If you’re shopping for a Medicare Supplement plan, you’ve probably noticed there may be significant differences in Medicare Supplement premiums. There are several factors that can affect how private health insurance companies price their policies, even for those of the same lettered name. Read on to learn some of the things that may affect your Medigap premium.

What are the main premium types private health insurance companies use?

While each private company sets its own monthly premiums for the Medicare Supplement plans it sells, most use one of the following three types of pricing structures:

  • Community Rated. With this pricing structure, everyone who buys a specific standardized plan (such as Medicare Supplement Plan G) pays the same premium, regardless of age or health status. That means a 65-year-old person pays the same premium as a 75-year-old person (if both are buying the same plan from the same company in the same state).
  • Issue-Age Rated. With this pricing scheme, your premium is based on the age you were when your plan was issued to you. For example, if you enroll at age 65, your premium might be $135, but someone who enrolled at age 75 may be charged $175 for the same plan. This generally favors younger enrollees, because your premium won’t increase based on your age, for as long as you are enrolled ( however, all premiums may go up from time to time due to inflation and other factors).
  • Attained-Age Rated. These plans offer a graduated premium structure that typically increases over time. For example, if you enroll at age 65, your premium might be $110 a month and increase to $115 at age 66 and to $150 at age 70. Health insurance companies who price use Attained-Age rating for Medicare Supplement premiums typically have comparatively low premiums for younger enrollees, but they may be the most expensive pricing structure for older enrollees.

It’s important to find out which pricing structure your insurance company uses before you enroll, since it will affect your Medicare Supplement premiums in the future.

Are there other factors that affect Medicare Supplement premiums?

There are four main issues that private health insurance companies may consider in pricing their plans,

  1. Some companies may offer discounts to certain categories of individuals, such as non-smokers.
  2. Companies may also use medical underwriting to set Medicare Supplement premiums if you do not have guaranteed-issue rights. This means premiums may be higher based on your health status or other factors.
  3. If you choose a high-deductible plan (like high-deductible Medicare Supplement Plan F*), your premiums may be lower. In 2020, this deductible was $2,340, which means that your Plan F doesn’t pay benefits until you’ve paid $2,340 out of pocket in Medicare Part A and Part B deductibles, coinsurance, or copayment amounts.
  4. If you are eligible for a Medicare SELECT policy, your premiums may be lower. With these types of plans, which are only offered by certain private health insurance companies in certain states, you may have to use providers in the plan’s network for your benefits to apply, except in the case of medical emergencies.

* Medicare Supplement Plans C and F, which may cover the Medicare Part B deductible, will be discontinued. You won’t be able to buy Plan C or Plan F if you become eligible for Medicare on or after January 1, 2020. But if you’re already eligible for Medicare before that date, you won’t lose your Plan C or Plan F, and you may be able to buy one if you don’t have it.
You might be able to buy a Medicare Supplement high-deductible Plan G in 2020 or later, no matter when you qualify for Medicare.

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