Issue Age vs Attained Age Medigap Plans

Attained Age vs Issue Age vs Community Rated Medigap Plans

Do you have an idea of how insurance companies price their Medigap plans? Are you wondering how these companies will charge you for your plan? How a company prices their policies will determine how much you end up paying for coverage.

Insurance companies have several pricing methods available when charging you for a Medigap plan. By understanding how these pricing methods work, you can find a Medigap plan that best suits your needs and budget.

Before we jump in, I just want to clarify some terminology before we start going over this topic. When we say Medigap, we’re also referring to Medicare Supplement insurance plans. We use these terms interchangeably, but they both mean the same thing.

Medicare Supplement Pricing Methods

There are 3 ways to calculate premiums for Medicare Supplement insurance.

Attained age
Issue age
Community-rated

Attained age is the most common method and is based on your current age. Issue age is based on your age when you first purchase the policy. Community rated means that everyone pays the same amount, regardless of their age.

Let’s go over these in more detail

Attained-Age Medigap plans

Age-attained policy premiums are always based on your current age. So, as you get older, your costs will go up. Usually, the insurance company only charges a small amount extra for each new year. Other factors can affect Attained-Age policy costs, such as the rate of inflation. Inflation would raise the price of your plan over time, as with any insurance plan.

Most insurance companies only sell attained-age-rated plans, which is the most common pricing method for Medicare Supplement plans.

This type of policy will be cheaper for you at age 65 than it will be when you turn 70.

Example
Here’s an example of how attained-age-rated pricing works: Imagine enrolling in a Medigap plan at age 65. Your monthly rate might be $119 when you first bought your plan. When you reach 70, you Medigap premiums may have increased to $130 each month. By the time you reach age 75, your Premium may cost $162.

Issue-Age Medigap Policies

Issue-Age Medigap policies are those that are priced based on the age of the policyholder when they first enroll in Medicare. This means that your monthly premiums will not go up as you get older.

Inflation and other economic conditions could lead to an increase in the price of your plan over time, but your age will never be a factor in your premium rate.

The cheaper your premiums will be if you enroll in an issue-age-rated Medigap plan when you are younger. Issue-age-rated Medigap plans have lower rates for younger people because they are less likely to use healthcare services compared to older policy holders.

Example
Here is an example: If you enroll in a Plan N at age 65, your premium might be $115 per month. However, if you wait until you turn 75 to enroll, you might pay $155 each month for the same issue-age-rated Medicare Supplement Plan N.

Several states require Medigap companies to price their plans using issue-age:

Issue Age States

*In these states, the insurance companies are able to choose to use community-ratings instead by using an Appeal process if they decide to.

Community-Rated Medigap plans

Community-rated policies have a higher initial price, but can be cheaper for older people. If everyone in the community enrolled in the same plan, they would all be charged the same base rate, regardless of things like gender. This isn’t a good deal for women, who represent half of the population. Premiums for women are typically lower with other pricing methods.

An insurance company that will sell you a community rated policy will charge all the people in the same geographical area the same price. This price is set regardless of whether someone enrolls at age 65, 70 or 75. As a result, your standard monthly premium will be the same price as other people in your city.

There are only a few Medigap insurance companies that use the community rating method. These companies usually offer lower prices to younger customers. However, as you get older, the price goes up. In the long term, these policies might not be as affordable as choosing a plan with the best rate when you first enroll and one that has a history of only small price increases.

The following are community-rated Medigap states:

Community-Rated Medigap States

Arkansas
Connecticut
Massachusetts
Maine
Minnesota
New York
New Vermont
Washington

Which is better attained age or issue age (The best pricing method)?

Different people have different opinions about the best way to price a Medigap plan. There are pros and cons to both issue age vs attained age Medigap policies.

The rates for Medigap policies usually go up a little bit each year to keep pace with inflation. The state Insurance Department has to approve any rate increase, so the increases are usually pretty small.

Additionally, attained-age rated policies are the most common type of policy, meaning that there is a large pool of insured policyholders. This helps to reduce and spread the insurance risk over many people, making pricing on this type of policy very competitive. In general, attained-age policies might be more expensive in the short run but may be a better value in the long run. Issue-age policies can be a good value in areas where they are common. Ultimately, the best policy for you will depend on your specific needs and budget.

The rules regarding Medigap pricing methods vary from state to state. In some states, insurance companies are allowed to choose their own rating method. However, in other states, the companies are told which method is allowed to be used. It is important to work with a licensed Medicare agent who understands the rules of your state and can inform you of the various pricing methods available to you.

In conclusion, it is important to remember that all three pricing methods will go up over time. The best way to find a good deal is to choose a company with low rates now, and that has a history of not increasing rates too much. If you need help comparing plans, companies or rates, we can assist you. Just contact REMEDIGAP today at 1-888-411-1329. Don’t have time to call? Fill out our request form here.

Michael Quinn

Michael Quinn is a licensed Medicare insurance expert and cofounder of REMEDIGAP. With over a decade of experience, he helps people compare coverage options with clear, unbiased guidance. His insights have been featured by USA Today, NerdWallet and many other publications.