Medigap Insurance Rates - Locking in the Lowest Premiums

Many people begin receiving phone calls and brochures from approved Medicare insurance providers as they approach their 65th birthday. Each company touts its advantages over other providers. Although the benefits are very similar, the Medigap insurance rates vary significantly. In the early 1990’s, there was a lot of exploitation of seniors regarding the various programs.

While some providers adhered to their required guidelines, others took advantage of the situation, loading on policies and benefits that were expensive and did not provide value to the beneficiary. Congress stepped in and put an end to this by passing a law that required standardization of the plans.

There are 10 plans, labeled Plan A through Plan J. Each one has a different level of coverage and additional benefits to cover the gaps in the original Medicare program. Plan A has the fewest benefits as well as the lowest Medigap insurance rates.

Plan J is the most comprehensive and carries with it the highest premium. Medicare participants must select from one of the pre-packaged plans. It is illegal for an insurance provider to change the combination of benefits. Despite the plans being standardized, the premiums charged by the insurance companies are not.

The wide-range of pricing has little to do with benefits and a lot to do with the way prices are set. There are three different methods used to set Medigap insurance rates. The attained age-rated plans will increase every three to five years, in addition to the standard inflationary changes that are added to all plans.

They are usually cost-effective in the beginning, but as the beneficiary ages, or “attains” a greater age, premiums increase. Issue-age rates are based on the age of the policyholder when they purchase the plan. Premiums rise only as a result of the inflation rate. Community-rated policies are only affected by inflation increases.

Everyone in the area pays the same for a policy, regardless of age or health condition. To lock in the premiums, keeping them as low as possible, choose a policy that is either issue-rated or community rated to reduce rate increases. Compare plans to find out which combination of benefits best suits your needs before shopping Medigap insurance rates.

Purchase a plan during the open enrollment period to ensure you are accepted without paying additional rates for pre-existing conditions. If you change plans at a later date, your health status will be taken into consideration when the premium is calculated.