January 31st 2024
By Ari Parker
Learn the distinctions between attained age and issue age in Medigap insurance policies, and understand factors that impact Medigap prices.
By Ari Parker
Medigap insurance, also called Medigap Supplement insurance, helps cover the 20% of costs that Original Medicare doesn’t cover, significantly reducing your out-of-pocket costs. Because Medigap plans of the same type (e.g., all Plan Gs) are identical, many are confused by the differences in pricing. The monthly premiums can feel kind of random if you aren’t aware of the different pricing structures that Medigap plans can have. It’s also important to know that Medigap pricing can change over time, depending on your policy’s pricing structure.
Medicare uses three pricing (or rating) structures to determine how your policy can change over time. In other words, you can have one of three kinds of Medicare Supplement policies:
Attained-age-rated
Issue-age-rated
Community-rated
Each pricing structure affects your monthly Medigap premiums differently over time. We’ll dive into each of these structures so you have a better understanding of your Medicare Supplement plan options.
Medicare has three types of pricing structures can be used by Medigap providers to determine how the cost of your Medicare Supplement premiums change over time: attained-age, issue-age, or community-rated.
With an attained-age-rated policy, your premium is based on the age you currently are.
With an issue-age-rated policy, your premium is based on the age you are when you first sign up for the plan.
With a community-rated policy, your premium is based on your location. The premium you pay is the same as everyone in the area with the same policy, regardless of age. Your premium won’t increase due to age.
It’s unlikely that you and your neighbor will pay the exact same premiums for a Medicare Supplement plan. This is because there are various personal factors that can impact what you’ll pay for a Medigap policy, including:
Your age
Your smoking status
Where you live
Your insurance carrier
Your gender
Depending on the type of pricing structure your Medigap policy uses, your age and location may play a bigger role in determining your monthly premium. Read on to learn about each type of pricing structure.
If you have an attained-age-rated Medicare Supplement policy, your monthly premium is based on your current age (the age you’ve “attained”). With an attained-age-rated policy, you’ll have lower premiums when you sign up at a younger age, but your premiums increase as you get older. Attained-age-rated policies can be tricky because they may have attractive premiums at first, but will become more expensive over time.
If you’re in a state with a birthday rule or anniversary rule, you can change from one Medigap plan to another with equal or lesser coverage once each year. In these cases, opting for the attained-age-rated policy and switching to another type once the pricing is no longer competitive could be a good strategy.
If you have an issue-age-rated Medicare Supplement plan, your monthly premium is based on the age you are when you enroll in coverage. Like an attained-age-rated plan, issue-age-rated policies have lower premiums at a younger age. However, while your rates can increase over time due to inflation and other factors, they can’t increase due to age. Keep in mind that not all states offer issue-age-rated plans.
The main difference between an attained-age-rated plan and an issue-age-rated plan is whether or not your premiums can increase due to age. The monthly price of an attained-age-rated plan can increase as you get older, but an issue-age-rated plan can’t increase because of age.
There’s one more type of Medicare Supplement pricing structure that you should know about: community-rated. If you have a community-rated plan, the premium you pay is the same as everyone else in your area with that same policy, regardless of age. Typically, prices can vary based on your age, your gender, and your smoking status. But, with a community-rated Medigap policy, this isn’t the case.
Like an issue-age-rated policy, your premium will not increase as you age with a community-rated plan. Community-rated plans are also not available in every state.
Comparing types of Medigap plans can be tricky. Here’s a useful chart to help you easily compare the similarities and differences between plans:
| Policy | What are costs based on? | Can premiums increase? B | What are the advantages of this type of plan? |
|---|---|---|---|
| Attained-age-rated policy | Your current age | Yes, premiums can increase as you age | Can offer lower premiums at younger ages |
| Issue-age-rated policy | The age you are when you apply | Premiums can increase because of inflation and other factors, but not because of age | Premiums won’t increase because of age |
| Community-rated policy | Your location | Premiums can increase based on inflation and aging of the population, but not your individual status | Can be more expensive initially, but plans are more stable over time |
How you should choose between an attained-age-rated, issue-age-rated, or community-rated plan depends on your unique health, financial, and lifestyle factors. Besides the pricing structure, there are other considerations you need to make as well. Medigap has ten plans to choose from, lettered A-N, and each plan covers a different set of out-of-pocket costs.
The first step when choosing a Medigap plan is to choose your type of plan based on your needs. The most popular Medigap plans are Plan F, Plan G, and Plan N. These plans cover the most out-of-pocket costs, virtually eliminating them. You can get a sense for how much these plans will cost by reading our guide on Medicare premium costs or using the Medicare plan finder. You can also skip the hassle and speak with one of our licensed Medicare advisors, who will help you compare plan pricing and choose the plan that best fits your unique needs.
When comparing prices, keep in mind the type of plan. Attained-age pricing may initially be more affordable, but these plans will eventually become the most expensive as you age. Some Medigap plans also have household discounts. You can save if there’s more than one Medicare-eligible person in your household.
The plan and price that works for you can be a difficult decision to make. You don’t have to do it alone! Our Medicare Advisors are here to help you compare all your coverage options and enroll in a plan that fits your needs best. Call us at 855-900-2427 or schedule a chat today to get started!
