Medicare Supplement Plan (Medigap) Premium Hikes: What's Driving Them and What You Can Do

Three pricing methods that determine how fast your rate climbs

Every Medigap carrier uses one of three pricing structures, and this single decision shapes your costs for life:

• Community-rated (no-age-rated): Everyone pays the same base premium regardless of age. Your rate still rises with inflation and claims, but not because you got older.
• Issue-age-rated: Your premium is based on your age when you bought the policy. It won't increase due to aging, but inflation and claims adjustments still apply.
• Attained-age-rated: Your premium rises as you age. It often starts lowest but climbs the fastest over time. This is the most common pricing method.

Most people buy attained-age plans because the starting price looks attractive. Ten years in, they're paying significantly more than someone who chose a community-rated carrier.

Why age isn't the only reason your premium jumped

On top of age-based increases, carriers file block rate increases when claims rise within your specific pool of insured members. This has nothing to do with your personal health. If the overall group gets more expensive, everyone in that block shares the cost.

When age increases and block increases stack in the same year, 10-18% jumps happen. Some carriers that priced aggressively low to attract new members end up with the steepest hikes within a few years.

2024-2025 rate increases: what we're actually seeing

Rate increases vary by carrier, plan letter, and state. Across our clients, we've seen annual increases ranging from 4% on the low end to 15% or higher with certain carriers. Plan G and Plan N tend to see the most variation because they hold the largest enrollee pools.

The carrier matters more than the plan letter. Plan G benefits are identical from every company (it's standardized by Medicare). Long-term premium behavior is the only real difference.

When switching carriers saves you money without new underwriting

In most states, switching Medigap carriers outside your initial open enrollment period requires medical underwriting. But federal guaranteed issue rights apply in specific situations:

• You lose employer or union group coverage
• Your Medicare Advantage plan leaves your area
• Your carrier goes bankrupt or violates its contract
• You moved out of your plan's service area

Some states offer additional protections. Rules vary by state, so call to confirm what applies to you. If you can pass underwriting and you're healthy, switching to a carrier with better rate history can save hundreds per year on the same exact coverage.

How a broker monitors your rate and moves you before the next hike

Most people don't realize a broker can track rate filings across carriers and flag when a better option opens up. You don't have to wait until a big increase hits your mailbox and scramble to react.

I review my clients' rates every year. When a carrier with strong rate history offers the same plan letter at a lower premium, I walk you through the switch. Same coverage. Lower cost. No gap in protection.

Don't just shop on starting price

The biggest mistake people make is choosing the cheapest Medigap premium at enrollment and never looking at a carrier's rate increase history. A plan that costs $20 less per month today but jumps 12% annually will pass a higher-priced stable carrier within a few years.

Ask for rate increase history before you buy. If your current carrier just hit you with a big hike, ask whether switching makes sense now.

Related resources

• Medigap Plan G: What It Covers and What It Costs
• Medigap Plan N: Lower Premiums, Small Copays
• Medicare Supplement vs. Medicare Advantage
• Medigap Open Enrollment: Why Timing Matters