What are Community-Rated Medigap Policies?

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Medigap policies, also called Medicare Supplement Plans, are plans offered by private insurers to help bridge the gap in coverage that Medicare does not pay. When buying a Medicare Supplement Plan, you have to shop around and compare all of the prices in your area. 

There are multiple ways to “rate”, or price, Medigap policies. The three ways companies rate their policies are community-rated, issue-age-rated, and attained-age-rated. Community-rated policies are priced the same throughout the entire community rather than changing the price based on a person’s demographics. 

Read on to learn more about what community-rated Medigap policies are and how they could affect your budget.

How Medigap Policies Work

Original Medicare covers many inpatient and outpatient healthcare services. However, Original Medicare does not cover all of these services in full. For example, Medicare only covers 80% of many outpatient services. This means that the patient is responsible for 20%. There are many instances of coverage gaps like this in Parts A and B. Fortunately, the Centers for Medicare and Medicaid Services authorized Medigap policies to help bridge these gaps.

Medigap policies are policies sold by private insurers authorized by the federal government to cover the gaps and reduce out-of-pocket expenses. You enroll in a Medigap policy, pay a monthly premium, and are covered in the event that you incur expenses. The Medigap policies are sold by different companies and priced differently. However, these policies themselves are based on ten templates outlined by the federal government. The companies must abide by the template, but they can price the plan according to the competitive market rate. 

Community-Rated Medigap Policies

Community-rated, also called no-age-rated, means that everyone in your community would pay the same monthly premium for that policy regardless of their demographics. This is a stark contrast to some of the other rating methods which do depend on age. Many people prefer community-rated policies. This is because they are generally cheaper than the age-related rating types as people age. However, keep in mind that you can change your Medicare Supplement Plan annually.

Medicare Supplement Plans are very important pieces of Medicare. While they add a monthly premium, they greatly reduce out-of-pocket expenses associated with Medicare Parts A and B. There are different ways insurance companies price these plans. One of those ways is the community-rated method. This method may be more expensive for 65-year-olds than the age-related methods would be, but it quickly saves money as people get older. To learn more about Medigap pricing, contact us at Bobby Brock Insurance today. 

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Justin Brock

President & CEO of Bobby Brock Insurance