Medicare Supplement

Waipahu Medigap shoppers: the three pricing methods that decide how your premium grows

WAIPAHU, Hawaii — If you are shopping for a Medicare Supplement policy, also called Medigap, here is something that surprises a lot of people: the benefits in a lettered Medigap plan are standardized and cannot change, but the premium you pay for that plan can — and usually does — go up over time.

Medicare SupplementWaipahu, HI

Why? Because insurers are allowed to use different methods to set that premium in the first place, and each method behaves differently as the years pass. Understanding the three methods before you sign anything can save you a headache later.

First, what "standardized" really means

Medigap policies sold to people new to Medicare today are labeled with letters — Plan A, Plan B, Plan D, Plan G, Plan K, Plan L, Plan M and Plan N. (Plans C and F are generally no longer sold to people who became eligible for Medicare on or after January 1, 2020.)

Every Plan G sold by every company must include the same core benefits. That part is set by federal law. What is NOT set by law is the premium. Two insurers can sell the identical Plan G in the same ZIP code and charge very different amounts. That is legal — and it is why comparison shopping matters.

The three pricing methods

According to CMS guidance on Medicare Supplement Insurance (medicare.gov), insurers generally use one of three methods to price a Medigap policy.

1. Community-rated (also called "no-age-rated") Everyone who has the policy pays roughly the same monthly premium, regardless of age. A 68-year-old and an 80-year-old with the same plan from the same company pay about the same. The premium can still go up over time because of inflation and claims costs — but not because you had another birthday.

2. Issue-age-rated (also called "entry-age-rated") Your premium is based on the age you were when you first bought the policy. Buy at 65, and your premium is tied to that starting age. It will not go up simply because you turn 70 or 80 — but it can still rise due to inflation and overall claims experience.

3. Attained-age-rated Your premium is based on your current age, so it goes up as you get older. These policies often look inexpensive at 65 and grow more expensive over time. On top of that, inflation and claims costs can push the premium up further.

Why the premium can climb even when the benefits can't

This is the part that trips people up. Because the benefits are standardized, some shoppers assume the price should be locked in too. It is not.

Three things can push a Medigap premium higher after you enroll:

• Age — but only if the policy is attained-age-rated.
• Inflation — the general rising cost of medical care.
• Claims experience — how much the insurer paid out for the whole group of people who hold that policy.

The second and third apply to all three pricing methods. So even a community-rated or issue-age-rated policy can see rate increases; they just are not tied to your birthday.

What this means for Waipahu shoppers

Waipahu is in Honolulu County, and Medigap availability, along with which pricing methods insurers use, is set at the state and insurer level, not by city. Hawaii's rules and the mix of insurers offering Medigap here can differ from what a friend or relative sees on the mainland, so it is worth asking questions specific to Hawaii before you commit.

A few practical questions to ask any Medigap agent or insurer:

• Is this policy community-rated, issue-age-rated, or attained-age-rated?
• How often has this policy had rate increases in recent years?
• What is the premium at my current age — and what would it be at 75 or 80 under this method?

You also have the strongest protections when you first enroll. During your Medigap Open Enrollment Period — the six-month window that starts the month you are 65 or older AND enrolled in Part B — insurers generally cannot deny you coverage or charge more because of health issues. Outside that window, medical underwriting may apply.

Where to get unbiased help

• medicare.gov — Use the Medigap policy search tool and read the official "Choosing a Medigap policy" guide.
• 1-800-MEDICARE (1-800-633-4227) — Available 24/7.
• Hawaii SHIP (State Health Insurance Assistance Program) — Free, one-on-one Medicare counseling from trained volunteers who do not sell insurance.