Why Two Medigap Plan G Policies Can Cost Completely Different Amounts

Medicare requires that Plan G cover the same benefits regardless of insurer. Pricing, however, is set independently by each company based on their own rating method, claims history, and business strategy. That is why identical coverage can carry very different price tags.

Transcript

SPEAKER_01 0:00

Hello, and thanks for joining us on the podcast with Elite Insurance Partners. Today we are looking at a fascinating mystery from our sources for this deep dive. Picture this. Two neighbors in Ohio, exact same age, living in the exact same zip code. One pays $118 a month for Medicare Supplement Plan G. The other pays $189 for the exact same plan G. Wow. Yeah, that is a 60% price gap for identical coverage for no medical reason whatsoever. Okay, let's unpack this.

SPEAKER_00 0:31

Aaron Powell It really is uh a striking gap. And to understand it, we first have to recognize that the coverage itself truly is identical. I mean, federal law actually mandates that plan G covers the exact same benefits nationwide. Trevor Burrus, Jr.

SPEAKER_01 0:43

Right. So it's a totally standardized thing.

SPEAKER_00 0:45

Aaron Powell Exactly. With just a few, you know, state-specific setups in places like Massachusetts, Minnesota, and Wisconsin. But otherwise, it covers the exact same stuff, like the $1,736 Part A deductible.

SPEAKER_01 0:55

Oh, wow.

SPEAKER_00 0:56

Yeah. And the $217 a day for skilled nursing plus Part B coinsurance, the only gap left is the $283 Part B deductible.

SPEAKER_01 1:05

Aaron Powell Wait, I am stuck on this. If it is identical down to the penny, is comparing these plans essentially like buying the exact same smartphone, but one store charges double just because of their own, I don't know, overhead and business strategy.

SPEAKER_00 1:18

Aaron Powell That is a perfect analogy, yeah. The government mandates the exact technical specs of the phone, but the insurers are like independent retail stores. They are setting their retail prices entirely independently.

SPEAKER_01 1:31

Aaron Powell Just based on their own internal metrics.

SPEAKER_00 1:33

Aaron Powell Right. They base those prices on their own overhead, their specific claims history, and uh their corporate growth strategy.

SPEAKER_01 1:41

Aaron Powell Okay. So if the government standardizes the phone, the method these independent insurers use to price the policy must be the main culprit here. How exactly are they calculating this?

SPEAKER_00 1:51

Aaron Powell Well, that is where the mechanics of claims pools come in. And there are three distinct rating methods. First, you have community rated, which is age blind.

SPEAKER_01 1:59

Meaning your birthday doesn't matter.

SPEAKER_00 2:01

Right. Everyone in that pool pays the same premium, and it only goes up due to inflation or the overall pool's claims. Second, there is issue age, where your premium is locked in based on your age when you buy it. And third, you have attained age.

SPEAKER_01 2:15

Uh-oh. How does that third one work?

SPEAKER_00 2:17

So attained age starts out looking incredibly cheap because the insurer is pooling you with other healthy 65-year-olds.

SPEAKER_01 2:24

And I'm guessing that changes.

SPEAKER_00 2:25

Yeah. As that specific pool ages and inevitably requires more medical care, the costs compound aggressively. Your premium increases every single year simply because you had a birthday.

SPEAKER_01 2:36

Wait, so what does this all mean? Is the attained age method essentially like a cheap policy trap, luring you in at 65, only to cost significantly more than a community-rated plan by your mid-70s?

SPEAKER_00 2:48

It absolutely functions that way for a lot of people. You might save 30 bucks a month today, but you are buying a guaranteed compounding price hike.

SPEAKER_01 2:56

That sounds incredibly confusing to navigate.

SPEAKER_00 2:58

It is. And honestly, because these pricing structures are so confusing, we at Elite Insurance Partners help you easily identify which rating method a company uses. It's a big part of what we do.

SPEAKER_01 3:10

So if I want to avoid that trap, maybe people assume a massive brand name automatically means a better or safer price. That's a mistake when shopping, right?

SPEAKER_00 3:18

Oh, yeah, that is a huge mistake. Yeah. Brand recognition does not guarantee a stable claims pool or a fair rating method. And this brings us to Eddie's pro tip from our sources.

SPEAKER_01 3:28

Oh, let's hear it.

SPEAKER_00 3:29

A cheap sticker price today is a mirage if that specific company has a history of hiking rates 10% a year. You never just look at today's price. You have to ask for their five-year rate increase history.

SPEAKER_01 3:41

That makes total sense. Past behavior locks in your long-term costs.

SPEAKER_00 3:45

Exactly. And timing is just as critical. You have a six-month Medigap open enrollment window starting when you were 65 and on part B. Right, the golden window. Yes. Because if you miss it and try to switch plans later, maybe because your rate's spiked, you face medical underwriting. A sudden health condition could mean a flat-out denial.

SPEAKER_01 4:04

That window sounds incredibly stressful if you don't know what you're looking for. And just a reminder: if you have questions about pulling a carrier's rate increase history or navigating that six-month window, we at Elite Insurance Partners can help. You can just fill out the form on this page or call us at 877-324-1512.

SPEAKER_00 4:22

Absolutely. To summarize all of this, avoiding overpaying means looking under the hood. You must evaluate the company's financial strength and rate history, not just the introductory premium.

SPEAKER_01 4:33

Very true.

SPEAKER_00 4:34

And if we connect this to the bigger picture, it raises an important question. As our population ages, will insurers with smaller, less stable claims pools be forced to abandon certain rating methods altogether just to survive? That is definitely something for you to ponder.

SPEAKER_01 4:51

That is a great point to leave off on. You have to look past the sticker price of a smartphone to see what you are really paying for over time so you don't end up like the neighbor paying 60% more for the exact same coverage. Thank you for listening to this deep dive. As a reminder, we at Elite Insurance Partners are always here to help you select a Medicare plan. Just give us a call at 877 324 1512.