How to Compare Medigap Plans with 5-Year Premium Planning
Find An Agent
Search your ZIP code to find trusted Medicare agents near you.
Trusted by Thousands of Seniors Nationwide
How to Compare Medigap Plans with 5-Year Premium Planning
Insurance companies plan ahead, so why shouldn’t you? When it comes to Medicare Supplement plans, your current income levels and monthly premiums may not reflect your situation in two, three, or five years from now.
Five-year premium planning helps you make a more informed decision about Medigap enrollment based on your projected finances and estimated rate increases.
Here’s what you need to know about 5-year premium planning and how a licensed Medicare agent can help you understand your options.
Understanding 5-Year Premium Planning
Five-year premium planning is a structured approach to projecting your likely Medicare Supplement premium and out-of-pocket costs over a five-year-period so you can make the best long-term plan choice. Medicare premium planning involves estimating your income and healthcare utilization and comparing Medigap rate projections.
Insurance companies already plan ahead, developing rates years in advance as part of a multi-year financial strategy. Medicare beneficiaries can mirror this discipline by doing their own five-year premium planning before choosing a Medigap plan.
Five-year premium planning is a multi-year strategy, not a one-time exercise – and it’s not just about insurance. People with a written financial plan, are “3.7 times more confident they'll reach their financial goals.”
By having a documented 5-year plan and a forward-thinking outlook, you can make a Medigap policy decision based on facts, not guesswork.
Why Look Beyond the Current Year in Plan Choice
Choosing a Medicare Supplement plan based on the first year’s premium alone – without factoring in Medigap rate trends – can be a costly mistake. That’s because rate increases can diverge widely over time, with some policies incurring a steeper annual premium increase than others. Over five years, that small difference can have a big impact.
Here’s what a plan comparison over time looks like for two plans with the same premium – $150/month – but with different annual rate increases:
| 8% Increase | 12% Increase | |
|---|---|---|
| Year 1 | $150/month ($1,800/year) | $150/month ($1,800/year) |
| Year 2 | $162/month ($1,944/year) | $168/month ($2,016/year) |
| Year 3 | $175/month ($2,100/year) | $188/month ($2,256/year) |
| Year 4 | $189/month ($2,268/year) | $211/month ($2,532/year) |
| Year 5 | $204/month ($2,448/year) | $236/month ($2,832/year) |
| Total | $10,560 | $11,436 |
Even a plan with a lower monthly premium can turn out to be more costly in the long run when you account for Medigap rate trends. By Year 5, you could be paying hundreds of dollars more per year, or thousands of dollars more over the next five or 10 years.
Remember, annual premium increases are to be expected; how much is the key question. ACA premiums rose 21.7% from 2025 to 2026, much more than the 2.0 percent average between 2020 to 2025. While Medigap plans are priced differently, premium spikes are common, especially for plans with ultra-low introductory rates.
Doing a plan comparison over time helps you plan for annual premium increases. Start with a conservative estimate of 10% per year, and adjust it based on your carrier’s rate increase history, since some carriers have steeper Medigap rate trends than others.
Tracking Your Healthcare Usage for Better Plan Decisions
Premiums are just one factor in choosing a Medigap policy. How much it covers, and what you’ll have to pay out of pocket, can also impact your overall costs. Healthcare utilization tracking – i.e., a “doctor visit log” – can help you track your typical costs, factoring them into your decision-making when comparing Medigap policies.
If you already have a Medicare policy, you can do a Medicare claims review to see how much you paid out-of-pocket and how much Medicare covered. But making healthcare utilization tracking a habit is easier than trying to retrieve the information later on.
For each doctor’s visit, keep a record of:
- The date of the visit or procedure
- The name and type of provider (such as primary care, specialist, lab, or imaging)
- The amount billed, including what you paid and what your insurance did
- Any changes to your prescription medication
Even over 12 months, a doctor visit log can reveal patterns, such as how often you see specialists that would incur a $20 copay per visit on Plan N.
Follow these steps to compare costs under different Medicare policies.
- Review your doctor visit log or Medicare Summary Notice.
- Use a spreadsheet to record the cost of each service and any coverage gaps.
- Calculate your annual out-of-pocket costs under your current plan.
- Estimate the cost for those services under two or three alternative plans.
- Add up the total cost over five years, including projected premium increases.
In the same way that reviewing your bank account and credit card statements reveals your spending habits, a Medicare claims review shows you how much you actually spend on healthcare costs, so you can make decisions based on your personal situation.
Estimating Premium Increases Over Five Years
Reviewing a carrier’s rate increase history is important because it allows you to make an accurate premium projection to predict your Medigap costs over five years. Because of compound premium growth, a premium with an annual rate of increase of 15% will quickly overtake a higher premium with an annual rate increase of 10%.
This chart shows how a “cheaper” plan costs ~$1,000 more over five years:
| 10% Increase | 15% Increase | |
|---|---|---|
| Year 1 | $150/month ($1,800/year) | $140/month ($1,680/year) |
| Year 2 | $165/month ($1,980/year) | $161/month ($1,932/year) |
| Year 3 | $181.50/month ($2,178/year) | $185/month ($2,220/year) |
| Year 4 | $199.65/month ($2,395.80/year) | $238/month ($2,856/year) |
| Year 5 | $219.62/month ($2,635.38/year) | $273/month (3,276/year) |
| Total | ~$11,000 | ~$12,000 |
Medicare Supplement premiums often increase faster than other insurance categories due to Medicare cost inflation, aging demographics, and an anti-selective risk pool. Carriers are even more likely to increase premiums when financial uncertainty is high.
While requesting your carrier’s rate increase history for the past five years will give you the most accurate premium projections, 10% is a conservative baseline that you can use when estimating Medigap costs over a five-year period.
Aligning Premium Planning with Retirement and Tax Strategies
Rate increases aren’t the only thing to consider: changes to your income can impact your Medicare premiums too. Your Modified Adjusted Gross Income (MAGI) determines how much you’ll have to pay in IRMAA surcharges (if any). That’s why MAGI management costs are a key part of retirement income planning. Here’s how IRMAA works:
The Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge that’s added to your Medicare Part B and Part D premiums based on your income bracket. If you earn more than $109,000 as an individual or $218,000 as a couple, you’ll pay more – as much as $689.90 per month for high-income beneficiaries earning more than $500,000/year.
The IRMAA surcharge is calculated based on your tax return from two years prior: that means your 2024 income affects your 2026 Medicare premiums. Roth conversions can temporarily increase your MAGI, resulting in higher premiums two years later.
Retirement income planning that factors in both Roth conversions and Medicare is key. For example, you could spread out your Roth conversions over multiple years, or delay Social Security benefits past retirement age to maximize Roth conversions while your MAGI is temporarily lower. Follow this checklist to make a strategic tax plan:
- Calculate your IRMAA bracket for the current year and following two years
- Estimate the impact of Roth conversions, capital gains, and other income sources on your MAGI
- Make Roth conversions when they won’t affect IRMAA brackets
- Consider Health Savings Account (HSA) contributions to reduce your taxable income
By factoring IRMAA brackets, Roth conversions, and Medicare costs into your overall financial strategy, you’ll be better placed to make the most of your retirement money.
Using a Rolling Cash-Flow Model to Manage Premium Costs
Five-year premium planning doesn’t mean only reviewing your Medicare costs every five years. With a rolling cash-flow model, you can make changes to your premium budgeting and retirement cash-flow planning every year, while always looking five years ahead.
A rolling cash-flow model is a continuously updated projection that includes all of your income and expenses, usually over a five-year period. It should include your sources of income, healthcare premiums, tax obligations, living expenses, and anything else that affects your bottom line.
Use this chart to list your income and expenses, starting with the current year:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Projected gross income (work, Social Security, pensions, etc.) | |||||
| Estimated MAGI (after deductions) | |||||
| Medicare Part B premium (including any IRMAA surcharges) | |||||
| Medigap premium (with projected increase each year) | |||||
| Part D premium and any out-of-pocket costs | |||||
| Total healthcare spending | |||||
| Net disposable income |
Review your rolling cash-flow model every year and before any major financial decisions like Roth conversions, home sales, and claiming Social Security to avoid MAGI spikes.
Monitoring Market Changes and Enrollment Periods
Five-year premium planning is all about being proactive, and that means getting ahead of insurance rate filings, open enrollment windows, and marketplace changes. Some carrier rate filings are made before federal policies are finalized, which means their initial rate announcements may not be final. And Medigap market competition impacts pricing, coverage, and insurer participation in specific geographic areas.
With Medicare Open Enrollment limited to specific windows, it’s important to make a plan well ahead of time. Open Enrollment for 2027 starts on October 15, 2026, while Medigap has a different enrollment period starting the month of your 65th birthday.
Use this monitoring calendar to stay ahead of important dates and deadlines:
- Q1: Review the previous year’s healthcare utilization log and update your cash-flow model.
- Q2: Check for carrier rate filings in your state and request a rate increase history from your insurer.
- Q3: Compare your current plan against alternatives; consult a licensed Medicare agent if you need advice.
- Q4 (by Oct 15, 2026): Finalize your plan choice during open enrollment; confirm coverage effective dates.
Key Considerations When Choosing Your Medicare Plan
Medigap (Medicare Supplement Insurance) is a private insurance policy that covers some of the “gaps” in Original Medicare, such as copays, coinsurance, and deductibles. Plans are standardized by letter (A through N) so that all insurers offer the same benefits, but premiums and underwriting practices may vary.
Choosing the optimal Medigap plan involves estimating your total costs over a five-year period, not just looking for the lowest premium. Make Medigap premium planning part of your annual financial review to align your policy selection with your current income levels and health status.
A Medigap plan comparison checklist can help you create a realistic picture of your options based on your personal Medicare plan selection criteria.
Keep these five considerations in mind when making a Medigap plan comparison:
- Current and projected health status: Review your Medicare claims history or doctor visit log to understand your healthcare utilization levels. Are your needs likely to remain stable or increase over the next five years?
- Five-year premium trajectory: Medigap rate increases can turn an affordable plan into a costly one. Check your carrier’s rate increase history to see whether those increases are consistent or if they vary across plans.
- Benefits vs. out-of-pocket costs: Some plans offer lower monthly premiums in return for higher copays. Are you comfortable with these out-of-pocket costs, or would you prefer a comprehensive plan with higher premiums?
- Income levels and tax impact: Your retirement plan may push you into a higher income bracket that triggers IRMAA surcharges. Plan ahead to avoid unexpected increases, since IRMAA is calculated based on two tax years prior.
- Local market dynamics: Local market dynamics, such as the number of carriers that compete in your area, can impact Medigap rate trends.
Tips for Maintaining Affordable Coverage Over Time
Maintaining affordable Medicare coverage as you age requires some financial planning. Follow these six Medigap cost management tips to keep your out-of-pocket costs as low as possible and ensure long-term premium stability over time:
- Keep your doctor visit log up-to-date. Update your log after each appointment so you don’t have to rely on memory or looking up medical records.
- Review your carrier’s rate increase history. A carrier with lower rate increases will be more cost-effective over time, even if the initial premium is higher.
- Be mindful of your taxable income. Spreading out Roth conversions over more than one tax year can help you avoid costly IRMAA surcharges.
- Consider delaying Social Security. Waiting until you turn 70 can increase your payments, giving you more flexibility to absorb higher Medicare premiums.
- Work with a licensed Medicare agent. Getting expert Medicare agent guidance can provide you with carrier-specific pricing and rate stability data that you won’t find using public comparison tools. AAMSI | MedicareSupp.org can connect you with vetted local agents who specialize in this analysis.
- Review your plan before each enrollment period. Market conditions change, and carriers come and go. Always review your plan to ensure it’s still the right match for you instead of auto-renewing it without considering alternatives.
Frequently Asked Questions
Five-year premium planning for Medicare means estimating your monthly premiums, income, and expected healthcare utilization over a five-year-period. This allows you to choose a Medicare Supplement plan that will meet your needs over the long-term, not just the one with the lowest monthly premium.
Why should I look beyond the current year when choosing a Medigap plan?
You should always look beyond the current year when choosing a Medigap plan because your premiums, income level, and healthcare needs may change over time. The plan with the lowest rate today may not be the most cost-effective plan in two, three, five, or even ten years from now.
How do I track my healthcare usage to compare plans?
You can track your healthcare usage by logging every doctor’s visit, medical procedure, and prescription, along with what Medicare covered and any out-of-pocket costs. This will allow you to compare how different Medigap plans would cover those services.
You can expect your Medicare Supplement premiums to increase by 10% every year, although your actual rate increase could be higher or lower. Review your insurance carrier’s rate increase history over the past five years for a more accurate estimate. Otherwise, use 10% as a conservative estimate for planning purposes.
IRMAA stands for Income-Related Monthly Adjustment Amount, and is a surcharge added to Medicare Part B and Part D premiums for some high-income policyholders. Your IRMAA bracket is based on your tax return from two years earlier.
Yes, Roth conversions can affect your Medicare premiums by increasing your Modified Adjusted Gross Income (MAGI), the amount used to calculate your IRMAA surcharge. Spreading your Roth conversions across multiple years can reduce the impact.
When does open enrollment for 2027 Medicare coverage begin?
Open Enrollment for 2027 Medicare coverage begins on October 15, 2026, and ends on December 7. Open Enrollment for Medigap begins the month you turn 65 and lasts for six months. You should start comparing your options well before enrollment begins in order to find the right policy for you and avoid having to switch later.
Yes, you should work with a licensed Medicare agent for premium planning if you need help finding your carrier’s rate increase history or other local market insights. AAMSI | MedicareSupp.org connects you with vetted local agents who specialize in premium planning and can help you choose the right Medicare Supplement plan.
What is a rolling cash-flow model and how does it help with Medicare costs?
A rolling cash-flow model is one that you update regularly, rather than a fixed estimate that you only calculate once. It helps you anticipate Medicare costs by projecting your income, premium, and expenses over a five-year period. Update it each year to reflect your current finances and spot income-related cost increases well in advance.
How do I choose between Plan G and Plan N over five years?
You can choose between Plan G and Plan N by comparing the cost of each plan over five years, including monthly premiums and out-of-pocket expenses. High-utilization buyers may prefer Plan G, which has higher premiums but fewer out-of-pocket costs. Plan N’s copays make it more cost-effective for low-utilization buyers.
