- Lesson 10:58
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- Lesson 34:42
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- Lesson 52:08
- Lesson 61:51
- Lesson 72:27
- Lesson 80:40
Premium Cost Factors
Now that we understand the benefits included in each different Medicare Supplement Plan, let’s talk about cost.
As we noted previously, the monthly premium will be one of the biggest factors when comparing the standardized Medicare Supplement plans.
But how are those costs determined?
To start, let’s look at the different premium structures.
Medicare Supplements have three premium structures: Attained Age, Issue Age, and Community Rated.
Attained age is the most common pricing structure.
It is based on the beneficiary’s current age.
Typically, attained age premiums will be lower for younger buyers, but as beneficiaries age, their premium may also increase each year.
Next, let’s review the issue age premium structure.
This structure is based on the age a beneficiary was when she enrolled in the policy, and the premium will not increase because of her age.
It’s good to note that the premium may still increase due to non-age related factors, like inflation.
Lastly, let’s cover the community rated structure.
Generally, plans with this structure charge the same premium to all members, regardless of age.
Similar to the issue age structure, premiums may increase due to inflation or other factors, but not age.
In addition to these structures, there are many other factors that could impact premium costs.
The first is tobacco usage.
Generally speaking, an individual that doesn’t use tobacco will have a lower premium than if he did use tobacco.
There are also discounts that can be applied to Medicare Supplements.
The most common is a household discount, which allows two individuals who are living together to get a discounted premium if they purchase a Medicare supplement with the same carrier.
These discounts can vary in amount and eligibility, so be sure to check the specific carrier documents for more information.
How a beneficiary pays for their Medicare Supplement can also impact premium costs.
For example, a plan may offer a cheaper overall price to pay annually or may apply a discount if the beneficiary sets up a monthly electronic funds transfer.
Although not the case in every state, some states will have different premiums for men and women.
Geographic location is another factor that may affect premium costs.
Premium rates are assigned to a given zip code, so premium rates can differ within a single state.
If a beneficiary needs to complete underwriting for their Medicare Supplement, having certain conditions or using certain medications could result in higher premiums.
Another factor we want to touch on is Medicare Select plans.
Medicare Select is a type of Medicare Supplement sold in certain states that requires a beneficiary to use a select network of providers to receive full insurance benefits.
The tradeoff for having more limited access to providers is that Medicare Select plans generally cost less than other Medicare Supplement policies.
One last cost item we want to note here, is the application fee.
The application fee is a one-time payment that the applicant sends in with their Medicare Supplement application.
Now that we have a better understanding of the premium factors for Medicare Supplements, head over to the next lesson to learn about the Medicare Supplement enrollment opportunities!