The next interview between Robert Powell, senior retirement editor and authorized monetary planner (CFP), and Jae Oh, CFP, and writer of Maximize Your Medicare, has been edited for readability. Two retirement consultants talk about what’s driving Medigap premium will increase and the way retirees could make knowledgeable selections throughout Medicare’s annual election interval, which runs from October 15 to December 7 annually.
The dialog is crucial for the 14.6 million Medigap enrollees in 2025, as altering premiums might influence retiree healthcare prices in 2026.
Rising Medigap Premiums and What’s Driving Them
Robert Powell: We’re in the midst of Medicare’s annual election interval, and many individuals are asking whether or not they need to get a Medigap insurance coverage plan with Unique Medicare or change from Medicare Benefit to Unique Medicare with a Medigap plan. Right here to speak with us about that’s Jae Oh, writer of Maximize Your Medicare. Jae, welcome.
Jae Oh: Thanks for having me, Bob.
Robert Powell: One in all my favourite matters — Medigap plans. What are you seeing now that we’re two weeks into Medicare’s annual election interval?
Jae Oh: We’re seeing notably increased premiums, Bob. That’s the underside line. A number of components are driving the will increase, with rising healthcare prices on the high of the listing. The second is increased utilization of healthcare providers — a double whammy.
Keep in mind, Medigap carriers should meet one thing referred to as a medical loss ratio to justify their premium will increase. As well as, we’re seeing different dynamics at play. Some states now use a “birthday” or “anniversary” rule that lets folks change Medigap plans at sure instances of 12 months. That development is rising and, if something, accelerating.
These guidelines and better utilization collectively are contributing to increased premiums. Anecdotal proof helps this development, with only some exceptions.
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For retirees dwelling totally on Social Safety, the numbers will be daunting. A married couple would possibly face round $3,500 a 12 months in Medigap premiums — plus the price of a Half D drug plan, even when some Half D plans cost $0 a month.
We’re seeing charge will increase starting from 10 p.c on the low finish to twenty p.c or extra 12 months over 12 months.
How Premium Will increase Are Authorised
Robert Powell: In all circumstances, it’s the state insurance coverage departments that regulate and approve these charge will increase, proper?
Jae Oh: That’s precisely proper, Bob. Medigap carriers should submit information to justify their charge will increase, and it’s not a straightforward course of.
Even after will increase, value variations amongst carriers stay slim — generally solely a greenback or two a month for a similar age group. That tells me the market is aggressive and that carriers aren’t arbitrarily setting costs.
After I have a look at the information for shoppers, if somebody can change to a lower-cost service and qualifies for underwriting, we’ll assist them do it.
How Age and Pricing Buildings Have an effect on Medigap Premiums
Robert Powell: My understanding is that if you happen to enroll in Medicare at 65, your premium stays roughly the identical as somebody who’s 85 — or is there a distinction?
Jae Oh: There’s undoubtedly a distinction. Most Medigap plans are priced utilizing what’s referred to as an “attained-age” mannequin, which suggests premiums rise with age. Additionally they enhance primarily based on the claims expertise of the whole threat pool, not in your particular person healthcare use.
Just a few carriers use different pricing buildings that flatten premiums when you attain a sure age, however these plans usually begin out dearer within the earlier years. The overwhelming majority of plans nonetheless use attained-age pricing.
Ought to You Swap or Downgrade Your Medigap Plan?
Robert Powell: For these seeing premium will increase, particularly in the event that they’re in one of many higher-tier plans, ought to they transfer all the way down to a decrease model of Medigap?
Jae Oh: That’s an awesome query. My first suggestion is to look for a similar plan with a distinct service. Though the pricing is aggressive, variations do exist.
If the financial savings are significant — say $20 a month for one individual or $500 a 12 months for a pair — switching would possibly make sense. Keep in mind, you may change Medigap carriers at any time through the 12 months if you happen to qualify for underwriting. You don’t have to attend for open enrollment.
As for shifting all the way down to a decrease plan, that’s potential too. The most well-liked Medigap plans at this time are Plan G and Plan N. However proceed with warning. The coverage language and protection particulars differ, and a few explanations have understated these variations.
That mentioned, the worth hole will be vital — usually $35 a month per individual. For a pair, that’s $70 a month or roughly $840 a 12 months. So long as shoppers perceive the trade-offs, we’re comfortable to information them by way of the choice.
Why Some States Supply Extra Flexibility
Robert Powell: Right here in Massachusetts, I don’t have as many selections. Just a few different states are the identical. Any recommendation for folks in these states?
Jae Oh: Sure, Massachusetts is exclusive. It has a selected window throughout which you’ll be able to change from Medicare Benefit to one of many state’s restricted Medicare Complement (Medigap) choices. These plans are tailor-made particularly for Massachusetts.
If somebody develops a well being situation and believes a Medigap plan could be higher, they’ll use that window to make the change. That flexibility generally is a actual benefit — you would possibly say these residents get to have their cake and eat it too.
Robert Powell: Jae, as all the time, it’s a pleasure having you share your data. Thanks for serving to our listeners navigate the complicated world of Medicare, Medigap, and all issues healthcare.
Jae Oh: Bob, it’s all the time my privilege.
Associated: ACA Open Enrollment 2026: What You Have to Know Earlier than Selecting a Well being Plan
