The three types of Medigap premium pricing are attained-age (premiums increase as you age), issue-age (premiums are based on your age when you buy and remain more stable), and community-rated (premiums are the same for everyone, regardless of age). The choice between attained-age, issue-age, and community-rated depends on where you live and whether you prioritize lower initial premiums or predictable, long-term costs. Consulting a licensed agent helps you compare all three.
What is an attained-age Medigap policy?
The pricing structure of an attained-age Medigap policy is based on your age at the time of enrollment. This means your premium will increase as you get older, typically on an annual basis. Issue-age policies, on the other hand, set premiums based on your age at the time of purchasing the policy, and these premiums remain consistent for the life of your coverage (aside from general inflation).
Premiums Start Lower But Increase with Age
An attained-age Medigap policy calculates your monthly premium based on your current age, which means it often starts with a lower premium when you first enroll. However, because the cost is tied to your age, the premium will automatically increase over time as you get older.
Key Financial Factors to Consider with Attained-Age Pricing
Choosing an attained-age Medigap policy offers the immediate benefit of a lower premium right at the start of your Medicare coverage, which can be attractive for those on a fixed income. However, financial planning must account for the long-term reality that these premiums will increase annually as you age, often leading to significantly higher costs in your later retirement years (75 and beyond). Therefore, while issue-age or community-rated plans may seem more expensive initially, they offer greater premium stability over a decade or more, providing a more predictable and financially secure expense stream for long-term budget management.
Comparing Other Medigap Plan Pricing Structures
Beyond the attained-age method, two other pricing structures offer beneficiaries greater premium stability, though they may carry higher initial costs. Understanding the differences will help you plan for your long-term financial goals and healthcare needs.
Issue-Age Medigap Policies
With an issue-age Medigap policy, your premium is determined by your age at the moment you first sign up for the plan, or the "issue age." The rate you secure at that time is essentially locked in for life. While the premium is still subject to modest increases due to general inflation and rising overall healthcare costs, it will not increase simply because you get older.
Community-Rated Medigap Policies
Community-rated (or "no-age-rated") policies are the third and most consumer-friendly pricing structure. These plans charge the same premium to every person who has the policy, regardless of their age or the date of enrollment. For example, a 65-year-old and an 85-year-old with the same plan in the same area pay the same monthly rate. Like issue-age policies, these rates can only increase due to non-age-related factors, like inflation. While the initial premium might be higher for a newly-enrolled 65-year-old, this model offers the most predictable long-term costs over the policyholder's lifetime.
State-Specific Policies: Issue-Age and Community-Rated
State insurance regulators have a significant impact on which Medigap pricing structures are available or mandated in your area, creating highly valuable consumer protections in certain regions.
States That Mandate Community-Rated Medigap Plans
Several states require insurance carriers to use community rating for most or all Medigap policies, ensuring age is not a factor in pricing. This offers the greatest protection against rapidly rising premiums as you age.
States that mandate community rating include:
States That Prohibit Attained-Age Pricing
A few states specifically allow the issue-age model but prohibit the attained-age model. The implication for the user in these areas is the assurance of predictable long-term costs, as rates are permanently based on the age of enrollment.
States that prohibit attained-age pricing (mandating issue-age or community-rated options) include:
If you live in any of the states listed above, you have regulatory assurances that your Medigap premium will not increase solely because you get older.
Switching Medigap Plans After Open Enrollment
Your initial Medigap Open Enrollment Period is the one time you can buy any Medigap policy without regard to your health. If you wish to switch plans later, you must navigate a different set of rules.
Reviewing Guaranteed Issue Rights for Switching Policies
Federal Guaranteed Issue (GI) Rights are specific situations that grant you a federal right to enroll in a Medigap plan without medical underwriting. If one of these events occurs, the insurer cannot deny you coverage or charge you a higher premium due to a pre-existing condition.
Common GI Right situations include:
You lose employer-sponsored retiree health coverage.
Your Medicare Advantage (Part C) plan leaves your service area.
You drop your Medicare Advantage plan within the first year of joining (your trial period).
If you qualify for a GI right, you typically have 63 days to apply for a new Medigap policy.
The Role of Medical Underwriting When Changing Plans Later
Outside of the limited circumstances that trigger Guaranteed Issue Rights, insurance carriers in most states are permitted to use medical underwriting when you apply to switch Medigap policies. This means you must answer detailed health questions, and the company can deny you coverage or charge you a higher premium based on your medical history. Consequently, medical underwriting can be a major barrier to switching plans later, emphasizing the financial importance of choosing the most suitable rating structure and plan during your initial, guaranteed-issue enrollment window.
SelectQuote Can Help You Find the Supplemental Coverage You Need
If you already have Original Medicare and are curious about other options to help you address gaps in healthcare coverage, you may choose to explore Medicare Supplement plans. Not sure where to start? Our licensed insurance agents are here to help. If you’re new to Medicare, recently moved, or lost your health insurance, you may qualify for a no-obligation Medicare plan review.
