Medicare Supplement

In Marshalltown, why a Medigap bill can climb while the coverage stays the same

MARSHALLTOWN, Iowa — If you have a Medigap policy, or you're shopping for one, here's something that surprises a lot of people: the benefits on a lettered Medigap plan are set by the federal government and don't change, but the premium you pay can still go up over time. The reason usually comes down to which of three pricing methods your insurer uses.

Medicare SupplementMarshalltown, IA

Marshalltown is in Marshall County, where residents on Original Medicare can pair their coverage with a Medigap policy sold by a private insurer. Every Plan G, for example, covers the same things as every other Plan G — that part is standardized. What isn't standardized is how insurers decide what to charge you, and how that price moves as you age.

The three pricing methods, in plain English

According to the Centers for Medicare & Medicaid Services (medicare.gov), insurers generally use one of three approaches to price a Medigap policy:

Community-rated (also called "no-age-rated"). Everyone who has the same policy pays the same base premium, regardless of age. A 68-year-old and an 80-year-old with the same plan letter from the same insurer would start at the same price.

Issue-age-rated. Your premium is based on the age you were when you first bought the policy. Buying younger generally means a lower starting premium, and the price doesn't go up simply because you have another birthday.

Attained-age-rated. Your premium is based on your current age, so it goes up as you get older. It may start out lower than the other two methods, but it typically climbs each year as you age.

Why the premium can still rise even when benefits can't

This is the part that trips people up. Medigap benefits for a given plan letter are fixed by federal rules — an insurer cannot quietly trim your coverage. But the premium is a different story. Even with community-rated or issue-age-rated policies, the price you pay can go up for reasons that have nothing to do with your age:

• Inflation. The general cost of health care goes up, and premiums often follow.
• Claims experience. If the pool of people holding a given policy uses more care than expected, the insurer can raise rates for that group.
• Your age (attained-age plans only). With this pricing method, aging itself is a built-in reason for the premium to rise.

So when you hear "the benefits can't change," that's true. It just doesn't mean the bill can't.

Which method will you be offered in Iowa?

Which pricing methods are available depends on the insurer and the state. Some states require or restrict certain methods; others leave the choice to the carrier. Rather than assume, ask the insurer directly: "Is this policy community-rated, issue-age-rated, or attained-age-rated?" That single question tells you a lot about how your premium is likely to behave over the next 10 or 20 years.

You can also call your local State Health Insurance Assistance Program (SHIP) — Iowa's SHIP is called SHIIP — for free, unbiased help understanding your options.

What to think about before you buy

A lower starting premium isn't the whole story. An attained-age policy may look attractive at 65 and feel very different at 80. A community-rated or issue-age-rated policy may cost more up front but change more slowly with age. Neither approach is automatically "right"; it depends on your budget, your health, and how long you expect to keep the policy.

Also worth knowing: your best window to buy a Medigap policy is usually 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 generally can't turn you down or charge you more because of health conditions. Outside that window, the rules can be less forgiving.