When you are choosing the policy you want from the standardized Medigaps, it is best to look at policies from different insurance companies. Policies with the same letter name offer the same benefits, but the premiums vary from company to company. For example: Policy A bought from insurance company 1 has the same benefits as Policy A bought from insurance company 2, but insurance company 1 and insurance company 2 charge different rates.
When choosing a Medigap, ask what factors the Medigap insurance company uses to set your premium. The following factors may affect the cost of your Medigap:
- Where you live;
- Your age;
- Your health status;
- Your gender;
- If you smoke; and
- If you are married.
It is very important to buy your Medigap policy during your open enrollment period or when you have the guaranteed-issue right because your premium cannot vary based on your health status at those times.
Pay attention to how the company uses age when setting premiums. In some states, companies are only allowed to use age to set premiums in certain ways. Depending on where you live, premiums may be:
- No-age-rated, also known as community-rated. The premiums are the same regardless of your age. These are generally the least expensive over your lifetime.
- Issue-age-rated. The premium will always be based on the age you were when you first bought the policy, so the younger you are when you buy it, the cheaper the premiums will be. Your premiums will still increase over time because of inflation (but not because of your age).
- Attained-age-rated. The premiums are based on your age when you bought the policy, but will increase as you get older. You will pay a different price at age 65 than you do at age 70. The premiums may be the lowest when you first buy them, but are generally the most expensive over your lifetime.