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Medicare Supplement Pricing Methods - Medigap Pricing
There are three different pricing methods used by Medicare Supplement Insurance companies. Below, we will explain the difference between these three various Medicare Supplement Pricing Methods. It is important to remember a few things first... Regardless of which pricing method the medigap insurance company uses in your state, the pricing method used will only affect your rate based on your age. No matter which pricing method is used, you can still receive rate increases due to medical inflation, greater claims experience, and the overall rise in cost of healthcare. Most companies will use the below "attained age" pricing method. Studies have shown that individuals will typically experience the lowest cost of healthcare by purchasing an attained-age policy.
Attained Age Pricing Method
This pricing method means that the insurance company will determine your rates based on your current age every year (your attained age). Your premium will go up each year according to your current age (as well as other factors). This is the most popular and widely-used pricing method. Example: John, age 65 purchases a Plan F that costs $120 per month. As he ages to 70, his rate has went up to $150 per month. This is because he has now attained an older age.
Community Rating Pricing Method
This pricing method means that everyone in your "community" will pay the same rate, regardless of age. However tobacco usage and health problems could possibly put you in a higher rate class, meaning your prices would be higher. A "community" may mean your entire state, or at least a large portion of your state. This is sometimes called the "no-age-rated" method. Example: John, age 67 purchases a Plan G that costs $150 per month, and Susan purchases the same Plan G at age 74 and also pays $150 per month. Even though they are different ages and different genders, they pay the same rate--the same as other "community members".
Issue Age Pricing Method
This pricing method means that your insurance policy will will be based on the age you were when you originally purchased the plan. If you purchase the plan at age 67, you will always pay the rate of a current 67 year old, however this does not mean that your price will not increase. You will still receive rate increases due to medical inflation and other factors. This is sometimes called the "age in" policy. Example: John purchases a Plan G for $120 per month at age 65 when he was first eligible. He always pays the "current rate" of anyone who purchases a new policy as a 65 year old male. In 5 years he may be paying more than the original $120, but he will pay the same as any new 65 year old male that purchases today. However, Edward who is age 71 purchases the same Plan G for $150 per month. He will always be considered a 71 year old as far as rate calculations are concerned, and will always pay the rate of a new 71 year old who purchases today, regardless of Edward's current age.
To learn more about the different Medicare supplement companies and plans offered in your area, please fill out our quick online quote form and see all plans & prices directly online. Or call us today at (855) 419-3826.
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