The insurance companies rate the policies in three different ways out of which issue-age pricing is one of them. Understanding how issue age technique works might help to understand how the premium for the policy is charged and consequently will help to choose the most favorable Medicare supplement plans.
How does it work?
Issue age pricing method
It means that the insurance company bases the cost of our premium on the age at which a person buys the policy or is issued. Under this type of pricing structure, for individuals at a younger age are charged with a lower premium. While under community-based plans the premiums do not differ with the age. It has no association with age at all. Prices may increase in the future due to inflation rates and the increasing health costs. In the long run plans with issue-age pricing might still end up to be cheaper than plans using attained-age pricing method.
Getting a 2019 medicare supplement plan can avoid the high costs of surplus medical bills.
To illustrate the above point, there can be two hypothetical examples. Person C of age 65 can purchase the Medicare supplement plan at a premium of $165 monthly. While if the same plan was purchased by Person H at the age of 75, the premium to be paid monthly could be $190 because this person is older than the former person.
Attained-age pricing method
Under attained age pricing method, the insurance premium to be paid is based on the current age and it will be higher if the age increases.
To illustrate attained age pricing, there can be stated two hypothetical examples. Person D is of age 65 at the time of first purchase of Medicare supplement plan will pay $100 as monthly premium which will increase to $150 by the time the person is 70. While if person F buys the same policy at 70 will pay a premium of $55 and will increase with age.
There are other factors which may result in the increase in the premium amount such as inflation and rising health care. Other factors that affect the overall cost can be the plans with high deductibles or discounts or use of underwriting. Medicare SELECT plans are a type of Medicare supplement plans which have cheaper premiums.
It is important to look at the pricing model used by the insurance companies while buying the Medicare supplement plans as they will have a future effect on the overall payment of the premium and not all insurance companies use the same method. Hence, it might also help to choose the best insurance policy served by different companies.