How do insurance companies set prices for Medigap policies?
Each insurance company decides how it will set the price, or premium, for its Medigap policies. It’s important to ask how an insurance company prices its policies. The way they set the price affects how much you pay now and in the future. Medigap policies can be priced or “rated” in three ways:
1. Community-rated (also called “no-age-rated”)
2. Issue-age-rated (also called “entry-age-rated”)
Each of these ways of pricing Medigap policies is described in the chart on the next page. The examples show how your age affects your premiums, and why it’s important to look at how much the Medigap policy will cost you now and in the future. The amounts in the examples aren’t actual costs. Other factors such as geographical rating, medical underwriting, and discounts can also affect the amount of your premiums.