Attained-Age vs. Issue-Age vs. Community-Rated Medigap Plans
- Medigap plans help pay out-of-pocket costs. Explore the differences in attained-age, issue-age, and community-rated pricing of Medigap plans.
Original Medicare does not have an annual out-of-pocket limit, and around 4.5 million Medicare beneficiaries were expected to spend more than $5,000 in out-of-pocket health care costs in 2023.
Because of this lack of financial protection, many people buy a Medicare Supplement plan, known as Medigap, to reduce these costs. Medigap plans cover payment gaps left by Original Medicare Parts A and B, such as the Medicare inpatient hospital deductible ($1,632 in 2024) and Medicare outpatient care (Part B) coinsurance/copays.
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.
Have Medicare questions?
Talk to a licensed agent today to find a plan that fits your needs.
What Are Attained Age, Issue Age, and Community Rated Medigap Plans?
Medigap has three main way of classifying their payment plans:
- Attained Age Plan: Monthly premiums for attained age medigap plans are based on your current age when you enroll, and will increase as you age. This is the most common form of payment plans for Medigap.
- Issue Age Plan: Monthly premiums for issue age medigap plans are based on your age when you apply, so it will be cheaper per month if you apply when you're 65 rather than 80. These plans will generally increase in price annually, but the increase isn't based on your age, but rather market factors. These plans aren't offered in every state.
- Community Rated Plan: Community rated medigap plans are based on your specific geographical location. Everyone in a specific community or area will pay the same premium price. Less than 10 states offer community rated medigap plans.
Attained Age vs. Issue Age: 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 Medigap policies 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.
Have Medicare questions?
Talk to a licensed agent today to find a plan that fits your needs.
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 basic 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.
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