How Medigap rates work

The three pricing methods

Medicare’s own guidance says a Medigap policy can be priced in one of three ways.^{[Medicare.gov]} Every policy sold in the United States uses one of them, and the choice is made by the insurer when it files the policy form with your state.

Definitions from Medicare.gov. All three still receive filed rate increases; only the first has an automatic annual age step on top.^{[Medicare.gov]}

The part that surprises people: the two increases stack

If your policy is attained-age-rated, you can receive two increases in the same year and they multiply rather than replace each other:

1. The age step. You moved from one age band to the next. This is built into the rate table the insurer already filed. No new filing is needed and no letter announces it as a “rate increase”, because technically it is not one.
2. The filed rate increase. The insurer asked your state for more premium across the whole block, and got it. This one arrives in a letter.

Suppose the age step is about 3% and the filed increase is about 7%. Your bill does not rise 10%. It rises about 10.2%, because the second applies on top of the first — and it does that again the next year, and the year after. That compounding is the single most consequential thing to understand about attained-age pricing, and it is why Medicare warns these policies “may be the least expensive at first, but they can eventually become the most expensive.”^{[Medicare.gov]}

None of this means attained-age is a bad choice. It is usually the cheapest way to be covered at 65, and if you are choosing between paying more now or more later, that is a real trade-off with a real argument on both sides. It only becomes a problem when nobody told you it was coming.

How to find out which one you have

Three places to look, in order of how quickly they will answer:

1. Your policy schedule or outline of coverage. The rating method is disclosed there. The outline of coverage is the short document you were given at application, and it is the one worth digging out.
2. Your insurer. Ask them directly: “Is my policy attained-age, issue-age or community-rated?” They must be able to answer.
3. Your state insurance department. They hold the filed rate tables. In several states they also publish an annual premium comparison that shows the pricing method for every carrier in the market.

A quick test that usually works: pull two renewal notices from consecutive years in which your insurer did not announce a rate increase. If the premium still went up, you are almost certainly attained-age-rated.

What the insurer has to do before it can raise your rate

A Medigap policy issued since 1992 is guaranteed renewable: as long as you pay, the company cannot cancel it, and it cannot single you out because of your health or your claims.^{[Medicare.gov]}

That protection is about your coverage, not your price. The model regulation the states adopt says plainly that guaranteed renewability does not prohibit rate increases otherwise authorised by law.^{[Centers for Medicare & Medicaid Services]} To take one, the insurer files a request with your state’s insurance department, supports it with claims experience, and the state reviews it. The increase applies to an entire filed class at once.

Two consequences follow, and both matter when you are shopping:

• A filed request is not an approved increase. States can and do approve less than what was asked for. When we publish a figure here, it is the one we could confirm in the filing record, and we say which it is.
• The filing is public. That is the whole basis of this site. You do not have to take a carrier’s word, or ours — you can read what they filed. How we verify a figure before publishing it.

Why the company name is not the useful unit

A rate increase is filed by a legal entity for a specific policy form in a specific state. One familiar brand often sits on top of several legal entities, each with its own NAIC number and its own filing history — and those histories can diverge sharply while the brand on the envelope stays identical.

This is why we will never publish a “most stable carrier” ranking. Averaged across blocks, such a ranking would be wrong in some state for almost every company on it. What we publish instead is per-block: the entity, its NAIC code, and what it filed. Why the same brand can run two very different books.

What this means when you are choosing

Comparing two quotes on this month’s premium alone tells you very little. Worth asking about any policy you are considering:

• Which of the three pricing methods is it?
• If attained-age, what does the premium look like at 75 and at 80? The insurer has that table — it is filed.
• What has this specific block filed for in the last five years?
• Is the policy still open to new customers, or has it been closed?

The last two are what this site was built to answer. Start with your state.