WHAT DO I DO WHEN MY MEDIGAP PLAN HAS A RATE INCREASE

Michael Braden
May 12
6 min read

YOU WERE JUST INFORMED THAT YOUR MEDICARE SUPPLEMENT/MEDIGAP PLAN IS INCREASING YOUR PREMIUM

Insurance premiums increase and rarely ever decrease; this is a fact of life. It does not make anyone feel good and can get very frustrating, but it doesn't have to be. You have options, and in this article, we will discuss what those options are, how realistic they are, and what steps you can take to regain control of your healthcare costs in retirement.

WHAT IS MEDICARE INSURANCE ALL ABOUT?

Insurance is a process where you pay a company to lower/mitigate your risk and to protect you from catastrophic losses. Concerning healthcare in retirement, we all have these options once we have determined we are either voluntarily or involuntarily leaving our Employer Group Health Plan:

Enroll in Original Medicare
Enroll in Original Medicare and purchase a Medigap plan.
Enroll in a Medicare Advantage plan.
Enroll in an ACA/Obamacare plan.
Enroll in a Ministry "Share" plan.

ORIGINAL MEDICARE

Over the years, every Medicare broker has done extensive research when assisting their clients with determining the best healthcare option for them based on their needs, lifestyle, family, family health history, and individual health history.

Original Medicare pays for 80% of all Medicare-approved healthcare services, but does not include routine dental, vision, or hearing coverage. With Original Medicare, you can go to any doctor or hospital in the US that accepts Medicare, and you will be covered. However, if you get dealt an evil hand such as heart surgery, cancer, or suffer a stroke (ischemic attack), your 20% share could easily be well over 100K dollars, which is why about 99.9% of individuals who choose Original Medicare also purchase a Medigap/Medicare Supplement plan to reduce their exposure and limit their risk of loss.

ORIGINAL MEDICARE WITH A MEDIGAP OR MEDICARE SUPPLEMENT PLAN

There are 11 different Medicare Supplement or Medigap plans to choose from. Many of these options are similar, but they offer different levels of coverage.

Before January 1, 2020, Medigap Plan F was the most popular and comprehensive plan available. Today, it is the third most popular plan, but you can only purchase Plan F if you were 65 before January 1, 2020.

Since January 1, 2020, the most popular Medicare Supplement/Medigap plans are Plan G, Plan N, and High Deductible Plan G. All three of these plans, along with Plan F, cover your 20% share of what Medicare does not cover, aside from the annual Medicare Part B deductible of $257. Once you pay the calendar year deductible of $257, all your healthcare costs will be covered anywhere in the US and all US territories.

Did you know that once you purchase a Medicare Supplement Policy, it is yours for life if you want it? You can never have your policy canceled unless you are 90 days or more behind on your premiums. You do not have to renew your plan every fall like Medicare Advantage plans.

You can compare the 2025 Medigap plans below using the 2025 Medicare Supplement Comparison Chart.

MEDICARE ADVANTAGE PLANS

Many Medicare insurance companies offer Medicare Advantage (Medicare Part C plans) as an alternative to Original Medicare. These plans are offered by private insurance companies, not by the government. You typically choose either an HMO or PPO plan. HMOs (health maintenance organizations) usually have the lowest MOOP and the most restrictions. PPO plans are less restrictive, but their MOOP is generally 100-300% more than many HMO offerings.

With Medicare Advantage plans, there are strict "networks" you must use for your insurance to pay your costs. There are a lot of co-pays and co-insurance that you are responsible for, and every plan has a MOOP (Maximum-Out-Of-Pocket) number that is the most you could pay for your healthcare.

Many of these plans include Medicare Part D Prescription Drug coverage, and many may offer additional coverage for dental, vision, hearing, gym memberships, and more. However, not every plan is the same; plans vary from county to county, and typically, their networks only include the county you live in.

Other things that you need to understand about Medicare Advantage plans are:

There are a lot of co-pays and co-insurance.
Coverage is generally only in the county where you live.
Skilled nursing/rehabilitation care is limited to 20 days with regular MA and MAPD plans.
Emergency care and urgent care are available outside of your network.
Any hospital stay costs approximately $375 per day, up to seven days.
Every Medicare Advantage plan has a 20% coinsurance for chemotherapy and radiation.
Plans can require you to get two, three, or more second opinions before they approve a procedure that will be covered.
Most "Teaching Hospitals" (Barrow Neurological Institute, The Mayo Clinic, and Mayo Hospital in FL and AZ, Johns Hopkins, Sloan Kettering, etc.) are not covered under Medicare Advantage.

ACA/OBAMACARE PLANS

ACA/Obamacare plans are available through each state's Marketplace. While it is an option for Medicare or Medicare Advantage plans, it is not good. Mainly because the premiums and especially the amount of the deductibles are not favorable. Additionally, you are subject to seeing doctors in your particular plan's network.

MINISTRY SHARE PLANS

Several Share Ministries offer plans for their members who are 65 and over. These plans are available, but most people do not use them because there are much better options with Original Medicare and Medicare Advantage.

WHAT CAUSES MEDIGAP RATES TO INCREASE

Insurance companies consider factors like overall healthcare costs, inflation, increasing loss ratios, and greed when determining the need or viability of increasing premiums. Additionally, it is important to remember that by law, insurance companies cannot raise an individual's premiums based on their claims. Instead, they must increase all lettered Medigap Plans, such as Plan N, in the entire state, meaning that everyone with a Medigap Plan N will be given the same increase.

Factors that have influenced the past three years include, but are not limited to:

Inflation
Costs of treatments and prescription medications
The new cap of $2,000 for Part D Drug Plans
State and federal governmental agencies mandate the costs of benefits given to non-residents.
Cost of living increases.

OTHER FACTORS THAT INFLUENCE MEDIGAP PREMIUMS

Many Medicare beneficiaries do not understand that some companies have a declining discount on their premium rates. You have a great introductory rate when you turn 65 and first enroll in Medicare. However, those discounts reduce by 1-2% per year. So, in year 10, individuals do not see any discounts, while companies take rate increases, leaving the consumer to feel the brunt of these policies.

Often, new Medicare beneficiaries do not know that they can take advantage of roommate discounts for having a spouse or any other individual 50-60 years old or older residing at the same address. These discounts can add up quickly.

It is also very common that when your spouse becomes eligible for Medicare, they do not shop the rates from other insurance companies; they just get the same policy from the same carrier their spouse has. Everyone should always check their premiums at least every two years.

YOUR MEDIGAP PREMIUM IS YOUR BASELINE FOR RATES

Rate increases are based on your premium. So, keeping your premiums as low as possible is key to absorbing many premium rate increases. You do this by comparing rates with an independent Medicare broker every 2-3 years. Most Medicare beneficiaries do not realize they can shop and switch their Medigap plan any day of the year.

About 80% of Medicare beneficiaries can easily pass underwriting, which is required for any Medigap policy purchased after the IEP (Initial Enrollment Period).

DOES IT MATTER WHO YOU CHOOSE AS YOUR MEDIGAP INSURANCE COMPANY

Honestly, it does not matter. I say this for these reasons:

Medigap or Medicare Supplement Insurance carriers must pay their share for any claim that Medicare pays. So they cannot pick and choose what they pay; it is pre-determined by Medicare.
Choose a company with the lowest price whenever possible. This will pay off over time. Medicare pays 80%, your Medigap carrier pays the remaining 20%, depending on your plan.
If a Medigap insurance company ever goes out of business (I have yet to see that in the past 11 years), then Medicare steps in and gives you 6 months to enroll in any plan with any company you want. You will have Guaranteed Issue Rights and will not have to answer any medical questions.
If you want a gym membership included with your plan, your choices will be limited, so keep that in mind.

WHAT YOU SHOULD LOOK FOR WHEN YOU ARE COMPARING MEDIGAP INSURANCE COMPANIES