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February 23, 2022
Can Medigap Rates Go Up Due to a Health Issue?

Can Medigap Rates Go Up Due to a Health Issue?

It’s a common fear for many facing a serious medical claim: Will my Medicare Supplement rates go up because of this new health issue?

Today, we’re exploring what happens to your rates when you receive serious diagnoses and what determines Medicare Supplement rate increases.  

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If I get cancer, are my rates going to go up?

No, Medicare Supplement companies cannot single you out for rate increases due to illness.

Medigap insurance companies cannot increase your rates just because you got diagnosed with cancer or any other serious medical condition. If the insurance company is going to increase rates, they are legally only allowed to do it for everyone in your state.

Insurance carriers cannot single out individuals and raise their rates to “punish” or penalize the sick.

Related reading: What Do I Do When My Medigap Rates Go Up?

Do my Medigap rates increase if I have to stay in the hospital?

No, your Medigap rates are not going to increase if you are hospitalized. Hospital coverage comes from your Medicare Part A coverage, and your Medigap coverage would only be supplementing that coverage. It’s why they call them Medicare Supplement plans.  

Either way, your rates are not going to increase based on hospitalization, although plan premiums may increase if you choose to change your plan and need to go through underwriting.

Does health ever play a role in how much you pay for Medigap premiums?

Health plays an important role in determining eligibility for certain plans. Some plans require what is called medical underwriting for those enrolling in a Medigap plan after their open enrollment period or switching plans after age 65.

The Medigap Open Enrollment Period is the six-month period starting the first day of the month of your 65th birthday. (If you continue to have group health coverage, you'll have a chance to enroll in Part B without a late penalty when your group coverage ends, and your Medigap six-month Open Enrollment Period would begin then.)

During this Open Enrollment time, you will not have to undergo medical underwriting. But if you choose to change your plan in the future, or if you enroll late, underwriting may occur and may affect plan options and cost.

Do Medigap plan premiums increase each year?

Typically, your Medigap plan premiums will go up a little bit each year. There are two different reasons your plan may have a rate increase: company rate increases and age-related increases.

When reviewing the previous year’s claims, the insurance company will look at their loss ratio. If they’re losing money in a certain area, they’ll raise their rates. We call this a company rate increase.

Age-related increases also happen every year. As we get older, we need more medical care. These plan premium increases account for those age-related statistics. Typically, carriers will try to combine age-related increases with company increases. That way, you’ll only experience one increase per year instead of two.

But rest assured, these rate increases effect everyone on that plan in the state. They aren't just happening to you!

More on this topic: When Will My Medicare Supplement Rates Change?

Is my rate increase affecting just me?

If your Medigap rates have gone up, that increase is not happening to just you. It’s happening to all the fellow policyholders in your state.

Medicare Supplements are required to raise rates based on state and not based on individuals or health concerns. If your plan had a 5% rate increase, it will be the same increase for everyone else on that plan in the entire state.

If you live in Memphis, your friend in Knoxville who has the same Medigap plan as you is experiencing the same rate increase.

Conclusion

Rate increases cannot be based on individual health concerns. Increases are determined by the age of the insured and market costs. A serious medical diagnosis is only going to affect your rates if you opt to change to a plan that requires underwriting.  

If your rates have increased, it might be time to explore your coverage options. Feel free to reach out and speak to one of our agents to compare plans in your area and find your best coverage at the best price.

Luke Hockaday
By
Luke Hockaday
Luke Hockaday is a Customer Success Rep here at Medicare Allies. Luke has been helping Medicare-eligible clients with their insurance and retirement-planning needs since 2011. Luke is passionate about 3 things, and 3 things only: senior insurance, football, and food!

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