Common Medigap Policy Price Factors

By Kendra Knouff
eMedicareSupplements Senior Writer

When choosing a Medigap policy plan to supplement your Medicare insurance policy, it is important to understand what factors will affect policy rates. Understanding what causes rates to fluctuate will help you make the right choice in purchasing a plan. While there are multiple factors affecting Medigap rates, a few that you should be aware of are Type of Coverage, Age of Insurance Plan, Premium Payments and Spousal Discounts.

Most states offer three types of Medigap coverage to choose from. They are Issue Age, Attained Age and Community Rated plans. Attained Age plans are usually the least expensive type to enroll in. While Issue Age and Community Rated plan do not base rates on the age of the insured, they do raise rates according to claims, diminishing discounts and other factors. The majority sold presently are Attained Age plans.

It is also important to think about the age of the insurance plan you are considering. If a plan has been in existence for a while, it is likely to be more expensive than a new plan being offered. If a provider is new to your area, they will likely offer plans with lower rates in order to compete with more established providers. Usually, more experienced providers have more claims, and they raise the rates annually because of this.

The method you use to pay your premiums also has a direct affect on the supplemental policy rates. If you choose to pay your premium monthly through an automated bank draft or yearly by check, you can usually save a small percentage or a small fixed dollar amount. This is because insurance providers often offer incentives for clients to pay monthly or annually. This allows them to avoid extra administrative costs.

Certain Medigap plan providers also offer different types of discounts. The most common discount offered is a spousal discount, which will reduce premiums by 5 to 7 percent for each spouse or domestic partner (assuming both are enrolled). Discounts are also offered based on very good health. This is a rarer discount and it does not affect open enrollment premiums.

Because of the many factors affecting Medigap rates, it is usually best to shop around through an insurance agent. Because insurance rates are government regulated, using an agent will not incur a charge. Contact one of our insurance specialists today to find the best Medigap plan for you.