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How do insurance companies price Medigap policies?

The cost of Medigap policies can vary widely. One reason: Insurance companies have three ways of pricing policies, all related to age in one way or another.

  • Attained-age-rated policy: The premium is based on your current age, that is, the age you have attained. This policy generally will be less expensive at age 65, but then premiums go up automatically every year as a person attains another year. This type of policy eventually becomes the most expensive. That’s why attained-age-rated policies are the most common. 

Janet Johnson bought a Medigap policy at age 65 with a monthly premium of $102. At her next birthday, the premium went up $5, followed by a $6 increase the next year.

  • Issue-age-rated policy, also called entry-age rated: The premium is based on your age when first buying a policy. Premiums are lower for those who initially purchase a policy at age 65 than at age 70. Premiums will likely increase over time, but a birthday will not automatically bring a change. 

Stuart Sanford purchased a Medigap policy the month he turned 65.  His premium is $155 a month.  His brother Steve enrolled in Medicare at age 70 and purchased the same Medigap policy.  His monthly premium is $190.

  • Community-rated policy, also called no-age-rated: According to, this policy features the same monthly premium for all policyholders (who must be members of the community), regardless of their age when enrolling in the plan. This policy can be the least expensive over a lifetime. For this reason, community-rated Medigap policies are not as common as attained-age-rated.

If Stuart and Steve could have purchased a community-rated policy, they each would have paid $165 a month.

State laws can affect the pricing of policies. For example, insurance companies in Maine can only sell community-rated policies. Also know that inflation and other factors can increase the premium cost for any type of Medigap policy.

Last updated: 01-02-2019