For anyone just turning 65 and especially for those who have been on Medicare for perhaps quite some time, there is no doubt that at some point in the process most people have asked why Medigap rates vary so widely between companies. After all, if every company has the exact same coverage when it comes to each Medicare supplement plan letter, then why should the rates be so very different?
Medicare Supplement plans are standardized so they all offer the exact same benefits within each plan letter. This means that an AARP Medicare supplement plan F is the exact same and offers identical benefits to a Gerber Medigap Plan F. Every doctor across the country will accept them all, they will handle the filing of the claims, and the each work the exact same way covering all deductibles, copays, and coinsurance.
One thing that is not standardized are Medigap rates. These premiums cannot be set the same between companies as each company by law is required to set their premiums based on the health and claim activity of any certain group that has the plan. This means if a plan within a group has been out for several years it is highly likely that there have been several claims being paid out, and new premiums coming in have dropped off. Therefore the insurance company must raise the rates of each group’s premium to meet certain guidelines established by the government.
All Medicare supplement plans are classified, or rated, in one of three groups. These groups include community rated, issue age rated, and attained age rated.
In this group everyone who applies comes in at a certain premium regardless of age, and the premium will not increase based on one getting older. It will raise based on other factors however, and these premiums tend to start higher than other rated plans.
Issue Age Rating
With this rating you are designated a premium based on the age that you enter the plan, however your rate still will not increase due to you getting older. They will in fact increase due to inflationary factors, this you can count on.
Attained Age Rated
These premiums are determined by the age you enter into and obtain a Medigap plan, and also go up each year as you get older based on your age combined with inflation. Despite most people thinking these are not the best choice, most companies offer attained age rated supplement plans and they typically have the lowest premiums.
How to Pay the Lowest Premiums Each Year
The most important thing to keep in mind as you purchase your first Medicare supplement policy is that it is highly likely you will not remain with the same company for more than 3-5 years. You may switch your Medigap policy any time throughout the year, and each time you get a rate increase your agent should shop the market to see if there is a lower premium that would make sense to switch.
You must go through medical underwriting to change plans, and this only involves answering medical questions on the application, a possible phone interview, and the new company checking your medical background. That being said, with continual rate increases it is wise to make sure that your agent is independent and represents several companies. They can then shop the rates when you do get an increase and have other options. Remember, any agent who just represents one company will likely not tell you about any lower rates from other carriers.
Although Medigap rates might go up every year that’s no reason to stop you from getting the very best coverage for the lowest premium. This website allows you to get quotes from several of the top insurance companies so you can easily compare plans and rates. Simply enter your zip code below and start saving today!
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