Is an Issue Age rated policy better than an Attained Age rated policy? One of the most important aspects of a Medigap policy is the type of rating used by the carrier to determine the premium paid by its members. This determination can have a serious impact on the premium paid throughout an individuals’ life. Unfortunately, the type of rating used (Issue Age, Attained Age) is often unknown to the unsuspecting Medigap shopper and even more often ignored by agents.
Medigap Issue Age Rated
A Medigap policy that is Issue Age rated will classify a person into the premium bracket based on the age they are when the policy is originally put in force. So if a person buys an Issue Age policy at 65 years of age, they will forever be in the premium bracket for 65 year olds. Likewise, if they are 68 years of age when the policy is put in force, they will be bracketed at 68 years old as long as they have the same policy.
Medigap Attained Age Rated
A Medigap policy that is Attained Age rated changes the premium bracket the policyholder is in every year. As they (attain another year of age) their premium bracket will reflect their new age. So when a person purchases an Attained Age policy at 65 they will pay the 65 year old rate. However, at their annual renewal when they will be 66, they will be in the 66 year old premium bracket.
Premium Comparison over 20 Years
We recently ran a premium comparison for a 65 year old female in Kansas for 20 years on Issue Age policy vs an Attained Age policy. The Attained Age policyholder paid $7,483 more for their Medigap, and we used the lowest priced companies for each rating type. This difference does not factor in increases in premium for healthcare inflation. Had we gone back 20 years to account for healthcare inflation, the difference in premium would have been much larger.
Another critical thing to consider when comparing Issue Age to Attained Age is the premium charged to existing policyholders. The rates we used were rates filed with the State of Kansas Insurance Department for individuals purchasing a new policy at a given age. Many carriers with Attained Age ratings charge a significantly higher premium to their existing pool of policyholders. With Issue Age policies, every policyholder in a particular premium bracket pays the same premium. I don’t like to use the term “teaser rate” when discussing Attained Age policies, but with many carriers that is basically what is happening.
The biggest problem we see is that when you initially go on to Medicare, you have the ability to purchase a Medigap policy with no underwriting, but after that you must qualify through underwriting to purchase a new policy. If you currently have an Attained Age Medigap policy, we encourage you to CLICK HERE to see what Issue Age policies are available in your state and the current premium.
There are other criteria to consider when purchasing a Medigap policy 5 Benchmarks for Choosing A Medigap , but when these other criteria are the same or even close, an Issue Age policy beats an Attained Age policy hands down every time.
Get Informed Before Choosing a Medigap Plan
Don’t be scared into making your Medigap choice. Get all the information you need by downloading the Free Report “5 Key Benchmarks to Use When Choosing your Medigap Policy”. This will allow you to make an informed decision that benefits you, and not some individual who convinced you the sky is falling.