Medicare Supplement

Why Your Medigap Bill Can Climb While Coverage Stays Put

SURPRISE, Ariz. — If you have a Medigap policy — or you're thinking about buying one — you may have noticed something puzzling. The benefits printed on the front of the plan can't change, yet the bill that arrives each year sometimes does. The reason usually comes down to one thing most shoppers never ask about: how the policy was priced in the first place.

Medigap plans (also called Medicare Supplement plans) are sold by private insurers, but the benefits inside each lettered plan — Plan G, Plan N, and so on — are standardized by federal rules. What isn't standardized is how insurers set the premium. There are three common methods, and knowing which one applies to your policy helps explain why the price today may not be the price five years from now.

The three pricing methods, in plain English

Community-rated (also called "no-age-rated"). Everyone who buys the same policy from the insurer pays the same base premium, no matter how old they are. A 66-year-old and an 80-year-old with the same plan pay the same starting rate. Your age won't push your premium up on its own, though the rate can still change for other reasons.

Issue-age-rated (also called "entry-age-rated"). Your premium is based on your age when you first bought the policy. If you signed up at 65, your rate is tied to that starting age. Someone who buys the same plan at 72 will typically pay more than you do — but again, your premium won't rise just because you're getting older.

Attained-age-rated. Your premium is based on your current age, and it goes up as you age. These policies often look attractive at 65 because the starting price can be lower, but the built-in increases at each birthday (or age band) can add up quickly over 10 or 20 years.

Why premiums can still go up — even on "age-locked" policies

Here's the part that surprises many readers: even community-rated and issue-age-rated policies can see their premiums rise. That's because no pricing method freezes your rate forever. Insurers can raise premiums across the board for reasons like:

• Inflation in health care costs, including hospital and doctor fees.
• Claims experience — how much the insurer is paying out for the pool of people who hold that plan.
• Regulatory changes approved by the state department of insurance.

What can't change is the list of benefits inside your standardized plan. Plan G covers what Plan G covers. The premium is a separate conversation.

Which method will you be offered?

That depends on the insurer and the state you live in. Some states require one pricing method, some allow all three, and some carriers only sell one type regardless of what the state permits. Arizona shoppers in Surprise, which sits in Maricopa County, will generally see more than one method available across the carriers licensed in the state — but the specific mix varies. The only reliable way to know is to ask each insurer directly, or to use the plan-finder tool at medicare.gov.

The mistake to avoid

The most common Medigap pricing mistake isn't picking the "wrong" method — it's not asking which method you're being sold. A policy that looks like a bargain at 65 may be attained-age-rated and climb steadily into your 70s and 80s. A policy that looks pricier today may be community-rated or issue-age-rated and hold steadier over time (though never guaranteed flat).

Before you sign anything, ask the agent or insurer three questions:

1. Is this policy community-rated, issue-age-rated, or attained-age-rated? 2. How often has this plan raised premiums in the last five years? 3. What triggers a rate increase — age, inflation, claims, or all three?

Get the answers in writing if you can.

When you can shop or switch

Your best window to buy a Medigap policy is your six-month Medigap Open Enrollment Period, which starts the month you're 65 or older and enrolled in Part B. During that window, insurers can't turn you down or charge you more for health reasons. Outside that window, medical underwriting usually applies, and switching policies later — even to a cheaper pricing method — may not be guaranteed.

This is different from the Medicare Annual Enrollment Period (October 15 – December 7) and Medicare Advantage Open Enrollment (January 1 – March 31), which apply to Part D and Medicare Advantage, not Medigap.