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How can you choose an insurance company that will give you the lowest Medicare Supplement rate increases? After all, no one has a crystal ball. We know that Medicare Supplement rate increases happen every year. They must raise rates to keep up with the skyrocketing healthcare costs in America. But do some carriers routinely have lower Medicare Supplement rate increases than others?
The answer is yes. Let’s look at why.
All Medicare Supplements will have increases in their rates, usually on an annual basis. This is partly to keep up with ordinary healthcare inflation, as we mentioned earlier. It’s also partly to cover Medicare’s own increases in Part A and B deductibles, copays, and coinsurance. Your Supplement pays these things for you, so when Medicare increases them, the costs for your Supplement company go up.
Sometimes a well-known insurance company that has been around for ages will launch a new book of business. It will be offered to the public at low introductory rates. When this happens, the rates may or may not stay low based on the losses suffered by the carrier in the first few years. So the claims incurred by the insurance company also matter.
Some states have laws and regulations regarding when an insurance company can increase your rate. For instance, certain states may not allow increases due to aging. In most states, a small part of your rate increase will be because you are a year older. This type of policy is called an attained-age policy.
The rest is due to losses incurred and how much the insurance company needs to make up for. Your rate will NEVER go up due to your personal health conditions. This is not allowed. Rate increases apply uniformly to everyone in the state on that same Medicare Supplement plan.
Other policies are either community-rated or issue-age. A community-rated policy charges the same premium to a group of people within a certain area enrolled in that plan. Therefore, the increase won’t be due to age but instead inflation and other factors.
Issue-age is when the premium is based on the age you are when you apply for the plan. It won’t increase each year as you get older.
It’s normal to fear getting stuck with a carrier after you have used up your one-time open enrollment period. People with certain health conditions can’t always change companies. It’s especially important for these folks to work with a Medicare insurance broker like us who can help them dig into the data and make a good plan selection. However, keep in mind that increases are inevitable.
Larger agencies like Boomer Benefits usually have pretty good comparison software. We can pull together a report that shows the history of rate increases for each carrier. What’s more, we can project rate increases based on actual loss ratios. Brokers, like us, have a pretty good idea of which carriers have expensive marketing campaigns to pay for. We also know which carriers are more conservative with their advertising to try to keep rates as low for a long time.
For example, we typically see that Medicare supplement Plan F takes higher rate increases than Plan G. If we run the numbers and find that Plan G is a good value for you, this may factor into which plan we recommend.
Here’s an example of rate increase histories that our software pulls up.
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