Medicare Supplement

Before you buy a Medigap policy in Mukilteo: the pricing method matters as much as the letter

MUKILTEO, Wash. — When shoppers here compare Medigap policies, most focus on the plan letter — A, G, N and the rest. But two policies with the exact same letter, sold by two different insurers, can be priced in completely different ways. That pricing method shapes what you pay at 65, what you pay at 75, and how quickly your bill can climb.

Medicare SupplementMukilteo, WA

Federal rules keep Medigap benefits standardized. What is not standardized is how insurers set the premium behind those benefits. Understanding the three pricing methods before you sign an application can save you frustration later, because once you are locked in, switching Medigap plans in Washington may require medical underwriting.

The rule that makes pricing method matter

Every standardized Medigap plan with the same letter covers the same things. A Plan G from one insurer pays the same gaps in Original Medicare as a Plan G from another. What differs is the premium — and, importantly, how that premium is calculated and adjusted as you get older.

That is why two Mukilteo neighbors, both on Plan G, can pay very different amounts. It is not because one has "better" coverage. It is because their insurers use different pricing methods, and they enrolled at different ages.

Method 1: Community-rated (also called "no-age-rated")

With a community-rated policy, the insurer charges the same base premium to everyone who buys that plan in a given area, regardless of age. A 65-year-old and an 80-year-old buying the same policy today would pay roughly the same starting rate.

The premium does not go up simply because you had a birthday. It can still rise, though, because of general inflation in health care costs or the insurer's overall claims experience.

Method 2: Issue-age-rated (also called "entry-age-rated")

An issue-age policy sets your premium based on the age you were when you bought it. Buy at 65 and your base rate reflects a 65-year-old. Buy the same policy at 72 and your base rate reflects a 72-year-old — a higher starting point.

Once you are in, your premium does not go up just because you turn another year older. Like the community-rated method, though, it can still rise due to inflation or claims trends across the insurer's book of business.

Method 3: Attained-age-rated

Attained-age policies typically start with the lowest premium at 65, which is why they can look appealing on a comparison page. But the premium is tied to your current age — your "attained" age — and it steps up as you get older, often every year or on a set schedule.

On top of those age-based increases, attained-age policies can also go up because of inflation and claims experience. Over 15 or 20 years, this method can grow into the most expensive of the three, even though it started as the cheapest.

Why premiums rise when benefits cannot

Federal rules lock in what a standardized Medigap plan covers. They do not lock in the price. Insurers can — and do — raise premiums for reasons that have nothing to do with your individual health:

• General inflation. Medical prices, hospital costs and provider payments rise over time.
• Claims experience. If the pool of people insured under that plan uses more care than expected, rates can be adjusted.
• Your age, but only if the policy is attained-age-rated.

None of the three methods is immune to the first two. The difference is whether age is added on top.

What this means for a Mukilteo shopper

Which pricing methods are actually offered depends on the insurer and the state. Not every method is available for every plan letter in Washington, and the mix can change over time. That makes it worth asking, before you enroll, exactly how the policy in front of you is priced.

A few practical questions to raise with any insurer or licensed agent:

• Is this policy community-rated, issue-age-rated, or attained-age-rated?
• What has this specific plan's rate history looked like over the past several years?
• If I enroll now during my Medigap Open Enrollment Period, can I be turned down or charged more later based on health? (In your six-month Medigap Open Enrollment window that starts when you are 65 and enrolled in Part B, insurers generally cannot use medical underwriting.)

Mukilteo is in Snohomish County, and Medigap availability is regulated at the state level by the Washington Office of the Insurance Commissioner. Rules on switching, guaranteed-issue rights and available plan letters follow Washington law rather than city or county boundaries.