What Is Attained Age?

Attained Age Explained

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Attained age is a type of rating method an insurance company may use to set premiums for its Medicare Supplement Insurance, or Medigap, policies. Your attained age is your current age or age as of your last policy anniversary date. 

Medigap is private insurance and you can buy it only through an insurance carrier. Each carrier has different criteria for pricing its Medigap policies and the attained age pricing methodology is one of them. 

The way an insurance company prices its policies determines how much you pay now and how premium rates may change in the future. Read on to understand what attained age is, how it works, what it means for your rate, and its pricing alternatives. 

Definition and Examples of Attained Age

Attained age is a method that insurance companies may use to calculate your premium for a Medigap policy. At the time when you first purchase your policy, your issue age is your attained age. After that, it’s calculated annually at your policy’s anniversary date.

For example, let’s say you’re 65 years old and buy a Medigap policy from an insurance company. Your attained age is the same as your issue age in this instance—65 years old—because you’re buying a new Medigap policy. The insurance company sets your monthly premium at $124.

One year later, you turn 66, and your premium increases to $130. When you turn 67, it’ll go up again, to $136, and so on and so forth. 

If someone else were to get a Medigap policy on the same day as you but they were 72 years old at the time, they would likely pay a higher monthly premium based on their attained age. If this person paid $162 at age 72, they’d pay more, such as $170, when they turn 73 years old.

Your Medigap premium may be based on your attained age, but there are several factors that go into calculating it, such as if you have any policy discounts (more on that below).

How Attained Age Works

Premiums are often a significant factor in deciding which Medigap insurance plan or plans you purchase. You may notice that there are huge price differences between plans, which is attributed to the rating or pricing method an insurance provider uses. A Medigap policy may cost less when you first purchase it but could be expensive in the long run because of the pricing method. 

Attained age is one of the ways an insurance company may set prices for its Medigap policies. Through attained age pricing, your Medigap plan’s premium is based on your current age—the age you have attained. Plans are usually cheaper at first but premiums increase as you get older due to the likelihood that you’ll have increased health care needs as you age.

Some insurers may increase premiums annually while others use age brackets, say every five years. An insurance company must apply any premium increases to an entire class of policyholders rather than an individual policyholder. Premium costs may also increase due to inflation and rising medical costs, so you may experience unpredictable increases or get priced out at an advanced age. 

Other Factors That Impact How Much You Pay for a Medigap Plan

Your attained age may affect how much you pay now and in the future for a Medigap policy. While this methodology helps with the initial pricing of your premiums, a few other factors may also impact how much you pay for a Medigap plan down the road. 

Discounts

Some insurance companies may offer discounts for being a non-smoker, paying your entire premium in full at the start of the year, paying premiums using electronic funds transfer, being married, or taking out multiple policies with the same insurer. 

Inflation

Like other insurance plans, inflation may affect your Medigap policy rates. Your Medigap premium may increase if inflation causes the overall costs of health care to increase. 

When You Apply

Your premium may be affected by the timing of when you apply for Medigap coverage. When you apply during Medigap open enrollment, an insurance company won’t consider your medical history (known as medical underwriting) when setting the premium rate. This means an insurer may not charge you more or deny you a Medigap policy if you have a pre-existing condition.

Even when you apply outside the Medigap open enrollment period, your guaranteed issue rights mandate that insurers provide coverage and not charge you more based on your past or present health problems.

Alternatives to Attained Age Pricing

Besides the attained age method, there are two other ways an insurance company may set the cost of its Medigap policies. 

Issue Age Pricing

Issue age or entry age pricing sets your Medigap policy’s premium based on how old you are when you first buy the policy. Premium rates won’t increase simply because you’ve celebrated your next birthday and got older. Instead, the cost of policies will increase because of inflation and higher medical costs or claim costs for your class of policyholders. 

Insurance policies that use the issue age pricing method may at first seem more expensive, but since the premiums aren’t based on your age, they’re often seen as more reasonable once you reach an older age bracket. 

Community Pricing

Also known as no-age-rated, community pricing sets a flat monthly premium for everyone who carries that Medigap policy, no matter the age, health, or length of time in the policy.

As the name suggests, community-rated policies are priced based on the community you live in. An insurer will set premiums based on the costs of providing Medigap coverage in your area.  

Community pricing also provides the strongest consumer protections for Medigap policies since it doesn’t set premiums based on your age or health status.

Key Takeaways

  • Insurers use attained age as a way to set Medigap insurance premiums. What you pay is based on your age at the time of purchase and it increases as you get older. 
  • Since Medigap is a type of private insurance sold by different insurance companies, there can be significant differences in the premium you pay for the same coverage from one insurer to the next.
  • Besides age, factors like inflation, policy discounts, and when you apply for coverage may also impact the cost of your Medigap policy.
  • Attained age isn’t the only method for pricing Medigap plan premiums. Insurers may also use issue age or community pricing methods.