Medigap Premium Increasing – Just like other kinds of insurance, Medigap premiums will go up. You can expect an increase every year. Once you’ve had your plan for a few years, this means that your premium could be drastically different than when you enrolled.
The good news is that there are a few things you can do to lower your Medigap premium. Today, we’re going to talk about how premiums are calculated, things to keep in mind when choosing your Medigap plan, and what you can do to decrease your rate.
How Medigap Premiums Are Calculated
Insurance companies use one of three pricing methods to calculate their Medigap rates.
Attained-Age Pricing: Policies are issued or renewed at a price based on your current age. As you get older, the premium increases.
Issue-Age Pricing: Premiums are calculated using the age you are when the policy is issued.
Community-Rated Pricing: Every person pays the same rate, regardless of their age. This is not often used in setting in Medigap rates.
Each of the three pricing methods can increase their premiums due to rising healthcare costs or inflation. No matter what someone may tell you, your Medigap premium will go up, no matter which pricing method is used.
A company will first select its pricing method and then use other personal factors to determine your premium. They’ll look at your age, gender, zip code, and tobacco use.
- Men pay more than women.
- Older beneficiaries pay more than younger ones.
- People living in areas with higher costs of living pay more.
- Tobacco users pay more than non-users.
Most of the time, you’ll only see one increase each year. This could be around your birthday or around the time your policy renews. In addition, carriers may increase the premium of all policies at one specified time of the year.
How much will the premium go up? There is no set amount that policies increase. Insurance companies must submit their request to certain state and federal agencies before increasing rates. This prevents companies from raising their rates drastically all at once.
Some Medigap plan premiums tend to increase faster than others. It often depends on the pool of beneficiaries enrolled and how much money has been spent on their healthcare costs. For example, Plan G sees larger rate increases than Plan N because people who enroll in Plan G are (on average) less healthy than those enrolled in Plan N. (Plan N requires doctor’s office copays, so people who require frequent medical visits don’t often enroll in Plan N.)
Changing Your Medigap Plan
If your rates have increased so much that they no longer fit into your budget, you may want to look at other options. If you’d like to continue coverage with a Medigap plan, you may be able to switch your plan.
Many people don’t realize that they can change their Medigap plan at any time of the year. There are no specific enrollment periods you have to adhere to. However, in most states, you’ll need to be able to pass medical underwriting to change your plan. On the application, you’ll answer questions about your health and enter your current prescriptions. Severe or chronic conditions will often prevent you from changing your plans. If your application does get denied, your current plan and premiums are not impacted.
Some states have unique rules about changing Medigap plans. Some states allow for year-round open enrollment. Others choose one particular month or have anniversary or birthday rules. This doesn’t always mean you can choose any plan. Changes may be limited to “like-to-like” or lesser benefit plans.
Consider Medicare Advantage
Beneficiaries who cannot change their Medigap plan due to health conditions should also consider enrolling in Medicare Advantage. Every person has access to at least one Medicare Advantage plan, but people in urban areas have more choices than those living in rural parts of the country.
Many Medicare Advantage plans have $0 monthly premiums. While you’ll still be required to pay your Part B premium, having a premium-free Advantage plan will drastically reduce your monthly payments. Keep in mind, of course, that there are other costs associated with Medicare Advantage plans. You’ll have cost-sharing amounts due based on the services you receive. Beneficiaries who enroll in Medicare Advantage should consider adding a Hospital Indemnity policy to reduce some of the out-of-pocket costs.
If you’d like to speak with someone about lowering your Medigap premiums, call the agents at The Medicare Help Desk. We’ll review your current plan and help you determine other options that will benefit your situation.
