Issue-Age Pricing for Medicare Supplement Insurance Plans
How does issue-age pricing work?
Some Medicare Supplement (Medigap) insurance plans are based on issue-age pricing, which means that the insurance company bases the cost of your premium on your age at the time that you buy — or are issued — your Medicare Supplement policy.
For this type of pricing structure, the premiums are lower for individuals who purchase at a younger age and, like community-rated pricing, the premiums will not go up due to your age. Prices may go up due to other factors, including inflation and rising health care costs.
In the long run, however, issue-age Medicare Supplement insurance plans may still end up being cheaper than other types, such as attained-age plans.
Examples of how issue-age pricing works
The following example shows how issue-age pricing for a Medicare Supplement insurance plan works with two hypothetical beneficiaries:
Mr. Jackson is age 65. He purchases a Medicare Supplement insurance plan and pays a $155 monthly premium.
Mrs. Milton is age 72. She purchases the same Medicare Supplement policy as Mr. Jackson. However, because she is older when she buys it, her monthly premium is $185.
Please note that these aren’t actual examples, but are meant to illustrate how issue-age pricing works.
Other factors that can increase Medicare Supplement insurance plan costs
Even issue-age and community-age plans, which do not increase premiums as you age, may still go up in price to adjust for inflating and rising health care costs. Other factors that can affect the overall cost of what you pay include Medicare Supplement insurance plans with a high-deductible, discounts, and whether your insurer uses medical underwriting (which can cause the premium to go up). In addition, some states offer Medicare SELECT policies, a type of Medicare Supplement insurance plan that is typically cheaper because it limits your coverage to a specific network of health care providers.
When deciding whether to enroll in a Medicare Supplement insurance plan, it is important to look at the policy’s pricing model so you can be aware of how much premiums will cost, both now and into the future. Not all insurance companies price Medicare Supplement insurance plans with issue-age pricing, and the way a plan is priced can mean that you pay more down the road. You should pick the plan that will best fit both your health needs and financial situation in the future.
To start comparing Medicare Supplement insurance plans, just enter your zip code where indicated on this page. You can also talk to one of eHealth’s licensed insurance agents – you’ll find contact information at the bottom of the page.
Source: Choosing a Medigap Policy. Baltimore: Centers for Medicare and Medicaid Services, 2015.