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Your Medicare Supplement Insurance premiums may increase over time, but the amount and timing depend on several factors. Some insurance plans will have increases simply because you're getting older.
Medicare Supplement Insurance (Medigap) companies try to limit premium increases to once a year, says Bill Gay, a licensed Medicare insurance agent and owner of Sun Coast Legacy Advisors.
Despite the limited number of price hikes, several factors affect how your premiums may increase including the plan's pricing methods and the rising cost of Medicare.
Pricing methods define if and how your Medigap monthly premiums will increase as you age. Medigap insurance companies price policies based on one of the following structures:
Attained-age pricing bases the premium on your current age. If you have an attained-age pricing plan, your premium will increase each year.
Community-rated pricing doesn't let your age affect your premiums. Premiums can increase based on inflation and other factors such as tobacco use. If you have a community-rate pricing plan, you would be quoted the same rate as those both younger and older than you.
Issue-age pricing bases the premium on how old you are when you buy the policy. The premium does not increase based on your age, but it can increase for other reasons.
If you need help deciding which method to choose or if you need help figuring out which method you currently have, you can call an agent at 1-866-865-9815 or fill out the form to the right of this page.
Or call now to speak with a licensed insurance agent:
The popularity of the three pricing methods differ across the country.
For example, where Gay works in Florida, attained-rated pricing is not available.
The same is true in Georgia, where Dan McBrayer works as a certified long term care insurance advisor. He usually sells policies with issue-aged pricing. If the policy uses factors other than age to determine premiums, other factors will determine the increases.
McBrayer said patient health factors, such as tobacco use, affect both the short-term and long-term cost of Medigap. One of his clients, a 66-year-old male smoker, paid $180 for Medigap Plan F. If he was not a smoker, McBrayer said his premium would likely be $20 to $30 less per month.
National statistics correlate with McBrayer's findings. A Kaiser Family Foundation (KFF) report found that smokers paid 12% higher monthly premiums than non-smokers.1
Two additional factors that affect premiums are increases in inflation and health care costs. As the overall cost of health care rises, the insurance to cover the costs must also increase.
McBrayer said that premium increases average about 6% to 10% a year. Since plans costs vary based on the insurance company, outlier cost ranges can occur. He said that Blue Cross Blue Shield Medicare Supplement recently experienced a larger than average increase ranging between 11-12%. The company-specific premium changes are an outcome of company costs and the loss ratio, which is the percentage of premiums that an insurance company collects that is returned to policyholders in the form of health benefits.
“The cost of insurance is a function for how well the company is doing with their loss ratio,” McBrayer said.
On a national scale, Medigap premiums have risen more moderately. According to the KFF report, the national average premium increased 13% between 2007 and 2010. That's an average annual increase of about 4.1%.
Many of McBrayer's clients are not surprised by the premiums, partly because Medigap yearly increases are significantly lower than premium increases for individual insurance plans. Leading up to their 65th birthday, he said some people's individual insurance plan premiums go up 20%-25%.
Since Medigap typically has much smaller premium increases, it's less of a surprise. “People understand that rates are going to go up,” McBrayer said.
Gay believes that increased premiums are partially due to the moderate coverage provided by Original Medicare. When Medicare provides limited coverage of a health care service, supplemental plans will be forced to pay the difference and increase premium costs. But he predicts that the yearly shifts will be minimal due to the slow evolution of the federal program.
“Everything in Medicare and this industry is slow to change,” Gay said. “I think companies are slow to react as well.”
He said that the yearly increases will be small and manageable for most.
“The price increases are not going to be so dramatic to price them out of their plan,” Gay said.
If you want to find a Medigap plan and compare different pricing methods, simply call 1-866-865-9815 or fill out the form here.
Or call now to speak with a licensed insurance agent:
Historically, the average Medicare Supplement plan rate increases around 5%-8% annually in 2023. Some plans even saw a jump as high as 12% rate increase. These rate increases depend on what plan you have and the what state that it's offered in. It is common to see Medigap premiums increase every year. A report by the Assistant Secretary for Planning and Evaluation (ASPE) published a report finding that the average increase of 3.8% Medigap premiums between 2001 and 2010.
1 https://kaiserfamilyfoundation.files.wordpress.com/2013/04/8412-2.pdf
Christian Worstell is a licensed insurance agent and a Senior Staff Writer for MedicareSupplement.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options.
His work has been featured in outlets such as Vox, MSN, and The Washington Post, and he is a frequent contributor to health care and finance blogs.
Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.
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