Tag Archives: rate increase

Why Did My Medicare Supplement Premium Go Up If I Never Used My Insurance?

Medicare Supplement rate increases illustrated with an upward arrow, rising bars, and a dollar sign.
Medicare Supplement premiums can increase over time for a variety of reasons, including age, healthcare costs, and insurance company pricing.

You may have asked yourself this question: “I barely used my Medicare Supplement plan this year, so why did my premium go up?”

It is a common question and an understandable one. Unlike some types of insurance where your individual claims history can directly affect what you pay, Medicare Supplement insurance premiums are not simply based on how much you personally used your coverage. Your premium can change even if you rarely visit the doctor, have never been hospitalized, or have not filed a single claim.

For Medicare beneficiaries in California, several factors can influence the premium you pay, including your age, ZIP code, insurance company, and whether you qualify for certain household discounts. Medicare.gov also notes that Medigap premiums typically increase over time and can vary among insurance companies.

Your Premium Is Not Based on How Much You Personally Use Your Insurance

One of the biggest misconceptions about Medicare Supplement insurance is that your premium should stay the same if you do not use your policy. That is not how Medicare Supplement pricing works.

A Medicare Supplement policy is designed to help cover certain costs associated with Original Medicare (Part A and Part B). The insurance company collects premiums from policyholders and uses those premiums to help pay covered claims across its pool of insured individuals. That means your premium is not calculated simply by adding up the medical services you personally used during the year. So if you had a healthy year and barely used your Medicare Supplement policy, you could still receive a premium increase. And that is normal.

Why Can Medicare Supplement Premiums Increase?

Why Medicare Supplement premiums can increase due to age, location, insurance company, household discounts, and healthcare costs.
Medigap premiums can increase over time for several reasons, even if you rarely use your insurance.

There is not necessarily one single reason for a rate increase. Various factors can cause this.

1. Your Age

Age can be an important factor in determining Medicare Supplement premiums. As you get older, your premium may increase depending on how your policy is priced. Premiums can also increase for reasons unrelated to your individual healthcare usage. This is one reason it is important to understand not only what you are paying today, but also how your premium may change over time.

2. Where You Live

Your location can also affect the price of Medicare Supplement insurance. In California, Medicare Supplement rates can vary based on factors such as age and ZIP code. This means that two people with the same Medicare Supplement plan may not necessarily pay the same premium if they live in different areas. If you move to a different ZIP code, your available rates may change as well.

3. The Insurance Company

Here is something many Medicare beneficiaries do not realize. Two insurance companies can offer the same Medicare Supplement plan and charge different premiums.

Medicare Supplement plans are standardized. For example, the basic benefits of Plan G are the same regardless of which insurance company sells the Plan G policy. However, the premium can be very different from one insurance company to another. So if your Plan G premium increased, that does not necessarily mean that Plan G itself changed. It may simply mean that another insurance company is currently offering the same standardized benefits at a lower premium.

The benefits are standardized. The premiums are not. This is one reason why reviewing your Medicare Supplement premium periodically can be worthwhile.

4. Household Discounts

Some insurance companies offer household discounts to qualifying individuals. Depending on the insurance company, a discount may be available when you live with a spouse, domestic partner, roommate, or another qualifying household member. These discounts can make a meaningful difference in the amount you pay each month. However, not every insurance company offers the same discount, and eligibility requirements can vary. This is another factor that can affect the premium you pay.

5. Overall Healthcare and Insurance Costs

Even if you personally have not used your Medicare Supplement policy very much, the insurance company is still paying claims for the larger group of people it insures. Changes in healthcare costs, medical services, utilization, and other factors can affect an insurance company’s overall expenses. As those costs change, premiums can change as well.

The Same Plan Does Not Always Mean the Same Price

This is one of the most important things to understand about Medicare Supplement insurance. Let assume that you have a Plan G policy. Your Plan G benefits are standardized. However, several insurance companies may offer Plan G in your area, and their premiums will be very different. For example, one insurance company might offer a Plan G for $180 per month while another might charge $215 or $240 for the same standardized plan.

That does not automatically mean the more expensive company provides better Plan G benefits. The benefits are standardized, but the premiums are not. This is why comparing Medicare Supplement rates can be valuable.

Should You Change Your Medicare Supplement Plan Because Your Premium Increased?

Not necessarily. A premium increase does not automatically mean you should switch insurance companies. There are several things to consider before making a change, including your current premium, the rates available from other companies, your eligibility for a new policy, and whether switching makes sense for your individual situation.

It is also important to understand that switching Medicare Supplement policies is not always as simple as switching other types of insurance. Outside certain protected situations, an insurance company may be able to use medical underwriting when you apply for a new Medicare Supplement policy. That is why you should never cancel your existing Medicare Supplement policy simply because you found a lower advertised rate. Always make sure your new coverage is approved and in place before cancelling your existing policy.

Why an Annual Medicare Supplement Review Can Make Sense

Your Medicare Supplement premium can and usually will change from year to year. This is why I believe it makes sense for Medicare Supplement policyholders to periodically review their coverage and current premium.

For my California clients, I review their Medicare Supplement options around their birthday each year. I look at factors such as their current premium, age, ZIP code, available plans, household discount eligibility, and rates from other insurance companies.

Many times I find an opportunity for my clients to save money, and sometimes the best decision is to stay exactly where they are. The goal is not to change your plan every year. The goal is to make sure you understand your options and are not paying more than necessary for comparable coverage.

California’s Birthday Rule Can Be Especially Important

California Medicare beneficiaries have an additional opportunity that can make an annual review particularly valuable.

Under the California Medicare Supplement Birthday Rule, eligible individuals who already have Medicare Supplement coverage have a 60 day window following their birthday each year to switch to another Medicare Supplement policy with the same or fewer benefits without medical underwriting.

For example, if someone has a Plan G Medicare Supplement, they can switch to Plan G with any other insurance carrier, regardless of their health. Or, they could switch to Plan N, etc. because Plan N has fewer benefits than Plan G. Under the birthday rule, you cannot switch from Plan N to Plan G because Plan G has greater benefits than Plan N, etc.

This can make your birthday more than just a day to celebrate. It’s a good time to review your Medicare Supplement coverage. For California policyholders, this annual review can be especially important because rates usually increase from year to year.

The Bottom Line

If your Medicare Supplement premium increased even though you barely used your insurance, you didn’t do anything wrong. Premiums can change for a variety of reasons, including age, location, insurance company pricing, household discounts, and broader healthcare costs.

It’s normal for rates to increase every year as we get older, and that’s why it’s important to review your coverage every year around your birthday and to take advantage of the California Birthday Rule. You do not have to change plans just because your premium went up. But you should know what your options are.

A Medicare Supplement review is not about changing your plan every year. It is about making sure the coverage you have continues to make sense for you and that you are aware of your available options.

Final Thoughts

Medicare is an excellent health insurance program, but it was never designed to cover every healthcare expense. Understanding these coverage gaps can help you avoid unexpected costs and build a more complete healthcare strategy.

If you have questions about Medicare Supplement plans or would like to review your coverage options, feel free to contact me. I am always happy to help you understand your choices and find competitively priced coverage that meets your needs.

About the Author

Ron Lewis, Independent Medicare Supplement Insurance Specialist, offering free Medicare consultations.

I’m an independent Medicare Supplement insurance specialist working with most of the major insurance carriers throughout California, Nevada, Arizona, and several other states.

I help people turning 65 coordinate their Medicare enrollment so their Medicare Supplement and prescription drug coverage begin at the same time as Medicare.

I also work with many people who already have Medicare Supplement plans and would like to review their options. In California, there is a law called the California Birthday Rule, which allows Medicare Supplement policyholders to change their plans each year during the 60 days following their birthday without answering health questions or going through medical underwriting. During this annual 60-day enrollment period, you cannot be turned down for coverage when changing to a Medicare Supplement plan with the same or fewer benefits.

I regularly help clients lower their Medicare Supplement premiums while keeping the same benefits and coverage.

Over the years, I have helped many clients save hundreds and sometimes even thousands of dollars on their annual premiums.

There is never a fee for my services because I am compensated by the insurance companies, not my clients. My goal is to help you find competitive premiums while providing dependable, personal service year after year.

If you’re turning 65 or already have a Medicare Supplement plan and would like to review your options, I’m happy to help.

Read what my clients have to say about working with me.

Contact Information

Ron Lewis

Independent Medicare Supplement Insurance Specialist

Cell: (760) 525-5769

Toll-Free: (866) 718-1600

Email: Ron@RonlewisInsurance.com

Website: www.MedigapShopper.com

Insurance Licenses

  • California: #0B33674
  • Nevada: #3822123
  • Arizona: #681166

This website is operated by a licensed insurance agent and is intended for educational purposes only. I am not affiliated with or endorsed by Medicare or any government agency.

Is the Affordable Care Act (ACA) Really Affordable?

Dear Mr. Lewis,

“A few weeks ago we notified you about upcoming changes due to the Affordable Care Act (ACA) and explained that your current Blue Shield medical plan will end December 31, 2013…”

These were the words I was dreading to hear! When I received our cancellation letter, I was very upset to learn that it was being cancelled at the end of 2013 because it was not “compliant” with the “Affordable Care Act” (ACA). Blue Shield of CA offered us another plan in its place that was “comparable” in coverage, but it really was not. The deductibles, co-payments, and out of pocket expenses on the “new” plan are significantly higher than the “old” plan, and the overall quality is inferior.

Besides our family, over six million Americans received cancellation letters from their insurance companies because of the ACA, and they have had their health insurance plans cancelled despite our president’s repeated promises, over and over again, that…

President Obama Contemplating Obamacare.

The First Time Our President Contemplated Obamacare.

“If you like your doctor, you will be able to keep your doctor, period.” “If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.” and “I will sign a universal health care bill into law by the end of my first term as president that will cover every American and cut the cost of a typical family’s premium by up to $2,500 a year.” Blah, blah, blah…

Well, we had a health insurance plan with Blue Shield of California for many years. It was called the “Shield Savings 3500/7000 PPO” plan, and we were very happy with it, despite the fact that President Obama felt it was a “sub-standard” plan. Since we were repeatedly told that our premiums would be going down approximately $2,500 a year, I was trying to keep an open mind. However, that was not the case.

We were paying $975.60 per month for a family of 8, and that included dental and prescription drug coverage for all of us as well as relatively low co-payments and deductibles. I thought that our premium on the Shield Savings plan was a little steep, but when I found out what our new ACA premium was going to be, I almost fell over!

Despite the fact that “Dirty Harry” Reid accused me (and thousands of other Americans) of being a liar this past week because the information in this blog is allegedly “untrue,” our ACA premiums more than doubled! Because of the “Affordable Care Act,” the health insurance premiums for our family went from $975.60 per month to $1,995.48 per month!

"Dirty Harry" Reid

“Dirty Harry” Reid

And unlike our Shield Savings plan, the ACA health plan only included dental for three of our six kids and no one else! Our premium would be even higher if the other five people in our family selected dental insurance. On an annual basis, we were paying $11,707.20 per year for our Shield Savings plan ($975.60 x 12 = $11,707.20), but the annual premium for our new ACA health insurance plan is $23,945.76 per year ($1,995.48 x 12 = $23,945.76)! Is that supposed to be “affordable?” I think not!

By the way, our new $23,945.76 per year ACA plan that I’m referring to is a basic PPO “Bronze” level plan, which is the “cheapest” of the four ACA metallic plans. This is the “ACA-compliant plan” that Blue Shield recommended because they told us it was the most “comparable” to our Shield Savings plan. Here is the description of the basic PPO “Bronze” level plan that we received from Blue Shield of CA:

“With low premiums, a high deductible, and more out-of-pocket costs, our Basic plan is designed for people who want affordable coverage and protection in the event of a serious medical emergency. You’ll have the basics such as three doctor’s visits prior to meeting the deductible and preventive care services.”

Now I’m not sure about you, but I don’t consider $23,945.76 per year to be either a “low premium” or more “affordable!” And regarding the “three doctor’s visits” and the “preventative care,” it would be much more cost effective (cheaper) for me to keep the old plan and pay for these expenses myself.

Furthermore, our deductibles and out of pocket costs increased significantly under the ACA plan. On our Shield Savings plan, our calendar year medical deductible was $3,500 per insured or $7,000 per family. On the ACA plan, it is $4,500 per insured or $9,000 per family. Our calendar year out of pocket (OOP) maximum on the Shield Savings plan was $5,000 per insured and $10,000 per family. On the ACA plan, it is $6,350 per insured or $12,700 per family!

With office visits (primary care doctors and specialists) and urgent care visits, lab and X-rays on the Shield Savings plan, we paid NOTHING after meeting our deductible. On the ACA plan, we still have to pay 40% of these costs AFTER meeting our deductible! And the same is true with Outpatient surgery and Inpatient hospitalization!

With generic drugs and preferred brand drugs, we paid $10 per prescription for generic and $35 per prescription for brand name after meeting our deductible. On the ACA plan, we still have to pay 40% of these costs after the deductible! I won’t go on and on with these boring details, but I hope that you get the point that the new ACA Bronze plan is significantly more expensive than the Shield Savings plan that we had, and it’s even more expensive when you take the additional costs of co-payments and deductibles into consideration.

If a family should end up in a situation where they have to pay a $9,000 family medical deductible as well as $12,700 in out-of-pocket costs (in addition to their obscene (non-subsidized) ACA health insurance premiums), there is a good chance that they are still going to end up bankrupt! So what’s the point of having insurance??? “The only thing worse than going broke is going broke with insurance!”

I hope and pray that people will wake up and repeal Obamacare or defund it because it is bad legislation that is destroying the quality of our health care system as well as hurting our economy and killing jobs. Then again, if enough young and healthy people don’t sign up for it, I think there’s a good chance that it will implode on itself and self-destruct.

As Nancy Pelosi famously said “We have to pass the bill to find out what’s in it.” President Obama and his administration purposely and repeatedly misrepresented the truth about the ACA, and it was sold to the American people as a pack of lies. Now that we know “what’s in it,” the majority of Americans don’t want it!

Nancy Pelosi

Nancy Pelosi, a little mixed up, as usual.

I would be curious to hear of your ACA experiences, both good and bad.

Thanks!