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Costs for Medicare Supplement insurance are expected to increase by roughly 4.5 percent annually according to a survey of pricing professionals conducted by the American Association for Medicare Supplement Insurance.
“Most people purchase Medicare Supplement coverage when they turn 65,” shares Jesse Slome, director of the industry organization. “The vast majority select Medigap Plan G where premiums can vary based on where you live and which insurance company you choose.” The organization examined expectations for Medicare price increases that could impact buyers of Medigap Plan G policies,
According to the organization’s 2021 Medicare Supplement Price Index, a male age 65 can purchase Plan G coverage for as low as $109-monthly in Dallas. “The same Dallas male could pay as much as $242-monthly for virtually identical coverage. If he lived in New York City, the range in monthly premium prices ranges from $268 to $476.”
Costs for insurance generally increase annually when the policy renews and as the person ages. “While each insurance company determines their specific rates, in general the pricing professionals we surveyed expected rates would increase between 3 and 7 percent annually over the next three years.” The average yearly increase expected by most was 4.5 percent with larger increases for those who are older.
Rate increases are generally based on policy usage but can also take into account medical and healthcare significant changes. “Covid expenses certainly will play a factor,” Slome explains. “So will how insurers anticipate such things as the impact of a newly approved Alzheimer’s medication.”
National health spending is projected to grow at an average annual rate of 5.4 percent for the period 2019 to 2028 according to CMS (Centers for Medicare and Medicaid) forecasts. The total spending for healthcare is expected to reach $6.2 trillion by 2028.
“The fastest growth is expected to be Medicare spending,” Slome points out. “An annual increase of 7.6 percent a year is anticipated but that’s mostly due to the growth of the number of Medicare beneficiaries.”
The American Association for Medicare Supplement Insurance advocates for the importance of planning. The organization makes available a free online directory listing local Medicare insurance agents who can help consumers compare local Medicare Advantage and Medigap plan options. To access the directory and other information, visit their website at www.medicaresupp.org.