Medicare supplements are regulated by the Federal Government. The key factor is in determining the right Medicare Supplement Plans for an individual as the premium to be paid monthly. The Medicare Supplement monthly premium is based on 2 things:
- The Medigap plan type you choose (Plan G, F, N, etc)
- The company you purchase from
Generally, all the states provide Medicare Supplement plans of 10 types. The benefits are the same for each type of plan, indicating that the benefits stay same, regardless of the company you buy from or the place you lice, except for Minnesota, Massachusetts and Wisconsin.
The monthly premiums are set by Medicare supplement insurance companies on their own and so the costs vary within companies. For instance, a Plan F bought from Blue Cross Blue Shield may be pricey than a Plan F from Mutual of Omaha, though both provide same benefits.
How do Companies Set Prices?
The setting of prices is based on three ways:
Community-rated: The price is the same for every member, whatever may be the age. This is the reason that it is termed as ‘Community’. Nevertheless, each year the premiums increase with respect to the inflation and several other factors. Nowadays, you cannot find Community-rated plans and even if it is available, it is expensive for people under 75 and for over 75 years it is found to be competitive.
Issue-Age-rated: The age used for the policy pricing is locked with the start date of the policy. The premiums increase often with the inflation and considering the factors every year. The issue-age-rated policies also have become rare offerings and when found they are very expensive.
Attained-age-rated: The common pricing model in most areas is Medicare Supplement plans. The initial pricing is based at the policy time on your age when signed and you receive the increases age-related as per your age. The premiums will increase with every year even with age-related based on other factors and inflation.
Other Factors influencing Premium Cost
There are few insurance companies offering lower rates for women on Medicare supplements plans. As per statistics, women live longer. Thus, they obviously pay more over their lifetime for their coverage. Besides, they also enjoy better health and the claim is mostly less.
The place you live definitely makes a difference in paying for Medigap premiums. The average wealth is calculated by the insurance companies and the premium price is set on that basis so that the residents are able to pay.
There are other factors as well such as the age, tobacco use, inflation, household discounts and so on.