Medicare Supplement Plan Rate Increases - How & Why

By Author: Tyra Phillips
Total Articles: 78
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One of the most important things to consider when purchasing a Medicare Supplement Plan is the price you are paying.  You want to make sure to purchase the plan from a quality company that offers your plan of choice for an affordable price.  However, one thing worth checking into is how often the company you choose will raise there rates.  There are several ways to get information about Medicare Supplemental Insurance Plans, but knowing exactly what your plan will cost in ten years is nearly impossible.

Most Medicare Supplement Plans are priced using the "Attained-Age" method, which means the price will increase every year on your birthday.  For example, when you turn 71 years old you will pay slightly more than when you were just 70 years old.  This pricing method is very common and is used by nearly every insurance company.  You can easily judge how much your price will increase due to age by taking a look at the "Summary of Benefits" offered by your insurance company.

Some Medicare Supplement Plans are priced by the "Community-Rated" method, which means the price will be the exact same for ...
... everyone regardless of their age or when they purchase.  At times, entire states will offer this pricing method.  A good example of this would be Connecticut or Arkansas.  While this would seem like the best choice, people who are 65 and purchase a community rated plan will likely pay more than if they purchase a plan from a company who uses the age-attained method.
The third method of pricing Medicare Supplement Plans is called the "Issue-Age" method.  The most popular company who uses a combination of the Issue-Age and Attained-Age methods to price their plans is AARP.  The Issue-Age method means the price is based on your age when you purchase the plan.  For example, the price you pay for the plan would be higher if you enroll when you are 66 rather than when you are 65.  
It is also important to note Medicare Supplement Plans can be subject to rate increases in order to keep up with inflation.  Often times, companies will raise their rates for every plan they offer in order to keep up with rising costs for health care services.  These rate increases come as a big surprise to consumers as they are relatively unexpected.  However, they usually happen only once every few years.  
Medicare Supplement Plans are all priced differently and the price increases must be approved by the state department of insurance.  Experts recommend you consult an insurance broker who carries multiple companies to get some idea regarding which companies raise their rates more often than others.  There are several quality companies available, and you want to make sure you purchase your plan from a company who offers your plan for an affordable price.