Attained-Age vs. Issue-Age vs. Community-Rated Medigap Plans

In this article...
  • Medigap plans help pay out-of-pocket costs. Explore the differences in attained-age, issue-age, and community-rated pricing of Medigap plans.

Attained-Age vs. Issue-Age vs. Community-Rated Medigap Plans

Medicare beneficiaries spend an average of $5,460 on out-of-pocket medical expenses each year. Many people buy a Medicare supplement plan, known as Medigap, to reduce these costs. New Medigap plans cover payment gaps left by Original Medicare parts A and B. However, only legacy plans offer prescription drug coverage. 

Medigap plans charge users differently and use three pricing methods: attained-age, issue-age and community-rated. 

Understanding these pricing structures allows you to evaluate Medigap plans and find one that best suits your circumstances.

Medigap Pricing for Each Plan Type

The pricing method an insurance company uses affects how much you pay for a policy in the long run. Here is an outline of the three policy rating types: attained-age, issue-age and community-rated.

Attained-Age-Rated Medigap Plans

Insurance companies offering attained-age-rated Medigap plans base the cost of your monthly premium on your current age. You’ll pay a more significant premium each year as you get older because you’re more likely to use healthcare services. 

Most insurance companies offering Medigap plans only sell attained-age-rated plans, meaning that these are the most common plans you’ll find.

To understand how attained-age-rated Medigap plans work, imagine you enrolled in one of these plans when you were 65 years old. You might pay a monthly premium of $120 at this time. When you turn 70, you might pay $132 each month for your premium. By the time you’re 75, your premium could cost $165. 

Other factors, such as the rate of inflation, would also raise the price of your plan over time, as with any insurance plan.

Issue-Age-Rated Medigap Plans

Insurance companies offering issue-age-rated Medigap plans calculate monthly premiums based on your age of enrollment

Inflation and other factors might increase the price of your plan over time, but advancing years are never factored into the premium rate.

The younger you are when you enroll in an issue-age-rated Medigap plan, the lower your premiums will be. Insurance companies with issue-age-rated Medigap plans reward younger people with lower rates, as they’re less likely to use health services than older people. 

To illustrate, if you enrolled at 65, your monthly premium might be $120. If there isn’t any inflation, you might still pay $120 a month for your issue-age-rated Medigap plan when you’re 75. However, if you delayed enrolling until you were 75, you might pay $165 a month for the same issue-age-rated Medigap plan.

Community-Rated Medigap Plans

Insurance companies offering community-rated Medigap plans charge all individuals living in the same geographical area the same price. Whether you enroll at 65 or 75, your standard monthly premium will be the same price as other people in your city. 

Your premium price may increase over the years due to factors such as inflation, but your age won’t play a part in calculating the standard cost.

Many insurance companies offer special discounts on their community-rated plans to entice members of a younger age. These concessions usually reduce over time, meaning that community-rated Medigap plans can resemble attained-age-rated Medigap plans, with monthly premiums increasing as discounts decrease.

What Is the Best Medigap Plan for You?

There are three key factors you should consider when choosing your Medigap plan:

  • How comprehensive the plan is, paying particular attention to the inclusions you need
  • The reputation of the insurance company
  • The price of the monthly premiums when you enroll

Insurance companies offer standardized Medigap policies. That means that all Medigap plans with the same letter provide the same coverage, no matter which state you live in or the company you choose. 

All Medigap policies adhere to federal and state laws designed to protect users. All insurance companies must also extend guaranteed issue rights to eligible customers. These rights mean that once you’ve decided which plan suits you best, you only need to consider which pricing plan works for you.

As most insurance companies only offer age-attained-rated plans, you may not have a choice about the pricing plan you choose. 

If you can find insurance companies with community-rated and issue-age-rated plans, compare the initial monthly premiums and research other people’s experiences online. Ideally, you want a Medigap plan with a low monthly premium when you enroll with only small rate increases over time.

How to Reduce Your Medigap Premiums

Aside from researching policy options and comparing different insurance providers, there are other strategies for reducing your Medigap premiums, including:

  • Choosing a high deductible plan. Potentially a good option if you’re in good health and feel you could pay more for the rare claims you make.
  • Taking out a policy for your partner. Some companies offer a Medigap Household Discount to couples who both take out Medigap policies with them.
  • Bundling your policies. Companies may discount Medigap premiums for customers willing to take out another type of policy with them, such as life insurance.

Whether you’re enrolling in Medigap for the first time or already have a policy, it’s essential to understand your pricing plan. As a consumer, knowing how companies charge you for their services can help you make intelligent purchasing decisions. Do your research, and the savings might surprise you.

About the Author

Zia Sherrell is a digital health journalist with over a decade of healthcare experience, a bachelor’s degree in science from the University of Leeds and a master’s degree in public health from the University of Manchester. Her work has appeared in Netdoctor, Medical News Today, Healthline, Business Insider, Cosmopolitan, Yahoo, Harper's Bazaar, Men's Health and more.

When she’s not typing madly, Zia enjoys traveling and chasing after her dogs.

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