Rating of the Company
Medigap, also known as Medicare supplement companies are rated by 2 rating agencies which are A.M. Best and Standard & Poor’s (S&P) and are given letter grades A-F. These letters describe the company as a whole including, claims loss ratio, customer service, and overall stability. We always recommend going with A+ rated companies when at all possible and would never go below an A- rating.
How Long A Company Has Been Selling Medicare Supplements
Many people confuse the year in which a company was established with how long they’ve been selling Medicare supplements in a particular area. These are 2 completely different things. Many companies have been established in the early-mid 1900s, yet may have only been selling supplements in a particular area for 2 years (Or selling a particular plan for even less!).
We never recommend going with a company that’s been in an area for under 5 years. We feel this is a comfortable amount of time for the company to get a good sample size and see how their claims loss ratio affects future premiums and allows those premiums to stabilize. Many companies will come in with low premiums to undercut the competition.
Going with these new companies puts you in a guinea pig situation. It might work out, or it might not. Why take risks? We also find that newer companies have a policy fee associated with new enrollees. This should be an immediate red flag the company is “buffering” its claims loss ratio and should be avoided.
This appointment is meant to alleviate any concerns and there is no-cost or obligation to make a change.
Average Rate Increase History
Average rate increase history is perhaps the most important factor in your decision of which plan and company to go with and should hold a heavyweight. Again, we find newer companies in an area to have heavier rate increases than those that have been in the area for 20+ years. Companies could have rate increases as high as 20% per year!
We often find that the higher the rating of the company, the more stable overall. Especially in issue age states (read more), where you’re locked in at the age at which you get your policy. This could have a drastic impact on the amount of premium you pay over the course of your lifetime. Seeing as Medicare supplements require you to be underwritten to switch plans or companies and we can’t predict what our health situation will be, the stability of the company is key.
Understanding How Medigap Rate Increases Affect You
One of the most misunderstood parts of choosing a Medigap policy is how rate increases actually work. Many people assume that their premium will stay consistent, especially if the starting price is low. Unfortunately, that’s not how most Medigap plans operate, especially with carriers that are new to the market.
Medigap rate increases are based on several factors, including claims experience, age-based pricing structures, and overall financial health of the insurer. This is why it’s so important to evaluate the average rate increase history of any company you’re considering. Some companies raise rates gradually, while others have a track record of aggressive hikes sometimes exceeding 15–20% annually.
A well-established Medigap provider with strong financial ratings often shows a more predictable and stable premium trend. This is especially critical in states that use Issue Age rating models, where your initial premium is locked in based on the age you enroll. Choosing a company with erratic rate hikes could cost you thousands more over the life of your policy.
When evaluating your Medigap options, always request to see the historical rate trends and how long the insurer has been in your local market. This data gives you insight into what you can realistically expect after year one and helps you choose a plan that supports your long-term budget, not just short-term savings.
When it comes to protecting your health and finances, choosing the right Medigap plan is one of the most important decisions you’ll make as a Medicare enrollee. While many people are drawn to a plan with the lowest monthly premium, that’s rarely the best indicator of long-term value.
The real strength of a Medigap policy lies in the stability of the company, rate increase history, and longevity of service in your area.
From this article, we hope it’s clear that premium alone is not enough information to make an informed decision about which plan and company to choose. Often, you will stay with the company and plan you choose for life. So make it a good choice!
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