AND WHAT YOU CAN DO MEDIGAP MARKET UPDATE: WHY RATES ARE RISING
UNDERSTANDING ADVERSE SELECTION (IN PLAIN ENGLISH) One of the biggest forces affecting Medigap pricing is something called adverse selection . Adverse selection happens when people who believe they are more likely to need medical care choose more comprehensive insurance , while healthier people are less likely to do so.
WHY PLAN F RATES ARE RISING EVEN FASTER Plan F has a different challenge. Plan F is closed to anyone born after Jan. 1, 2020 . No younger or healthier people can join.
Plan G or Plan N?
For many years, Medigap (Medicare Supplement) plans were known for stability. While Medicare Advantage plans changed frequently, Medigap felt predictable and dependable.
That stability is now being tested.
That means:
Rates are rising faster than they have in the past, fewer new Medigap plans are being created, and some plans are seeing much larger increases than others. Here’s what’s happening behind the scenes, and why it matters to you.
• The average age of the plan keeps increasing. • Medical usage rises every year. • The pool of insured members slowly shrinks. As fewer people pay premiums and claims continue to rise, rates must increase faster to keep the plan financially sound. This is a natural outcome of a closed insurance pool. WHY PLAN N OFTEN HAS SMALLER INCREASES Plan N generally sees smaller and steadier rate increases because it works differently.
In simple terms:
• Someone who expects to be sicker in the future is more likely to buy stronger coverage. • Someone who feels healthy may choose less coverage, or none at all. People may expect higher medical needs because of: • Past health problems • Family history • Risky lifestyle habits • Recent loss of other insurance When more high-risk people enter a plan and fewer low-risk people do, claims rise faster than premiums . Insurance companies must then raise rates to cover those costs.
WHY SO FEW NEW MEDIGAP PLANS EXIST There are hundreds of insurance
companies in the U.S. health insurance market. Today, only one company is actively creating new Medigap products.
That alone tells an important story.
Most insurance companies are hesitant because: • Medical costs remain high. • Claims have increased faster than expected. • New enrollment rules make pricing uncertain. • Losses from prior years are still working through the system. Rather than risk large losses, most companies are choosing to pause and wait for the market to stabilize. WHY MEDIGAP RATE INCREASES ARE GETTING LARGER In 2025, Medigap rate increases are averaging about 3% higher than in 2024 , and double-digit increases are becoming much more common .
Plan N includes modest cost sharing, such as:
• Small copays for doctor visits • Copays for emergency room visits • No coverage for Part B excess charges Because members share some costs, they tend to use care more thoughtfully. Plan N also attracts more cost-conscious and often healthier individuals, which helps keep claims lower and rate increases more manageable. CLAIMS ARE IMPROVING, BUT SLOWLY There is some good news. Over the past few years, Medigap claims increased about 10%–11% per year . In 2025, claims appear closer to 9%–10% . That is a modest improvement, but it is not enough to offset prior losses , which is why rate pressure remains. WHAT THIS MEANS FOR YOU Medigap is still strong coverage, but reviewing your plan matters more than ever . CONTINUED ON PAGE 3 ...
WHY PLAN G IS ESPECIALLY AFFECTED
Plan G is the most popular Medigap plan, and it is also the main plan used for Guaranteed Issue .
Guaranteed Issue means:
• You must be accepted into the plan. • No health questions are allowed.
People entering through Guaranteed Issue are often:
• Coming from employer coverage or Medicare Advantage • Managing more health issues • Expecting higher medical use Because these individuals tend to have higher claims, Plan G experiences more adverse selection than other plans. This pushes costs up for everyone in the plan, leading to higher rate increases. Plan G is still excellent coverage, but it is carrying more financial pressure than in the past.
Here is how rates have trended for one plan, Plan G:
• In 2023, most increases were under 10%. • In 2024, increases began moving higher. • In 2025, fewer than 40% are under 10%. • Nearly one-third are between 10% and 15%. • More than 12% exceed 20%. This didn’t happen by accident. It is driven by how Medigap plans work and who enrolls in them.
2 • OmahaInsuranceSolutions.com
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