Understanding Medigap Rate Increases
Your Medigap premium will go up. The question isn't whether — it's how much, how often, and whether the pattern is predictable.
Why rates go up
Every Medigap carrier files rate changes with your state's Department of Insurance. These increases are driven by three factors:
Medical inflation
Healthcare costs rise 4-6% per year nationally. Carriers must adjust premiums to keep pace with what they pay in claims.
Claims experience
If a carrier's members generate more claims than expected, the carrier raises rates to cover the difference. This is specific to each carrier's risk pool.
Age (attained-age only)
If your plan uses attained-age pricing, your premium automatically increases each year simply because you're older — on top of the other factors.
What's normal and what's a warning sign
Annual rate increases of 3-6% are typical for a well-managed carrier. This roughly tracks medical inflation and keeps the plan sustainable without shocking policyholders.
Increases of 8-10% happen occasionally and aren't automatically cause for alarm — a bad claims year can drive a one-time correction. But consistent increases above 10% are a serious warning sign.
Red flags in a carrier's rate history
Double-digit increases two years in a row
Suggests the carrier underpriced initially or is losing healthy members. The trend tends to accelerate.
Large rate filing for a specific plan letter only
May indicate adverse selection — sicker members concentrating in one plan while healthy members leave.
Small or declining enrollment in your state
A shrinking risk pool means fewer people to spread costs across. Rates tend to rise faster.
AM Best rating below A-
A lower financial strength rating means higher risk of market exit, reduced service, or aggressive rate increases.
The "death spiral" pattern
The most dangerous pattern in Medigap pricing is the death spiral. Here's how it works:
- 1. A carrier raises rates significantly (10-15%+)
- 2. Healthier members — who have lower claims and can pass underwriting — switch to a cheaper carrier
- 3. The remaining pool is sicker and more expensive to cover
- 4. The carrier raises rates again to cover the higher claims
- 5. More healthy members leave, accelerating the cycle
This pattern is most visible in Plan F, which has been closed to new enrollees since 2020. With no new (younger, healthier) members entering the risk pool, Plan F premiums are rising faster than Plan G in most states.
When to consider switching carriers
You can switch Medigap carriers at any time, but outside your original Open Enrollment Period, the new carrier can use medical underwriting. This means switching is most viable when you're still in good health.
Consider switching when:
- Your carrier has had 10%+ increases for two or more consecutive years
- Your carrier's AM Best rating has been downgraded
- Another carrier offers the same plan for 20%+ less and has a strong rate history
- You're still healthy enough to pass underwriting
Some states offer special protections. For example, several states have a "birthday rule" that gives you a guaranteed-issue window around your birthday each year.
Check your carrier's rate stability
Our carrier profiles include rate filing history so you can see the pattern before you buy.