Medicare Supplement

Same Medigap Plan G in Durham, three price tags: how insurers set the rate

In Durham, two neighbors can buy the exact same Medigap plan letter from two different insurance companies and pay very different premiums. That is not a mistake, and it is not because one plan covers more than the other. It comes down to how each insurer prices the policy, how long they have been raising rates, and whether you qualify for discounts or have to answer health questions to get in.

Durham is in Durham County, and Medigap policies are regulated at the state level in North Carolina. That means the same lineup of standardized plans is sold across the state, but the companies behind them — and what they charge — vary. Here is how to compare apples to apples.

The same letter means the same coverage

Medigap plans are standardized. That is the single most important thing to understand before you start comparing. A Plan G sold by one company in Durham covers the same Medicare-approved costs as a Plan G sold by any other company in North Carolina. The benefits are set by federal rules, not by the insurer.

For people newly eligible for Medicare today, the available plan letters are A, B, D, G, high-deductible G, K, L, M and N. Plans C and F are only available to people who were eligible for Medicare before January 1, 2020.

So when you compare across insurers, you are not comparing coverage. You are comparing price, pricing method, service and stability.

Three ways insurers set the price

North Carolina allows insurers to use any of three pricing methods for Medigap, and this is where premiums start to diverge:

Attained-age rating. The premium is based on your current age and generally goes up as you get older. It often starts lower at 65 and rises over time.

Issue-age rating. The premium is based on your age when you first bought the policy. It does not go up simply because you have a birthday, though it can still rise due to inflation.

Community rating. Everyone in the same area pays the same base premium, regardless of age. Younger buyers may pay more than they would under attained-age, but rates do not climb just because you turn 75.

None of these methods is universally better. What matters is how the premium is likely to behave five, ten and fifteen years from now — and that depends on the company's rate history, not just the method on paper.

Why rate history matters more than the first-year premium

Two insurers can both use attained-age rating and still end up with very different premiums a decade later because one raises rates more often, or by larger amounts, than the other. Before you sign up, ask the insurer (or an independent agent) for the rate increase history on that specific plan letter in North Carolina over the past five to ten years.

The North Carolina Department of Insurance publishes a Medigap rate guide that shows premiums by company and plan letter, which makes it easier to see who has been steady and who has been climbing. That guide, together with the Medicare.gov Medigap policy search, is the most reliable starting point.

Household discounts and other price levers

Some insurers offer a household discount — often in the range of 5% to 12% — if you live with another adult, whether or not that person is also on Medicare with the same company. The rules vary: some require both people to have a policy with the insurer, others just require you to share a home.

Ask each insurer:

• Do you offer a household or spousal discount?
• Is there a discount for paying annually or by automatic bank draft?
• Are there any new-enrollee discounts, and how long do they last?

A discount that disappears after year one is not the same as a permanent one, so read the fine print.

When underwriting comes into play

During your Medigap Open Enrollment Period — the six months that start when you are 65 or older and enrolled in Part B — you have a guaranteed right to buy any Medigap plan sold in North Carolina, at the best available rate, without answering health questions. This is the easiest time to compare insurers, because everyone has to accept you.

Outside that window, most insurers can use medical underwriting. That means they can ask about your health, charge you more, or turn you down. Some insurers underwrite more strictly than others, and a few offer limited situations where they will waive underwriting. If you are past your Open Enrollment window, ask each insurer what their underwriting looks like before you apply.

How to build your Durham comparison list

There is no shortcut to a good comparison, but there is a clear order of operations:

1. Go to Medicare.gov's Medigap policy search and enter your Durham ZIP code. It will show every insurer licensed to sell each plan letter in your area. 2. Cross-check with the North Carolina Department of Insurance Medigap rate guide for premium ranges and rate history by company. 3. Call the North Carolina SHIP (Seniors' Health Insurance Information Program) for free, unbiased help walking through the list. 4. Contact two or three insurers directly, or work with an independent agent who represents multiple carriers, and ask about pricing method, rate history, household discounts and underwriting.

The table on this page lays out the standardized plan letters available in North Carolina. Once you know which letter you want, the comparison becomes about the company behind it.