue Age policy, your rates will increase over time.  They may not go up every year, and once in a great while, they may go down, but be assured they will increase over time.  Premiums typically increase on the anniversary of your annual renewal.  Even Issue Age plans increase your premiums for three reasons: excess claims, plain old inflation, and the company stops selling.

You can’t escape it!  It’s inevitable, and we never know how much it will increase on top of the age increase.  The average Medicare Supplement annual increase over and above the age increase was about 5% to 8% per year until 2024.  In 2024, we saw the average increase around 10%, and in some cases as high as 30% due to the fallout of COVID.

Inflation

The most obvious reason your rates will increase is due to inflation.  Just like groceries, housing, and electricity, the cost of medical care increases over time.  When you buy a Medicare Supplement plan, the premiums reflect the cost of care at the time you purchase your policy.  As time passes, the insurance companies have to raise your premiums to help pay the higher cost of medical care.

Claims

This is the big one!  Suppose the insurance company has a lot of people who get more medical care than they anticipated. In that case, they have to make up the difference somehow, so they increase the premiums, not only for the people who incurred the high claims, but instead it’s spread over the entire population of people in the same geographic area with the same plan. You can’t be singled out to bear the brunt of a $2,000,000 medical bill yourself.  Yes, you pay for others’ poor health, but it protects you from the same thing happening to you.

This past year, we experienced higher claims increases than in past years, and it’s likely to happen this year too, mainly as a result of COVID.  Higher claims ratios can also result from the plan being priced too low for new buyers, or the company unknowingly attracted to many new policy holders in poor health.

Closed Book Of Business

No one ever talks about this, but it happens all the time.  Medicare Supplement companies can stop selling the product anytime for various reasons.  When this happens, there aren’t any younger, healthy people being added to the policyholders who continue to age and incur more medical bills.  This can occur if the Medicare Supplement division is sold to another company, the state orders them to stop selling, it becomes unprofitable, or it no longer fits the company’s objectives.

What You Can Do To Lower Your Premiums

1. Compare rates for the exact same coverage with other companies.  You should shop all the companies available in your area, not just one or two.  Keep in mind you need to pass the health questions and underwriting to make a change.  Our Independant Agents can give you pricing for the plans in your area and also go over rate increase history and claims ratios for each one.
2. If you can’t get a lower rate that what you’re paying now, think about changing your plan, not just your company.  For example, if you have a Plan G, consider changing to an Plan N or High Deductible G Plan.
3. If you can’t pass the health questions, then we’ll check out any Guaranteed Issue situations you could use to make a change without having to answer any health questions. The rules and availablility for Guarantee Issue are different in every state so give us a call and we can help.
4. If you have no other options, call the company you have now and ask if you can downgrade your plan without underwriting.  It’s up to the company if they will allow you to do this.

Call us at (614) 402-5160 or fill out the Customized Quote Form and we’ll explain your options in your state.  Choosing the right plan isn’t always easy so we’re here to help.  We’ll go over pricing, rate increase history and scheduled age increases for the plan you qualify for.  Then you’ll be able to make the decision that’s right for you!