Medicare supplement insurance carriers can base their policy rates on several factors. A large number of carriers use a traditional and proven system where your policy rate will increase naturally with inflation as you age. Several carriers may base their rate factors more on the geographic area or community in which you live. This may or may not benefit you. Also, there are some carriers who offer a policy where your rate is based upon the age at which you bought it, or “issue age”. Several insurance agents who sell these issue age-rated Medicare supplement policies claim that this means you will always pay what a 65-year-old person new to Medicare will pay.
While this is true, it is also misleading. It sounds like it will be cheaper over the long run, but that is usually not the case. Knowing all the facts about which policies keep their value over the long run, as opposed to which ones will often cost you more over time, can be a helpful determining factor when choosing your first policy.
When reviewing your choices, knowing how the rating models work is critical to determining the long term costs of your coverage. The advertising about issue-age policies can be misleading allowing people to believe they will never have rate increases. Medigap carriers selling this policy type might not use your increasing age as a rate factor, but they can and do often impose an annual rate increase to keep up with medical inflation.
This means it is entirely possible that you will pay a lot more over the life of your policy than if you had selected an attained-age policy. Also, lower initial pricing makes attained-age plans so popular that they gain a larger pool of people over which to spread the risk and rate burdens. Lastly, the simple laws of supply and demand tend to keep the rates more sustainable although you will have small increases as you age.
More evidence to the fact that issue-age rated policies do not save consumers from rate increases is how rarely they are offered. The majority of carriers do not favor this form of pricing. When you do come across one, you often learn that the agents selling these policies are just captive agents. Captive agents are limited to selling only that one particular company's policies. It is never in your best interest to work with an insurance agent that can only get you quotes from one company.
If you really want to save money on your Medicare supplement insurance over the years, talk with an independent insurance agent who can offer insurance plans from many of the top carriers. Have them explain the different types of pricing models offered in your state. Find out which plans are sold the most and what the rate history trends have been with each company over the last several years. Learning all you can before you make a purchase will help you to feel secure in your decision.
Sonia Ashford is an independent insurance agent in the Medicare field, and has delivered hundreds of speeches about turning 65, Medicare Advantage and Medicare supplement insurance to consumers in Tarrant County. A respected agent within the Medicare insurance industry, she is the owner of Ashford Insurance Services. Visit Sonia's agency website http://ashfordinsuranceservices.com/ to learn more about how she can help you with your Medicare decisions.