Attained-Age vs. Issue-Age Rates with Medicare Supplement
Key Takeaways
- Medicare Supplement plans fill gaps in Original Medicare coverage.
- Attained-age-rated Medigap plans set premiums based on your age when you enroll and increase as you get older.
- Issue-age-rated Medigap plans set premiums based on your age when you enroll but don’t increase as you get older.
- Community-rated Medigap plans are not based on age and generally charge the same premium to everyone.
If you want help affording your Original Medicare out-of-pocket costs, you can enroll in a Medicare Supplement plan, also known as a Medigap plan. These plans, offered by private insurance carriers, “fill in the gaps” in Original Medicare coverage so you pay less out-of-pocket medical care costs. For example, these plans may cover Original Medicare’s deductibles, coinsurance, and copays.
In most states, 10 standardized plans are available, each offering a different level of coverage. These plans are labeled alphabetically from Plan A to Plan N.
Plan availability depends on where you live, and each state sets different rules for Medigap plan pricing. However, Medigap plan pricing is based on three main rating categories or formulas: attained age, issue age, and community-rated. Here’s a quick look at attained age vs. issue age pricing:
- Attained age: Attained-age pricing uses your current age to calculate monthly premiums. As you get older, your premiums increase accordingly.
- Issue age: Issue-age pricing uses only the age from when you signed up for a plan to calculate your premiums. Your pricing does not increase as you get older.
- Community-rated: Community-rated plans do not use age as a factor. Instead, everyone pays the same amount.
This article reviews the differences between attained age vs. issue age vs. community-rated plans and how to choose the best Medigap plan for your needs.
Attained-Age Medigap Plans
Attained age Medigap plans calculate your monthly premiums based on your current age. This means you have low premiums when you are younger, but rates increase as you age. Your level of coverage does not change despite the increasing price.
Rates generally increase by a small percentage annually or within a set timeframe, such as a certain percentage every five years. State health insurance agencies approve rate increases.
Attained age policies are the most common model for Medigap plans, but some states prohibit this type of pricing. States where insurers cannot use the attained age pricing model are:
- Arizona
- Florida
- Georgia
- Missouri
Attained age plans may seem attractive when you’re younger because of their low premiums, but they may become expensive over your lifetime. It’s important to keep this in mind when choosing a Medigap plan.
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Issue Age Medigap Policies
Issue-age-rated policies also use your sign-up age to calculate your premium costs. The main difference is that your costs won’t increase because you’re getting older. The age-based rate you pay when you sign up is the rate you’ll be locked into.
Issue age-rated policies use your plan enrollment age to calculate your premium costs. Your costs do not increase as you age. However, that doesn’t mean your premium will remain the same indefinitely. Plans can still increase premiums based on other factors like:
- Inflation
- Where you live, especially if you move
- Whether or not begin smoking
If you sign up when you first become eligible to purchase Medigap, this plan is less expensive over time than attained age plans. However, issue age-rated plans start with higher premiums than attained age plans. Note that not every state offers issue age plans.
Community-rated Medigap Plans
Community-rated Medigap plan premiums rely on where you live rather than on your age. Everyone within a certain geographic area pays the same monthly premium for the same Medigap plan. For example, if you’re 75, you’ll pay the same premium as someone who is 65 for the same Medigap plan.
Because everyone pays the same price, premiums may be higher than in age-dependent plans. The community-rated model is the least common nationwide. However, it’s legally required to be offered to policyholders over 65 in several states, including:
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Do Medicare Supplement Premiums Increase With Age?
Your Medigap premiums will increase with age if you sign up for an attained age-rated plan. Medicare Supplement premiums will not increase because of your age with issue age-rated and community-rated plans.
That said, no Medicare Supplement premium is guaranteed to stay the same price forever. Most policies fluctuate in price each year based on factors unrelated to age, including general inflation, your smoking status, and where you live.
Other Premium Cost Factors
The plan you choose affects costs. For example, Plan B, Plan D, and Plan G have higher average costs because they offer more coverage. Lower-cost plans include Plan K and Plan M, which offer fewer benefits but can still help those with Original Medicare lower their out-of-pocket spending.
Another factor that affects costs is when you enroll in a plan. While Medigap enrollment is open all year, enrolling during your six-month initial enrollment period will secure the best rates. This period begins when you turn 65 and enroll in Original Medicare.
You can enroll in any Medigap plan without medical underwriting during this time. Insurance companies can base your rates on your medical history or deny you coverage outside of this period.
Lower Your Medigap Premium Costs With Guaranteed Issue Protections
Enroll in a plan with guaranteed issue protections to pay less on your monthly premiums. Federal law provides guaranteed issue protections for people 65 and older who sign up for Medigap policies during a six-month open enrollment period, starting the first month of Medicare Part B coverage.
During this time, you can enroll in any Medigap policy sold in your state, and insurance companies cannot deny you coverage or raise your premium if you have pre-existing health conditions.
Guaranteed issue protections also kick in for certain qualifying events, such as:
- Your employer canceling retiree coverage
- Your Medicare Advantage plan discontinuing coverage in your area
- Your Medigap insurance company going bankrupt, causing you to lose your coverage
Some states also offer expanded protections outside your initial Medigap enrollment period:
- Connecticut
- Massachusetts
- Maine
- New York
Choosing a Medigap Plan With the Right Rating Model for You
Medigap pricing models are just one of the many factors that affect the premiums you pay over the years, so be sure to consider more than attained age vs. issue age pricing models. Also consider your individual needs, such as which Medicare benefits you’re most likely to utilize. For example, if you routinely need care at a skilled nursing facility, opt for a plan that covers the coinsurance for skilled nursing facility care.
You also want to consider the plan provider’s reputation. While all plans are standardized and have to offer the same coverages everywhere, some plan providers may be better than others at customer service and retention. Always choose a well-ranked provider with good reviews from other Medigap customers.
Putting It All Together
Deciding between attained age vs. issue age Medicare Supplement plans can be tricky. Issue age-rated plans offer a more stable price, but you could pay more upfront. Attained age-rated plans are cheaper upfront, but premiums rise as you get older.
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Sources
- Medicare Supplement Insurance. Medicare.gov.
- Key Facts About Medigap Enrollment and Premiums for Medicare Beneficiaries. KFF.org.
- How Much Does a Medicare Supplement Insurance Plan Cost? Nerdwallet.
- Get ready to buy. Medicare.gov.
- Illegal Medigap practices. Medicare.gov.
- Limited Medigap Consumer Protections Are Associated With Higher Reenrollment In Medicare Advantage Plans. NIH.gov.
- How to compare Medigap policies. Medicare.gov.
- Costs of Medigap policies. Medicare.gov.
- State Health Insurance Assistance Program. Shiphelp.org.