Medicare Premiums are not a fixed fee; that is the same rate for everyone reaching the age of 65. Several factors can influence what you pay, and what the plans will cover regardless of your current health.
If you are approaching 65, now’s the time to do your research and find out what is available because the best rates go to those who know how to shop smart by getting onto a suitable plan. Preferably before you become subject to medical underwriting, which will push premiums up that is if you have any existing health conditions or a troublesome medical history.
7 Factors That Influence Medicare Premiums
- Adults Living in the Same Household
If you have someone over the age of 18 living in your household, it can be assumed that there’s someone around to help with your care needs as you age, thus reducing the need to pay for home support services, live-in support or needing to move to a supported living facility in the near future.
- Couples Discounts
As with any insurance company, they will offer referral discounts. With Medicare and Medicare Advantage plans, when someone enrolls, it’s usually for the long-term as very few people will actively shop around every year during the Open Enrollment for a better Medicare Plan.
For most seniors, enrolling in Medicare is a one-and-done process, despite being able to make sometimes significant savings by switching plans or providers. The majority of seniors tend to shop around when Medicare basic premiums rise above $75 per month. Then they know there’s likely a more affordable plan elsewhere.
- Your Gender
This may come as a surprise to some readers, or you may be like, yeah, nothing new there.Insurance companies can discriminate because it’s in the interest of their business. Research shows that women outlive men, and for that reason, women can get more favorable coverage. Studies also show that women are more likely to take better care of their health than men do, which is another reason a woman can get better premiums on health plans.
The vast majority of Medicare plans are priced using an ‘attained-age-rated’ policy, which just means the premium you’re quoted when you’re enrolling is based on your age at the time of application. The older you are, the pricier the plans.
Fewer firms are using an issue-age-related pricing model, which would lock your initial premium in without price increases. The obvious downside to this is that as you age, there’s a higher risk you’ll develop a health condition. If that happens, then with a price-lock, the insurance company would need to foot the bill. Fewer companies are using this model because of the increased risk.
Another beneficial pricing model for consumers is community-rated pricing. With this system, the insurance group is run like a community where all members, regardless of their age and health conditions pay the same premiums. Healthy members offset the price of those in declining health.
- The Time of Year and Your Age When You Enroll
You will always get the best premiums quoted when you’re aged 64 and a half, which is when you’re approaching the start of your Part B enrollment period. You can apply for Medicare before your 65th birthday. But, more importantly for those with existing health conditions is to take advantage of the Medigap Open Enrollment, which only happens once and that’s the six months following the start of your Medicare Plan B start date.
During this 6-month time frame, you’re able to enroll in Medigap without going through a medical questionnaire, for which your answers will affect your premiums. If you leave Medigap until the Open Enrolment period finishes, your policy is more likely to require medical underwriting, which pushes your premiums higher.
For that reason, if you have any existing health conditions, or you feel you’re at risk of certain health problems, take advantage of the first six months after turning 65 to get onto a Medicare Advantage plan without paying extra.
- Your Lifestyle
As with anything related to health plans, your lifestyle will factor into the premiums. This is things like whether you smoke, vape, drink alcohol, consume drugs, have a history of any addictions, your diet, how often you exercise, etc.
If you drink a heavy amount of alcohol, smoke 20 cigarettes, rarely step outdoors and live on pizza, the premiums will be sky-high. On the other hand, a non-smoker, with an active gym membership that’s used twice a week, cycles on the weekends and cooks healthy meals every night will have more favorable premiums.
On average, premiums for a smoker is usually 10% higher. Heavy alcohol consumption will increase that again as will a poor diet and no exercise routine.
- Prescription Medications You Currently Take
Medications are categorized and then tiered to determine the price you pay for medications. Some types of general medications can be covered by Part C of Medicare; however, most branded medications require Part D coverage. The premiums vary by State and are affected by a couple of factors.
- The population
The smaller the population, the less demand there will be for certain drugs, which can increase the prices for pharmacists to buy them in.
- The Competition among Insurers
In rural States, there are fewer Advantage plans available. In larger states where there’s a high number of insurers competing for your business, the premiums tend to be lower.
In 2018, the most expensive State for Medicare Advantage plans was Wyoming with a monthly premium of $45.50 and a maximum out-of-pocket (MOOP) expense of $7,246. On Medicare Advantage plans, you want to have the MOOP lower as that’s the maximum you’ll need to pay towards your medical expenses each year. Once you reach the maximum out of pocket costs, 100% of your costs are covered by your plan.
The above information is provided by the team at The Medicare Store and is accurate for 2019. Changes to Medicare and Medicare Advantage plans do happen. You can refer to the Medic Care Store’s Blog (using the linked text above) for the latest information on factors influencing Medicare Premiums and more.