Nov 202011
 

Medicare and Medicare supplemental insurance can be a source of frustration for People turning 65 as well as many seniors currently using the services. Medicare has its different parts and Medigap has its ten plans, most people don’t even consider issue age vs. attained age.

Issue age policies have the base price determined by the age you are when you purchase the policy and much more expensive when you first get them but are supposed to not go up in price as you age. Attained age policies determine the base price by the age you currently are. They are a lot less expensive while young but go up incrementally as you age.

Picture issue age vs attained ageI had a customer who was looking for Medicare supplemental insurance for his wife and himself ask me “would we be better off getting issue age policies so premiums won’t increase with age?” This was my response:

That is a good question and a hard one to answer. It is impossible to predict what future rates will be. They will most likely be going up and it will not matter if your policy is by issue age. Issue age means the insurance provider cannot increase premiums for the insured as he or she grows older. In essence, the insured is locking in a rate based on his age when the policy is issued. However, insurance providers can raise premium rates by class for all policies issued in their state. An insurance company might increase rates due to significant increase in claims or medical cost. Issue age plans will be more expensive at issue, but the insured hopes to pay less in premiums cumulatively over the long run by not experiencing rate increases with every birthday.

United Healthcare is based off of issue age (I pulled Bankers also for your wife only) and as you can see they are much more expensive at $132. I pulled Philadelphia American plan F for a 66, 70, 80, and 90 year old female in your zip for comparison and the rates were 66: $92, 70: $101, 80: $148, and 90: $233 a month. My personal gut feeling is to take the discounts while you got them and plan for the increase in premium, but that is just me.

I hope this helps.

This person lived in Tennessee where a majority of insurance companies use attained age. These quotes are for a specific zip code and will vary quite a bit from company and area, but the spread will likely be similar. As you can see this person would be in their mid 80’s before they started to save with an issue age policy. This may work out to be a very good deal for some, but it is so hard to predict ten to fifteen years down the road.

Joel Moyer