How Insurance Companies Price Medigap Policies: Community Rated

Medigap, or Medicare Supplement Insurance, is no different than any other type of insurance that is private or not.  It is designed in a way to give the biggest number of people the most amount of coverage possible to protect the public.  There are multiple different ways in which the prices are considered and set to get the best premiums, one is called Community (or “no age related”) rating.

The biggest thing to remember about community ratings is that they are more fitting of their nickname of “no age related” policies.  These premiums for a policy are based on the amount it will take anybody in the area to obtain the insurance.  In other words, regardless of your age or any other characteristic, the premiums will remain with this coverage because the decision was to charge everyone the same.

The downside of having one premium that applies to everyone and your age not being a factor is the premium may be a little more erratic.  Inflation is more of a factor with these policies because there are no changes if you get older, just inflation.  So, the relief is that you know what your premium will be regardless of your age or financial situation.