Medicare Supplement

Why two neighbors pay different prices for Plan G

Why two neighbors pay different prices for Plan G — plain-language Medicare information for Warner Robins, Georgia.

WARNER ROBINS, Ga. — If you have a Medigap policy or you're shopping for one, the benefits are standardized by letter — a Plan G is a Plan G, no matter who sells it. What is not standardized is the price. Two neighbors on the same lettered plan can pay very different premiums, and the same policy can cost more next year than it does today, even though the benefits haven't changed. The reason usually comes down to one thing: how the insurer priced the policy in the first place.

The three ways Medigap premiums are built

Medigap premiums generally fall into one of three pricing structures. The federal rules describing them come from CMS and are summarized on medicare.gov.

Community-rated (also called "no-age-rated"). Everyone who has the same policy pays roughly the same premium, regardless of age. A 68-year-old and an 80-year-old on the same plan letter with the same company would pay the same base rate. The premium can still go up over time, but not because you had another birthday.

Issue-age-rated (also called "entry-age-rated"). Your premium is based on your age when you first buy the policy. Buy in earlier, and your starting rate is lower and stays tied to that younger age. The premium won't rise simply because you get older — but it can still rise for other reasons.

Attained-age-rated. Your premium is based on your current age and typically increases as you get older. It may look inexpensive at 65 and cost noticeably more at 75 or 85. These policies often have the lowest starting price and the steepest long-term climb.

Why the premium can rise even though benefits can't

Federal rules guarantee that once you have a standardized Medigap policy, the insurer can't quietly water down the benefits. What the rules do not do is freeze the price. Three forces commonly push premiums up:

• Inflation and rising health care costs. As the price of medical care goes up, so does the cost of covering the gaps.
• Claims experience. Insurers look at how much they're paying out across the group of people who hold a policy. If claims run higher than expected, rates can be adjusted for everyone in that group.
• Your age (attained-age plans only). With attained-age pricing, aging itself is a built-in reason for the premium to rise.

Community-rated and issue-age-rated policies are not immune to inflation or claims-based increases. They just don't add an age-based bump on top.

What this means for shoppers in Warner Robins

Warner Robins is in Houston County, and like the rest of Georgia, the Medigap options available to you depend on which insurers are licensed to sell here and which pricing methods they use. Not every method is offered by every carrier in every state, so it's worth asking directly:

• Which pricing method does this policy use — community-rated, issue-age-rated, or attained-age-rated?
• How often have premiums been adjusted in recent years?
• If I stay on this plan for 10 or 20 years, how is the premium expected to change?

A policy that looks cheap today can be the most expensive one later, and a policy that looks pricier at 65 can end up steadier over time. The lowest starting number is not always the best long-term fit.

Common mistakes to avoid

• Comparing only the first-year premium. Two policies with the same benefits can behave very differently over 15 years.
• Assuming benefits change with the price. They don't. A rate increase does not mean your coverage shrank.
• Waiting past your Medigap open enrollment window. During the six months that begin when you're 65 or older and enrolled in Part B, insurers generally can't turn you down or charge more for health reasons. Miss that window and, in most states, medical underwriting can apply.
• Skipping the pricing-method question. It's the single most useful thing to ask before you sign.

Where to get personalized help

For plan-specific questions, call the insurer directly and ask for the pricing method in writing. For unbiased, free help, Georgians can contact GeorgiaCares, the state's SHIP (State Health Insurance Assistance Program). You can also visit medicare.gov or call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048, 24 hours a day, 7 days a week.