How do private health insurance companies price their Medicare Supplement premiums?

Tamera Jackson by Tamera Jackson | Licensed since 2007
Print

This article was updated on: 09/16/2018

Find Affordable Medicare Plans in Your Area



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 F) 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 (for Medicare Supplement Plan F), your premiums may be lower. In 2018, this deductible was $2,240, which means that your Plan F doesn’t pay benefits until you’ve paid $2,240 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.

Still have questions about Medicare Supplement premiums?

I’m happy to answer your questions about Medicare Supplement plans and premium costs. If you prefer, you can schedule a phone call or request an email by clicking on the buttons below. You can also find out about plan options in your area by clicking the Compare Plans button.

The product and service descriptions, if any, provided on these Medicare.com Web pages are not intended to constitute offers to sell or solicitations in connection with any product or service. All products are not available in all areas and are subject to applicable laws, rules, and regulations.

The purpose of this communication is the solicitation of insurance.  Contact will be made by an insurance agent/producer or insurance company.

Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the Federal Medicare program.

Find Affordable Medicare Plans in Your Area





Tamera Jackson |
View profile
Licensed Insurance Agent since 2007
1- 844-847-2659
TTY users 711
Mon - Fri, 8am - 8pm ET


Compare Medicare
Plans and Save

Our shoppers found an average saving of $541/year*

Compare Plans


Can’t Find the Answer You’re Looking For?

  • saying Talk to a Licensed Insurance Agent
  • 1-844-847-2659
  • TTY Users 711
  • Mon - Fri, 8am - 8pm ET

Licensed Insurance Agents

Let us help you learn more about your Medicare plan options

8.4 out of 10
rating

9.1 out of 10
rating

9.1 out of 10
rating