Why Is My Medicare Supplement Plan G Premium Increasing?
Has your Medicare Supplement Plan G premium increased? Learn why Medigap premiums go up, how pricing methods affect your rate, and what to consider before switching insurance companies.
Why Is My Medicare Supplement Plan G Premium Increasing?
If your Medicare Supplement Insurance (Medigap) Plan G premium has increased, you may be wondering why. Premium increases can be frustrating, especially when your coverage has not changed.
The short answer is that Medigap premiums can increase for several different reasons, including the insurance company's pricing method, changes in healthcare costs, claims experience, inflation, and changes in the age or health profile of the policyholders in the plan.
What Does Medicare Supplement Plan G Cover?
Medigap Plan G is a standardized Medicare Supplement plan. In most states, the benefits for Plan G are the same regardless of which insurance company sells the policy. Plan G generally covers most Medicare-approved cost-sharing expenses that Original Medicare does not pay, including Part A coinsurance and hospital costs, Part B coinsurance or copayments, skilled nursing facility coinsurance, and certain other covered costs.
Plan G does not cover the Medicare Part B deductible for most beneficiaries. Because Plan G covers a significant portion of Medicare cost-sharing, the amount an insurer pays in claims can affect the premiums it charges.
1. Healthcare Costs Continue to Rise
One of the primary reasons Medigap premiums may increase is the rising cost of healthcare. Medical services, hospital care, physician services, diagnostic testing, and other healthcare expenses can become more expensive over time. When the cost of covered care increases, insurance companies may experience higher claims costs. Premiums may then be adjusted to reflect the expected cost of providing coverage. This does not necessarily mean that your specific policy has become less valuable. Rather, the insurer is adjusting the price of coverage based on the overall cost of claims and other factors affecting the insurance pool.
2. Medigap Premiums Typically Increase Over Time
Medicare.gov states that Medigap premiums typically increase each year. The amount and frequency of increases can vary by insurance company, plan, location, and the way the policy is priced. The exact rating method depends on the policy and applicable state rules. Therefore, it is important to check your policy documents or contact the insurance company rather than assuming that all Plan G policies in a particular state use the same pricing method.
3. The Policyholder Group May Be Changing
Medigap policies are part of an insurance pool. The insurer collects premiums from policyholders and pays claims for covered healthcare services. Over time, the characteristics of the policyholder group can change. For example, the average age of people enrolled in a particular block of business may increase. Changes in healthcare utilization and the number or cost of claims can also affect the insurer's overall expenses. These factors may contribute to premium increases. However, the specific reasons for an individual insurer's rate increase depend on that company's experience and the rules governing rate approvals in the applicable state.
4. Insurance Companies May Adjust Premiums Based on Claims Experience
Insurance companies periodically evaluate the premiums they charge in relation to the claims and expenses associated with their policies. If claims costs are higher than anticipated, an insurer may seek to increase premiums. The details of how rate increases are reviewed and approved vary by state and by the type of insurance product. This is one reason two companies selling the same standardized Plan G benefits may have very different premiums or different rate histories.
5. The Same Plan G Benefits May Cost More—or Less—Depending on the Company
Because Medigap plans are standardized, the basic benefits of Plan G are generally the same regardless of which insurance company sells the policy. That means the premium can be an important point of comparison. Medicare specifically notes that premiums for the same Medigap plan can vary significantly between insurance companies. For example, two companies may both sell Plan G, but one may charge substantially more than the other for the same standardized benefits.
Should You Consider Switching Plan G Companies?
If your premium has increased significantly, it may be worth comparing other policies available in your area.
However, switching is not always as simple as changing the policy. Outside of your initial Medigap Open Enrollment Period or a qualifying guaranteed-issue situation, an insurance company may be able to use medical underwriting when you apply for a new policy. This can affect whether you are accepted and how much you pay.
Before canceling an existing Medigap policy, make sure you understand your options. Medicare warns that once you drop a Medigap policy, you may not be able to get the same policy—or another policy—back later.
What Should You Do If Your Plan G Premium Goes Up?
Consider taking these steps:
Review your premium notice. Look for the effective date and the amount of the increase.
Compare other Plan G premiums in your area. The benefits of standardized Plan G policies are generally the same, but premiums can vary significantly.
Consider your health and underwriting risk before switching. You may have to answer health questions when applying for a new policy outside a guaranteed-issue period.
Do not cancel your current policy until you understand your options. Make sure any new coverage is approved and effective before ending existing coverage, unless you have received specific guidance that a different rule applies.
The Bottom Line
A rising Plan G premium does not necessarily mean that your insurance company has changed your benefits. Premiums may increase because of healthcare costs, claims experience, inflation, the policy's pricing method, or other factors affecting the insurance pool.
Because standardized Plan G benefits are generally the same from one insurer to another, comparing premiums and rate history may be worthwhile. However, switching companies can involve medical underwriting, and changing Medigap policies may affect your future options.
Before making a change, review your current policy, compare available alternatives, and carefully consider whether you have guaranteed-issue rights or may be subject to medical underwriting.
Sources
This content is for educational purposes only and is not intended as a complete description of Medicare Supplement insurance, Medicare benefits, or any specific insurance policy. Plan availability, premiums, underwriting requirements, and eligibility rules may vary by state, insurance company, and individual circumstances. Contact Medicare.gov or a licensed insurance professional for information specific to your situation.
This article was created with assistance from ChatGPT by OpenAI and reviewed and edited for publication by the author. The Medicare information and references should be independently reviewed for accuracy and applicability to the reader's specific policy and state.
