Each insurance company decides how it’ll set the price, or premium, for its Medigap policies. It’s important to ask how an insurance company prices its policies. The way they set the price affects how much you pay now and in the future. Medigap policies can be priced or “rated” in 3 ways:
Community- rated (also called “no-age rated”)
Issue Age-rated (also called “entry -age-rated”)
Community-rated : Generally the same premium is charged to everyone who has the Medigap policy, regardless of age or gender. Your premium isn’t based on your age. Premiums may go up because of inflation and other factors but not because of your age.
Issue-Age-rated: The premium is based on the age you are when you buy (are issued) the Medigap policy. Premium are lower for people who buy at a younger age and won’t change as you get older. Premiums may go up because of inflation and other factors but not because of your age.
Attained- Age- rated: The premium is based on your current age (the age you’ve “attained”) , so your premium goes up as you get older. Premiums are low for younger buyers but go up as you get older. They may be the least expensive at first, but they can eventually become the most expensive. Premiums may also go up because of inflation and other factors.
In the long run you will save the most money with Community-rated or Issue-Age-rated plans. Be sure to ask your agent or the carrier how they price their plans. An informed consumer leads to smart decisions especially when purchasing a Medigap policy.