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Community-Rated vs. Issue-Age-Rated vs. Attained-Age-Rated Medigap Plans


While there are different types of Medicare Supplement (Medigap) pricing methods among carriers, the letter plan and your location have the most significant impact on monthly premium rate increases. However, becoming familiar with pricing methods will give you a deeper understanding of how insurance companies determine local rates.

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Below, we explain the difference between community-rated, issue-age-rated, and attained-age-rated Medicare Supplement premiums. It is important to remember that the state insurance department must approve monthly rate increases.

Medigap Pricing Methods

Regardless of pricing method, carriers increase Medigap rates annually. Most of the best Medicare Supplement companies try to keep increases modest. It is easier to keep current policyholders happy than to find new policyholders.

There are three types of Medigap pricing methods:

  • Community-Rated
  • Issue-Age-Rated
  • Attained-Age-Rated

Medicare Supplement (Medigap) Pricing Methods

Attained-Age vs. Issue-Age Medigap Pricing Methods

Issue-age-rated Medigap policies base your premium on your age when you buy the policy. Thus, older you are when you get your policy, the more you will pay.

Under the issue-age pricing model, a person who buys a policy at age 72 will pay a higher monthly premium than someone who buys the same plan at age 65 will at age 72.

On the other hand, attained-age-rated Medigap policies are standard among insurance carriers. Attained-age-rated Medigap pricing always bases your premium on your current age (the age you have attained), no matter how long you have had your policy. Thus, annual premium increases are to be expected.

With an attained-age rating, the carrier will base your premium on your age when you first buy your policy. So, older people pay more under this pricing model. For example, a person purchasing a policy at age 72 will pay more than someone buying the same policy at age 65.

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When a carrier uses the attained-age rating method, they calculate your premiums using your current age. Therefore, your premium increases along with your age.

For example, suppose you enroll in a policy at $120 a month at age 65. Your monthly premium for the same policy might be $165 by the time you turn 72.

Issue-Age: Rates Not Based on Age, Costs Are Usually Higher

So, which rating method is better between issue-age and attained-age? There are pros and cons to each.

When you enroll in a policy that uses the issue-age rating method, your age does not play a role in determining your premium after the carrier initially sets this number. Instead, inflation, administrative costs, or other factors impact premium increases annually.

Insurance companies using this rating method know that age will not be a factor in rate increases. As a result, they usually charge steeper premiums in the beginning.

The premiums for issue-age policies increase at the state level. So, for example, when Cigna raises the Florida Medigap premiums for Medicare Supplement Plan N, everyone in the state with that plan sees a premium increase. In some states, insurance companies have no choice but to sell issue-age policies.

Many companies use a discount for those who sign up at age 65. As those people age, the discount slowly goes away. This results in a policy with a premium close to that of an attained-age policy during the duration of the discount.

The following states require Medicare Supplement companies to rate their policies using the issue-age method:

However, in these states, carriers can opt into using community ratings instead through an appeal process if they choose.

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Attained-Age: Generally Lower Initial Costs

An attained-age policy can be the lowest-cost option when you are 65. However, you can expect your premium to go up as you get older. Like the other two pricing models, attained age premiums can also increase because of inflation or other factors.

Although several factors can cause your premium to increase, attained-age-rated policies are usually a better option. For someone turning 65, a premium could be $100 monthly on an attained-age policy and $140 per month for an issue-age or community-rated policy. Yet, all three policies will increase over time, eventually evening out.

What Are Community-Rated Medigap Plans?

Everyone pays the same rate for a policy on a community-rated Medigap plan (also known as no-age-rated pricing). Your age does not factor into the equation that determines your premium.

For example, if you buy a community-rated policy at age 72, you will pay the same rate as someone buying coverage at age 65. Like the other two pricing methods, your premium increases because of inflation and other factors.

Community-Rated: Pay More At a Younger Age

Someone who is 72 could benefit from paying the same premium as someone who is 65. In most cases, the 65-year-old is paying substantially more in an area with a community rating than they would pay in another location with a different rating method.

Although, this rating method does not provide the best situation when first enrolling, premium prices tend to balance out as you age. Thus, not many companies community-rate their Medigap plans.

What States Have Community-Rated Medigap Plans?

Eight states require Medigap insurance companies to community-rate their policies’ monthly premiums.

The following are community-rated Medigap states:

  • Arkansas
  • Connecticut
  • Massachusetts
  • Maine
  • Minnesota
  • New York
  • Vermont
  • Washington

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How to Find the Best Medigap Rating Method

Some states allow each carrier to choose their own rating method where other states may tell the carriers which method is allowed to be used. Because of this, you will want to work with a licensed Medicare agent who understands the laws of your state and can inform you of your available Medigap pricing methods.

To begin working with an agent licensed in your area, complete our online rate form. From there, you will receive a side-by-side plan comparison of all the top plans in your area that match your budget and healthcare needs.

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Sources:

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. What You Should Know About Medigap Pricing, Kiplinger. Accessed August 2022.
    https://www.kiplinger.com/article/retirement/t039-c001-s003-what-you-should-know-about-medigap-policies.html
  2. Estimation of a Hedonic Pricing Model for Medigap Insurance, Health Services Research. Accessed August 2022.
    https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1955311/
  3. Medigap Reform, KFF. Accessed August 2022.
    https://www.kff.org/medicare/issue-brief/medigap-reform-setting-the-context/

Jagger Esch

Jagger Esch is the Medicare expert for MedicareFAQ and the founder, president, and CEO of Elite Insurance Partners and MedicareFAQ.com. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate themselves on all their Medicare options. He is featured in many publications as well as writes regularly for other expert columns regarding Medicare.

2 thoughts on “Community-Rated vs. Issue-Age-Rated vs. Attained-Age-Rated Medigap Plans

  1. Looking at the AARP/United Healthcare Supplement plans, according to the medicare dot gov site they are community rated, while all other plans in my area (NorCal) are attained age rated. But the AARP/United Health have something called an “Enrollment Discount” which starts at age 65 with a 36% discount from the “standard rate” and increases every year until it gets to 100% of standard rate at age 77. Is this just a way of making their CP rated plan premiums more price competitive with AA rated competitors, or something else? Is it something I should be concerned about if I am considering buying their plan?

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