If you’re like a lot of people, you did things right by enrolling in a Medicare supplement plan during your six-month Medigap open enrollment period, which began the first of the month you were both 65 or older and enrolled in Medicare Part B.
By law, you were able to enroll in any of the Medicare supplement plans offered in your area, and any preexisting conditions you had could not be factored into your premium rates.
You chose a good plan at a good rate, and your investment started paying off right away.
That meant, health insurance-wise, you were set for life, didn’t it?
How Do Insurance Companies Set Medicare Supplement Rates?
Private insurance companies employ a variety of methods in setting premium rates.
Community-rated policies are one option for insurance companies. Age is not a factor in setting rates for community-rated policies. However, factors other than age may cause premiums to increase over the years—and they usually do. Holding a community-rated Medicare supplement policy is no guarantee against year-to-year rate increases.
Issue age-rated policies have their rates set based in part on the age of a person’s initial enrollment in the plan. Someone joining a plan at age 65, for example, is going to pay lower rates over the long term than someone who enrolled in the same plan at age 70. As with community-rated policies, various factors generally lead to rate increases over the years.
Attained age-rated policies set rates according to the current age of the policyholder. By most estimations, Medigap policies setting rates according to current age see more significant increases than community-rated or issue age-rated policies.
Many people who purchase attained age-rated policies at age 65 notice a spike in their Medigap rates when they reach age 67 or 68. Fortunately, this is not the case with all policies.
Vigilance Can Save You Money
Along with the flexibility of not limiting you to a healthcare network, Medigap offers the flexibility of allowing you to switch to a new policy at any time. If you have preexisting conditions, you have to be cautious in considering a change, but there is nothing to prevent people in relatively good health from shopping the market for new Medicare supplement policies when they are hit by age-related rate increases or rate increases for any other reason.
You should not cancel your previous Medigap plan until you are covered by your new policy. There is a 30-day period in which you can keep both policies, and it is best to play it safe even though you will be required to pay both premiums for the month. After the 30-day period you can no longer hold both policies.
Finding the lowest Medicare supplement rates available in your area is easy. Start by getting a free Medigap quote, and then get in touch with a MedicareMall Medicare supplement plans representative who will be eager to walk you through every option for saving money or improving coverage.
Have you ever been hit by a big increase in your Medigap rates after reaching a certain age? Tell us about it!
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