Beneficiaries of Medigap plans pay different Medigap premiums by state and age, in most states. Generally, beneficiaries aged 65 paid lower premiums than those under age 65; in the same way, beneficiaries at 80 years old paid higher premiums than a 65-year-old. We looked up information on the state websites for plan F premiums, using beneficiaries at age 65 for a reference. The premium rates may not be the actual amounts the beneficiaries pay, but they are the states’ advertised rates listed in their comparison guides. This information is generally made public by state health insurance programs to assist beneficiaries in selecting their Medigap policies. In all 10 states, average premiums across all policies were higher by 73 percent for those under 65 than for those aged 65, including beneficiaries with disabilities, although the ratio varies by insurance company and state.

Consumer Protection, Open Enrollment, and Guaranteed Issue

Medigap rates varied in states according to whether the beneficiaries were covered by consumer protection for those under 65. Beneficiaries under age 65 in five states—CA, FL, CO, MO, and LA—with requirements for open enrollment and guaranteed issue paid 88% or nearly double for the same policy, as 65-year-olds paid. In the five states that did not have requirements for open enrollment and guaranteed issue—ND, MT, KY, IA, and AL—those under 65 paid premiums of 56% more for the same policy than 65-year-olds. However, in these states, few insurance companies made policies available to those under 65. For example, only one insurer in North Dakota, Montana, Iowa, Alabama, and only eight in Kentucky offered policies to those under age 65.

Not all states that do not have consumer protection have lower premiums for those under age 65. Insurers can make the choice not to offer policies to every beneficiary under 65 and keep their own cost down by ensuring only the healthiest people. That practice would influence the figures and analysis, even though it appears quite different on the surface. If insurers make a practice of only insuring healthy people instead of being required to cover all Medicare beneficiaries regardless of age, the state of their health or disability status, then the premiums individuals pay will continue to vary widely and perhaps unfairly.

Also, recipients pay a wide variation of monthly premiums for Medigap insurance because there is no uniformity among the states. At the same time, the cost of age differences is also quite varied. For instance, in 2009 for each Medigap policyholder age 80 or older, Medicare spent 52 percent more than was spent on those aged 65 to 69.23.