Key Takeaways

• Medigap premiums vary based on multiple factors, including location, age, and enrollment timing. Understanding these factors can help you identify whether you’re paying a fair rate.

• USPS retirees and employees should review plan options and potential cost-saving strategies. Comparing different plans and enrollment periods can prevent unnecessary expenses.

What Influences Medigap Premium Costs?

When you enroll in a Medigap plan, your premium isn’t just a random number—it’s determined by several key factors. Understanding these influences can help you avoid overpaying while ensuring you get the coverage you need.

Your Age at Enrollment

• If you enroll during your Medigap Open Enrollment Period (OEP)—a six-month window that starts when you turn 65 and are enrolled in Medicare Part B—you have access to the best pricing and guaranteed acceptance.

• If you apply outside of this period, insurers can charge higher rates based on your health status, potentially increasing your premium significantly.

• Some states allow continuous or guaranteed issue rights, which may help you enroll later without penalties.

How Plans Are Priced

Medigap policies are priced in three different ways:

• Community-rated – Everyone pays the same premium, regardless of age.

• Issue-age-rated – Premiums are based on the age you were when you first enrolled; younger enrollees pay less.

• Attained-age-rated – Premiums start lower but increase as you get older, sometimes making them more expensive over time.

Understanding how your plan is priced can help you plan for future cost increases and ensure long-term affordability.

Where You Live

Premiums vary significantly by location due to state regulations, competition among insurers, and cost of healthcare services. If you move after retirement, you might notice a big change in your premium.

• Urban areas may have higher premiums due to a higher cost of healthcare services.

• Rural areas may offer fewer plan options, which could affect pricing and coverage availability.

• Some states provide additional Medigap protections, limiting rate increases for older enrollees.

Tobacco Use

Many insurers charge higher premiums if you are a smoker or have used tobacco products in the last 12 months.

• Smoking-related surcharges can increase your costs by as much as 10-15%.

• Some states prohibit tobacco-related rate hikes, so it’s worth checking your local regulations.

• If you quit smoking, you may be eligible for a lower premium after a certain period.

Gender and Marital Status

Some Medigap insurers base pricing on gender and marital status:

• Women typically pay lower premiums due to longer life expectancy.

• Married couples may qualify for household discounts, reducing overall costs.

Inflation and Market Changes

Even if your plan is issue-age-rated or community-rated, premiums can still rise due to inflation and changes in the healthcare market.

• Inflation impacts healthcare service costs, affecting Medigap rates.

• Higher claims from policyholders can lead to premium increases.

USPS Retirees: How Medigap Works with PSHB and Medicare

As a USPS retiree, you now receive health coverage through the Postal Service Health Benefits (PSHB) program. However, once you become eligible for Medicare, you may consider a Medigap plan to help with out-of-pocket costs. Here’s what you need to know:

• If you enroll in Medicare Part B, a Medigap plan can cover costs such as deductibles, copayments, and coinsurance.

• Some PSHB plans coordinate benefits with Medicare, reducing the need for additional Medigap coverage.

• Reviewing your plan’s coordination of benefits can prevent unnecessary expenses.

• Some USPS retirees may find that their PSHB plan covers most Medicare-related expenses, making Medigap less necessary.

Common Mistakes That Lead to Overpaying

1. Missing the Open Enrollment Period

Enrolling in Medigap after your Open Enrollment Period means insurers can charge higher premiums or deny coverage based on preexisting conditions.

• If you miss this window, you may have to undergo medical underwriting, which can result in higher costs.

• Some states offer guaranteed issue rights, allowing certain individuals to enroll later without penalties.

2. Not Comparing Different Plans

• Medigap plans are standardized, meaning Plan G from one insurer covers the same benefits as Plan G from another.

• Premiums, however, can vary—shopping around could save you hundreds of dollars annually.

• Consider the financial stability of an insurer to avoid unexpected rate hikes.

3. Ignoring Discounts and Savings

• Some plans offer household discounts if more than one person in your home enrolls.

• Some states prohibit excessive rate increases, making it worth checking local regulations.

• If you are switching plans, some insurers may offer temporary discounts to new enrollees.

How to Ensure You’re Not Overpaying

Shop Around Annually

Even if you already have a Medigap plan, checking alternative options each year could lead to cost savings. Insurers update pricing structures, and you might find a better deal.

• Premiums can fluctuate based on company experience and market changes.

• Comparing quotes ensures you aren’t stuck with an overpriced plan.

Consider Your Long-Term Needs

• If you are approaching retirement, factor in future premium increases.

• If you have chronic health conditions, a plan with lower out-of-pocket costs may be more beneficial than one with the lowest initial premium.

• Some plans offer extra benefits, such as foreign travel coverage, which may be valuable if you travel frequently.

Ask About Rate Increase History

Some plans start with low premiums but increase them rapidly over time. Request a plan’s rate increase history before enrolling.

• Attained-age-rated plans tend to increase more frequently as you age.

• Consider insurers with a history of stable pricing to avoid unexpected hikes.

Work with a Licensed Agent

A professional can help USPS retirees and employees evaluate their options, ensuring they select the right plan without overpaying.

• Agents can provide state-specific guidance on Medigap rules.

• They can also identify less advertised discounts that may lower your premium.

Making the Right Choice for Your Future

Medigap premiums are influenced by several factors, and USPS retirees should take extra care when evaluating their options. Reviewing your choices regularly and considering how your coverage works with PSHB can help you avoid unnecessary costs. Taking steps like comparing plans, understanding pricing structures, and checking for discounts can help you save in the long run. If you’re unsure about your options, reach out to a licensed agent listed on this website for expert guidance tailored to your needs.