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Medicare Supplement Insurance Price Factors

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There are several factors that will determine the cost of a Medicare supplement policy upon purchase. Each insurance company and each state has its own rules and regulations affecting policy prices.

That is why it’s usually wise to shop around with an independent agency. The prices of Medicare supplement insurance plans are controlled by law, so it will be no more or less expensive to work through an insurance agent.

Common Medicare Supplement Price Factors

There are several factors that will determine the best overall price when purchasing a supplemental policy. There are some providers that will always offer lower prices than others and it’s important to know why.

Listed below are the most common parameters used to determine price:

  • Your Age, Gender and Zip Code
  • Tobacco Use
  • Type of Coverage (Issue or Attained Age; Community Rated)
  • Age of Plan Selected
  • Premium Payment Method
  • Available Discounts

Age and Gender Affects Medicare Rates

All insurance companies will base your premium on your current age. Some use age bands, but most underwrite to your exact age when the application is made. The older you are, the more expensive the supplemental policy.

Gender is a factor in most areas, but not all. Generally, Medicare supplement insurance is less expensive for women assuming all other variables are equal. However, many providers and some individual states underwrite based on unisex tables.

Anthem Blue Cross Blue Shield and AARP United Healthcare have the exact same rates for men and women in most states. California requires unisex rates for all insurance companies and in Texas, Mutual of Omaha uses a unisex table while most others do not.

Thus, if you are a female shopping for coverage, you will likely get your best rates if you choose an insurance company with separate prices based on gender –  assuming your home state allows for it.

Resident State and Zip Code Factors

Overall Medigap rates are also affected significantly by where you call home. Some states are more expensive than others based on demographics and the cost of care as determined by actuaries.

Furthermore, many insurance companies, but not all, will determine your rates depending on the zip code in which you reside. In Ohio for example, Medicare insurance rates are higher in the northern part of the state (near Cleveland) than in most other areas.

Florida is another good example. Overall, supplemental rates in FL tend to be higher than in most other states based primarily on demographics and the cost of health care. There are certain areas of Florida that have some of the highest rates in the country.

Supplemental Insurance and Tobacco Use

As with almost all insurance coverage, prices will be higher for those who are regular tobacco users. This is true of life and health insurance, disability, long term care, and Medicare supplements.

It does not matter what form of tobacco that is used, it will still increase your premiums. With most providers, you must be tobacco free for at least one year in order to qualify for a lower rate. One caveat to this rule is that some states do not factor in tobacco use during open enrollment.

Type of Coverage and Age of Insurance Plan

There are  three  types of coverage to choose from in most states: Issue Age, Attained Age, and Community Rated plans. Generally attained age plans are the least expensive policy type upon enrollment. Some states only allow for one or two types of coverage to be sold however, but the majority of plans offered today are attained age.

Issue age and community rated Medicare supplements do not raise rates based on the insured growing older each year, but they do raise rates based on claims, diminishing discounts and other factors. It is the opinion of this insurance agent that one type of coverage is not significantly better than the other as all three will increase rates each year.

The age of the plan is yet another factor in determining your rates. In general, the older the coverage – the more expensive the plan. If a carrier is new to your area, then almost always they will have lower rates than one that has been offering insurance for several years. Providers with more experience have more claims and will raise their rates each year accordingly.

Premium Payments and Spousal Discounts

You can usually save a small percentage or predetermined dollar amount by paying for your Medicare supplement insurance either monthly through an automated bank draft or yearly by check.

Insurance companies try to avoid administrative expenses by offering incentives for regular monthly or yearly payments. In fact, most providers will only allow for monthly payment via bank draft.

Additionally, several Medigap providers offer discounts in one form or another. The most common is a marital (spouse) discount that will usually decrease the premiums by 5-7% for each insured spouse or domestic partner assuming both are enrolled. Some carriers now offer household discounts as well. By simply having someone else living with you, you can qualify for a 5-7% discount.

It is a good idea to let us know if a spouse will be Medicare eligible in the near future or if you are living with someone else as it may affect our recommendations for your Medicare supplement insurance company.

Other companies provide preferred rates for those in very good health. This is a less common practice and will not affect rates for those in open enrollment. Still others, AARP for instance, offer a discount that erodes each year regardless of any other available premium breaks.

Contact Us to Compare Supplemental Insurance Quotes

As you now know, there are several factors that will help determine your overall Medicare supplement insurance rates. That’s why it is such a good idea to talk with an agent as oppose to trying to shop it around on your own.

Placing your insurance through an agent will not affect your rates one iota, but will give you the best opportunity to find affordable coverage now and in the future.

Hyers and Associates, Inc. is a full service Medicare insurance agency offering supplements from several carriers across the country. Contact us today to research the best Medicare supplement quotes and rates in your area.

Category: Medicare Supplements

Last updated on June 19th, 2018