Medigap Attained Age vs. Issue Age vs. Community Rated
Attained Age vs. Issue Age vs. Community Rated Medigap Plans: Do you know how insurance carriers’ price Medigap plans? Well whether you already have a Medigap plan in place or you are researching your options, you may want to know how Medicare supplement premiums are priced so you can have a good grasp about how future rate adjustments might affect you. For a personal discussion on Medicare supplement pricing, call 844-528-8688.
First of all, anyone that tells you that your Medicare supplement premium will not increase is flat out lying to you, they all increase in price over time.
Today in this guide, I'm going to share with you the three pricing techniques that insurance carriers use to adjust premiums.
Now before we dive into this comparison and the topic, I just want to clear up some terminology. When you read Medigap, remember that I am also referring to Medicare supplement insurance. We just use both these terms interchangeably, but they do mean the exact same thing.
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Let's go ahead and dive into our topic. As I noted earlier, there are three pricing techniques that insurance companies use.
1. Attained age
2. Issue age
3. Community rated
The first pricing technique is attained age, which is by far the most popular way that insurance companies price plans.
Now according to the Centers for Medicare Medicaid Services, the definition for attained age is as follows “attained age-rated premiums are based on your current age which is that age you've attained, so your premium goes up as you get older.”
The advantages of the attained age plan are that your premium, first of all, will be very low when you are 65 years old and with many insurance companies, they will not increase your rate based on age until you reach 67 or, in some cases, 68 years old.
Now the disadvantage with an attained age plan is that not only do you get an age-based rate increase, but you will also receive an inflation-based increase, which means that the insurance provider can give a fair increase due to the increase in health care costs.
Now, in your research, you may have found information on attained age plans but do note that this type of plan can become very expensive as you age.
And this certainly seems to be true when it comes to increasing age and inflation. But we must keep in mind that there are times, especially in the case of plans G and N, when insurance companies do not want to adjust rates for inflation but can leave them at zero percent for the year and sometimes lower them.
The second pricing method is called Issue age, but it's also known as entry age.
And the definition, according to CBS, is as follows “the premium is based on the age you are when you buy the Medigap plan. Premiums may go up because of inflation and other factors but not because of your age.”
The obvious is to issue age plan is that you're not going to see rate increases based on age. However, the con is that you are still going to receive increases based on inflation. The other drawback is that issue age plans generally do start at a much higher premium compared to attained age plans.
There are certain states that only offer issue age plans or at least the majority of them are issue age, and those states are Florida, Georgia, Idaho, Arizona, Missouri, and New Hampshire. Again, you will find the majority of plans in these states are issue age if not all of them.
Now in other states, you will see a combination of attained age issue age and community rating which we're going to get to. But when you compare the issue age to the attained age, you will see that the premium is a bit higher.
Final pricing method is community rated, and by definition, community rated Medigap policies generally charge the same premium to everyone who has the Medigap policy regardless of age or gender.
Now the advantage of community rated policy is that as you get older, your premium is going to be precisely the same as anyone new entering Medicare at age 65.
However, the disadvantage is for anyone new entering Medicare at age 65 your premium may be a bit higher compared to age attained because you have other policyholders in your group that are older than you and of course you still get inflation based increases with a community rated plan.
What's the best Medigap pricing method?
Well, there are definitely different opinions about which is the best way to price a Medigap plan. It's certainly something to be aware of.
Which leads me to my first suggestion which is don't put all your eggs in one basket meaning; my recommendation to you is don't rely solely on the pricing technique when you are choosing your Medigap plan. The reality is you are going to receive rate increases regardless of which rate plan you choose.
There is no guarantee that an attained plan is going to be more expensive than an issue age or community rated plan ten years down the road.
I will suggest you look at other factors when determining what might be the best Medigap plan or the one that's best suited for you. Then you must also give proper attention to the insurance companies’ financial stability. Look at the course at their increased history and “future age rate” rated projections if it applies to that type of policy.
Now the question is, how will you gather all this information?
Well, certainly not on your own.
It's really hard to research that type of information on your own even online or by calling the insurance companies directly.
You will spend a lot of time a, lot of legwork researching, and, in the end, you probably won't have all the information you are looking for.
It's just best to contact a Medicare Solutions Team professional, someone who works independently, who is contracted with multiple insurance carriers because you know they have access to tools, and they have worked with these companies. 844-528-8688
They know their insurance companies’ tendencies and thus can provide you their increased history, their financial stability. Furthermore, they even know their future age projections and rate increases based on the applicant’s age.
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