Editor's Blog

How Are Medicare Supplement Premiums Calculated and Why Do Rate Increases Take Place?

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There are three different ways that an insurance company can price its Medicare Supplement premiums. Make sure you know which pricing strategy your policy follows.

With a community-rated (also called No-Age-Rated) pricing structure, the same monthly premium is charged to everyone who has the Medigap policy, regardless of age. So, no matter if you’re 65 or 72, male or female; everyone pays the same premium. Please note that rates can still increase due to inflation and other factors.

In issue-age-rated policies, your premium is based on the age you are when you purchase your Medigap policy. Premiums are lower for younger buyers, and will not change as you age. Just like any Medigap policy, however, rates are subject to increase due to inflation and other factors.

Attained-age-rated policies base your premium on your current age. Your premiums are lowest when you purchase the policy, and increases as you get older.

The way in which your policy is priced will determine your monthly premiums now, as well as what you’ll pay in the future. Do not confuse these different pricing strategies with Medigap rate increases. Rate increases take place no matter which pricing strategy your policy uses. Rate increases are commonplace throughout the industry, and take place because of factors like inflation and the rising cost of healthcare. Some companies, however, increase their rates more than others. Be sure to ask a company for a history of rate increases when shopping for a Medigap plan. 

Visit our Medicare Supplement Plans page for more information.


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