Do Medigap premiums increase with age? They certainly do, nearly every year.
If you think about it, Medicare supplement rate increases are inevitable for a couple of reasons. The first is because the cost of healthcare is subject to inflation like anything else. The second is that Medicare increases the Part A and B deductibles, copays, and coinsurance every year, and your supplement covers those items for you. So if the Part A deductible goes up by $50 next year, your supplement has to increase the rates to cover those items for all of its policyholders.
Because of this, Medicare supplement rate hikes are common. Here are some answers related to frequently asked questions about Medigap rate increases.
Questions about Medigap Premiums
Why has my Medicare supplement rate gone up when I haven’t even used my coverage this year?
Medicare supplements rate increases apply equally to all insured members. This is regardless of their health conditions experienced in the last year. An insurance carrier cannot exempt you from rate increases because you are healthy. Likewise, they cannot single you out for an increase just because you are sick.
Instead, Medicare supplement insurance companies calculate their total loss ratios for the year. Then they apply rate increases to certain “blocks of business.”
For example, some Medigap companies increase rates across all clients in a certain geographic area. Others have automatic increases when insured members reach a certain age band, such as age 70 or 75. Still others will apply rate increases to everyone insured on a certain policy, such as Medigap Plan F.
Every insured member usually experiences at least one rate change per year. That has nothing to do with whether you are sick or well. The nature of insurance coverage relies on a carrier’s ability to spread out it’s potential losses over a large group of policyholders.
Will my Medigap insurance carrier raise my rate if I have a long-term expensive illness?
Absolutely not. Think of this the same way you do homeowner’s insurance. Just because a hailstorm occurred and your roof needed to be replaced does not mean the homeowner’s insurance company can smack you with a big rate increase. It is not your fault that your home was in the path of a storm.
Medicare supplement insurance is the same way. The insurance “insures” you against unforeseen illnesses or medical costs, and the company counts on the fact that in any given year, there will likely be more insured people who are well than there will be those that become ill and have a lot of insurance claims. This natural balance is what protects you from getting singled out for a rate increase if you become sick.
If my Medicare supplement premium goes up, can I just change to a different Medicare supplement company during the fall Annual Election Period?
Not necessarily. The Annual Election Period is for changing your Medicare Part D drug plan. There are no health questions required to change your drug plan. However, the election period has nothing to do with your Medicare supplement.
Instead, you can change your Medicare supplement any time of year, as long as you can pass medical health underwriting.
Most Medicare beneficiaries find this confusing, because they remember that when they first got Medicare, they got to enroll in a Medicare supplement policy with no health questions. This is called your Medigap Open Enrollment Period. You only have access to that window for 6 months after your Part B is active.
After that, when you want to change Medigap plans, the insurance company can accept or decline you based on health risk. This is one reason why it is important to work with a licensed health insurance agent when selecting your first policy. Agents like us can help you determine whether or not you will be likely to be able to change carriers down the road. If not, you’ll want your agent to help you choose a carrier with rate stability because other carriers down the road may not accept your application.
Need Help with a Medigap Rate Increase?
Medigap plans have rate increases every year. It’s always worth checking in with us to see if another company can offer you a lower rate than your current company. We can also answer questions you may have about health conditions and whether they would cause a problem for you when you try to switch.
Give us a call to compare premiums for Medigap policies in your area today.