Medigap is a Medicare supplemental insurance policy offered by private insurance companies. There are about 10 Medigap plans numbered from A to N that are standardized by CMS (Centers for Medicare and Medicaid). While these plans are standardized, Medigap rates vary from private insurance company to private insurance company.
Medigap rates are the insurance premiums you pay for your Medigap subscription. The insurance premiums are normally paid monthly. The difference in Medigap rates arises from a number of factors. An important factor is the method used by the insurance company to arrive at the insurance premium.
There are three main methods that insurance companies use when calculating Medigap rates. These methods are achieved age rating, issue age rating and community rating.
When using the reached age method, the insurance company calculates the premium to be paid based on your current age. However, the premium to be paid increases as you get older. These policies are usually the least expensive when a person first enrolls (presumably at age 65), but the cost increases each year and eventually these policies become very expensive. However, the increase in Medigap rates will apply to all persons in the same category as you.
The age classification method is also known as the age classification method. The premium is calculated based on your age when you first purchase the Medigap plan. Your premium will therefore not increase because you are getting older. It is therefore advantageous to take out subscriptions when you are younger.
The final method of calculating Medigap rates is the community rating method. This is also called the no-age rating method because the premium is the same regardless of age. Rates are determined based on geographic location.
In addition to the method used in calculating the premium, Medigap rates can increase over the years due to inflation and other factors, such as higher-than-expected claims costs and increases in medical costs.
It is a bit difficult to determine which plan and which of the Medigap rates are right for each individual. Often the choice comes down to individual preference. Some people prefer to pay a lower premium in the beginning, while others prefer a more constant premium percentage.
To get a lower premium, it’s a good idea to apply for a Medigap subscription during the open enrollment period. This is because many insurance companies give discounts to enrollees during this period. It’s also a good idea to get a Medigap plan during the open enrollment period, as the insurance companies are required to sell you any plan you like despite you having a pre-existing medical condition. After the open enrollment period, insurance companies are allowed to use medical underwriting and may limit your choices. This will make your Medigap rates higher.
One last but very important thing to remember is that every plan offered offers the exact same coverage regardless of the cost or the company offering it. For this reason, the price range should be carefully looked at from company to company.