UPDATED Jan. 30, 2019. Insurance companies set Medicare Supplement premiums based on one of the three Medigap rating methods: Community Rating Method, Issue-Age Rating Method, and Attained-Age Rating Method.
Medicare Supplement Premiums: Community Rating Method
Medicare Supplement premiums do not depend on age. Premiums may increase due to inflation and other factors, but not because of age.
Medicare Supplement Premiums: Issue-Age Rating Method
Medigap premiums are based on your age when you buy the policy. The premium is the least expensive for younger buyers and does not change as you get older. It may increase due to inflation and other factors, but not because of age.
Medicare Supplement Premiums: Attained-Age Rating Method
Medicare Supplement premiums are based on your current age. Therefore, the premium is lower for younger buyers but goes up as you get older. This type of premium is the least expensive at first, but can eventually become the most costly. Also, the premium may increase due to inflation and other factors.
Most of the carriers use an attained-age rating method.
Two Portions of the Premium
The typical Attained-Age Medicare Supplement Premium actually consists of two portions:
- Age Portion: An age-related portion of the premium. This portion is always increased with age.
- Experience Portion: This portion reflects a vendor’s business results and must be approved by the state. The more profitable vendor, the more chances is avoids any substantial increase of this portion. Sometimes a vendor will DECREASE the experience portion.
The total premium is the sum of both parts. Typically premium change is done once a year and includes both portions. Some vendors have separate premium changes for each portion.
Attained-Age vs. Issue-Age Rating Methods
On the comparison between issue-age and attained-age rating methods, there are two things to consider:
- People voting for the issue-age method emphasize that there are NO automatic age increases as they grow older.
- However, for younger individuals, the premium is higher for issue-age method than in attained-age method. Those who prefer the attained-age method assert that it takes 10 to 15 years before the issue-age plan become cheaper than the attained-age plan.
Overall, all Medigap plans will increase their premiums over time. Companies with extensive medical underwriting rules (more and in-depth health questions) typically have either a smaller premium increase or even premium decrease.
Other factors that have an impact on Medicare Supplement Premiums include:
- Many companies provide a discount factor for married couples. The typical number is 7 percent.
- Some companies provide the same premium for men and women. This practice results in a more competitive rate for man and a less competitive rate for a woman.
US Government Sources
- Costs of Medigap Policies
- Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare
Let Liberty Medicare Help You
If you are looking for Medicare Supplement coverage, Liberty Medicare is here to assist you. We’ll help in all stages of comparing, selecting and enrolling you in the best and most suitable Medicare Supplement Plan for your needs. Our services are offered at no cost to you!
Give us a call at 877-657-7477, or Contact us with your Medicare Questions.