Medicare Supplement

Same Medigap benefits, higher bill? Three pricing rules explain it

# Same Medigap benefits, higher bill? Three pricing rules explain…

NORTH BERGEN, N.J. — If you have a Medigap policy, or you're shopping for one, here's a puzzle worth understanding before you sign anything: federal rules lock in the benefits of each lettered Medigap plan, but they do not lock in the price. Two neighbors on the same block in North Bergen can hold the very same plan letter and pay very different premiums — and see very different increases over the years — because insurers are allowed to price these policies in three different ways.

Knowing which method your insurer uses is one of the most overlooked parts of buying a Medigap policy. It can shape what you pay at 75 or 85, even though the coverage itself never changes.

Benefits are fixed. Premiums are not.

Medigap policies sold today come in standardized letter plans (like Plan G or Plan N). Once the federal government defines what a plan letter covers, every insurer that sells that letter has to cover the same things. That's why Plan G from one company pays the same Part B coinsurance as Plan G from another.

What is not standardized is the price. Each insurer decides how much to charge, subject to state review, and picks one of three pricing methods below. That is why the premium can climb over time even though your benefits, by law, cannot shrink.

The three ways insurers price Medigap

1. Community-rated (also called "no-age-rated"). Everyone who buys the same policy from that insurer pays roughly the same premium, regardless of age. A 65-year-old and an 80-year-old pay about the same base rate. Your premium does not go up simply because you had a birthday, but it can still go up for other reasons — like inflation or claims costs across the whole group.

2. Issue-age-rated. The premium is based on the age you were when you first bought the policy. Buy at 65 and your rate is anchored to age 65. Someone who buys the same plan at 72 starts at a higher base rate. Again, your price does not rise just because you got older — but it can still rise for inflation and claims.

3. Attained-age-rated. The premium is based on your current age and goes up as you get older. It often looks like the cheapest option at 65, but it typically increases each year (or on a set schedule) as you age — on top of any inflation or claims-driven increases.

None of the three protects you from every kind of rate hike. They differ mainly in whether age itself pushes your premium up.

Why premiums can still go up when benefits can't

Even with a community-rated or issue-age-rated policy, expect the possibility of increases over time. According to CMS's Medigap guidance on Medicare.gov, insurers can raise premiums to reflect:

• Inflation in the overall cost of health care.
• Claims experience — how much the insurer is paying out for the group of people who hold that policy.
• Age, but only with attained-age-rated policies.

State insurance departments review and approve rate changes, but "approved" does not mean "frozen." That's the piece many shoppers miss: a locked benefit is not a locked price.

What to ask before you enroll

North Bergen residents are in Hudson County, where a licensed agent or the New Jersey State Health Insurance Assistance Program (SHIP) can walk through which insurers offer which pricing methods. Which methods are available depends on the insurer and on state rules, so it is worth asking directly:

• Is this policy community-rated, issue-age-rated, or attained-age-rated?
• How often has this insurer raised premiums on this plan letter in the last five years?
• If I buy today, what would a same-plan-letter policy cost from a different insurer using a different pricing method?

Comparing the same plan letter across carriers is the fairest apples-to-apples check you can do, because the coverage really is identical.

The enrollment window that matters most

Your strongest Medigap protections — the ones that keep insurers from turning you down or charging more for health reasons — are tied to your Medigap Open Enrollment Period: the six months that begin the first month you're 65 or older and enrolled in Part B. Outside that window, in most states, insurers can use medical underwriting.

That six-month window is separate from Medicare's Annual Enrollment Period (Oct. 15 – Dec. 7) and the Medicare Advantage Open Enrollment Period (Jan. 1 – March 31), which affect Advantage and Part D — not Medigap.