Just over 14 million seniors have Medicare Supplement insurance, also commonly called Medigap coverage. When selecting coverage, typically when turning 65, few of these individuals are aware of the significant risk of future rate increases.
A new study revealed that in 2024, existing policyholders with Medigap Plan G coverage experienced up to 20% year-over-year rate increases. According to the American Association for Medicare Supplement Insurance (AAMSI) and KLC Actuarial, LLC, which conducted the analysis, most insurers raise their rates annually.
When turning 65, just over half (53.2%) of those opting for Medigap coverage select Plan G, according to AAMSI. Plan N is the next most popular choice, with 39.5% opting for this coverage to supplement their Medicare Parts A and B coverage.
The Medigap rate increase analysis found that half of all Medicare Supplement companies implemented double-digit rate increases. The study examined rate increase filings between May 2023 and April 2024.
The analysis found that Medigap insurers with one million or more members raised rates up to 18%. Insurers with 400,000 to 1,000,000 Medigap policyholders raised rates between 7.5% and 20.0%. Those with between 200,000 and 400,000 members reported rate increases between 7.5% and 12.0%.
Experts acknowledge that it’s impossible to avoid future Medigap rate increases. However, four suggestions from the American Association for Medicare Supplement Insurance can help you find the best Medicare supplement insurance coverage.
- Ask how long the insurer has been offering Medigap policies: New entrants may offer lower rates to attract purchasers. If they fail to meet their claim expectations or any of a number of assumptions, they’ll need to raise rates.
- Comparison shopping can be beneficial: Depending on where you live, you may have as few as four insurers to select from or as many as 20. The 2024 Medigap Price Index found the lowest monthly price for a male turning 65 in Phoenix is $110 (Medigap Plan G). The highest monthly price for equal coverage is $459.
- Request a history of rate increases for the company being recommended: Look at their rate increase history for the past five or six years. It can be a valuable indication of what might be expected in future years.
- If you have some existing health conditions, share them with the insurance professional: Typically, a Medigap insurer cannot reject you or charge more if you have existing health conditions when you first enroll in Medicare at age 65. This is called the Guaranteed Issue Period.
During this guaranteed period, you can enroll in a Medicare supplement plan without the use of medical underwriting. Medical underwriting is when an insurance company looks at your medical history, current health and other factors to determine if you will likely need medical care and how much it will likely cost. After the Medicare guaranteed period, you could be deemed a high-cost individual and thus be charged a higher premium or denied coverage altogether.
To sum up, the Medigap policy rate increases are unavoidable, however, costs can be managed and the best coverage can be secured, with good knowledge about policy details and being proactive.
About Jesse Slome
Medicare Expert – Director Long Term Care Insurance Association, Medicare Supplement Insurance & Critical Illness Insurance Association