What is an Attained-Age-Rated Medigap Plan?
Attained-age-rated policies are the most common type of Medigap plan. Premiums are based on your current age, starting lower for younger enrollees but increasing as you get older. While initially more affordable, these can become the most expensive over time.
- Lower initial cost: Attractive for those seeking a low initial premium.
- Higher long-term cost: Premiums rise steadily with age, plus adjustments for inflation and rising healthcare costs.
What is an Issue-Age-Rated Medigap Plan?
With an issue-age-rated policy, your premium is set based on your age when you first enroll and does not increase as you age.
- Stable premiums: Offers predictable costs over your lifetime, good for long-term budgeting.
- Higher starting price: Typically begins with higher premiums than attained-age plans.
- Still subject to market forces: Premiums can increase due to inflation and general healthcare costs for the policy group.
What is a Community-Rated Medigap Plan?
Community-rated plans charge the same premium to all policyholders in a specific geographic area, regardless of age or gender. This can result in a higher premium for younger members and a lower one for older members.
- Uniform rates: Everyone in the same plan and area pays the same, providing rate stability.
- Inflation affects premiums: Like other plans, premiums can increase due to inflation and rising healthcare costs.
- Limited availability: Check local regulations as these plans are not offered in all states.
Understanding the Medigap Pricing Model Differences
Understanding these three systems is vital for selecting a Medigap policy and managing your long-term healthcare budget.
| Feature | Attained-Age Rated | Issue-Age Rated | Community-Rated |
|---|---|---|---|
| Premium based on... | Your current age | Your age when you first enrolled | Your location (and other non-age factors) |
| Premiums increase with age? | Yes, premiums increase as you get older | No, premiums do not increase based on age | No, premiums do not increase based on age |
| Initial premiums | Typically the lowest, especially for younger enrollees | Often higher than initial attained-age rates | Can be higher for younger enrollees but cheaper long-term for older enrollees |
| Long-term cost | Can become the most expensive option over time | Offers more predictable, stable rates over your lifetime | Offers rate stability, though inflation increases still apply |
Which plan is right for you?
The best plan depends on your financial and health situation. An attained-age plan might appeal if you prioritize a low initial premium. For long-term stability and predictability, an issue-age-rated plan could be better, despite a higher starting cost. Community-rated plans offer the most stability regarding age but have limited availability.
Compare quotes for the same Medigap plan letter from different insurers, noting their pricing model. Consider potential discounts, though remember they may not be permanent.
In conclusion, whether Medigap plans increase with age depends on the rating system. Research the pricing model in your state before choosing a policy.
How to Research Medigap Plans in Your Area
- Medicare Search Tool: Use the plan finder on the official Medicare website to see available plans and pricing models in your ZIP code.
- State Insurance Department: Contact this office for a rate comparison guide and details on state pricing regulations.
- Independent Agent: Work with a licensed agent to compare multiple carriers and their pricing histories.
Important Considerations
All Medigap premiums are subject to increases due to factors like medical cost inflation and changes in the plan's claims history, regardless of the rating system. Most premium discounts are also not permanent.
