Medicare Supplement Rate Increases: What to Do

If you opened your Medicare supplement renewal notice and saw a premium increase of 15%, 20%, or even 30%, you’re not alone. Rate increases this steep are happening across the entire Medicare supplement industry, affecting virtually every major carrier. The good news? You have more options than you might think to reduce your costs without sacrificing coverage.

Why Medicare Supplement Rates Are Rising Everywhere

These dramatic rate increases aren’t isolated incidents—they’re industry-wide corrections that have been building for years. Medicare supplement plans were significantly underpriced for nearly a decade, with carriers collecting less in premiums than they were paying out in claims. This unsustainable business model is finally catching up with the industry.

The primary driver behind these increases is the explosive growth in Medicare Part B drug costs. We’re talking about expensive medications like chemotherapy drugs, biologics, and infusion therapies. The average annual Medicare payment per beneficiary using Part B drugs has nearly tripled, rising from $3,300 in 2009 to $9,200 in 2023.

There’s also a dangerous cycle at play in the Medicare supplement market. When rates increase, healthy policyholders often shop around and switch to cheaper options, leaving behind those with health conditions who can’t pass underwriting elsewhere. This creates a sicker pool of remaining customers, which drives claims higher, leading to further rate increases that push even more healthy people away.

Understanding Rate Correction Patterns

Most carriers are spreading their rate corrections across multiple years through a process called “stair-stepping.” If you received a 20-25% increase this year, you should expect additional increases in the coming years as carriers continue to correct their pricing.

Don’t assume that a carrier with smaller recent increases is necessarily safer. They may simply be behind on their rate corrections and could be planning larger adjustments in the near future. Understanding how Medicare supplement rates increase can help you make more informed decisions about your coverage.

Age-based increases compound this problem. In most states, you’ll pay higher premiums each year simply for getting older, regardless of broader medical cost inflation.

Agent Tip

I’ve seen clients stick with expensive plans thinking they can’t qualify elsewhere, only to discover they could have saved thousands by shopping around. Don’t assume you won’t qualify for better rates without checking—underwriting standards vary dramatically between carriers.

Exploring Different Plan Options

One option showing dramatically more stable rate increases is High Deductible Plan G. While it carries a $2,950 deductible for 2026, the monthly premiums are significantly lower than regular Plan G.

Here’s a real-world example: if regular Plan G costs $180 per month and High Deductible Plan G costs $60 per month, you save $1,440 annually. For healthy individuals, this savings can cover the deductible for two full years. When rate increases hit, a 15% increase on the $180 plan costs an additional $27 per month, while the same percentage increase on the $60 plan only costs an extra $9 per month.

Plan N offers another alternative, covering nearly everything Plan G does but with small copays: $20 for office visits and $50 for emergency room visits (waived if admitted). Plan N also doesn’t cover Part B excess charges, though these are rare and restricted in many states.

State-Specific Opportunities

Your state’s regulations can significantly impact your options when dealing with rate increases. Twenty states have “Birthday Rule” provisions that allow you to switch Medicare supplement carriers once yearly around your birthday without medical underwriting.

California’s Birthday Rule is particularly generous, but this flexibility comes with a trade-off—carriers price their plans higher in Birthday Rule states to account for the increased risk of adverse selection.

The Birthday Rule states include: California, Oregon, Illinois, Nevada, Maryland, Idaho, Oklahoma, Kentucky, Louisiana, Indiana, Delaware, Virginia, Wyoming, Utah, Rhode Island, and Missouri.

Three states—New York, Connecticut, and Washington—offer year-round open enrollment, allowing switches without underwriting at any time.

Guaranteed Issue Rights: When Underwriting Doesn’t Apply

Several situations trigger guaranteed issue rights, meaning you can switch Medicare supplement plans without answering health questions:

• Medicare Advantage trial right: If you’re in your first 12 months with Medicare at age 65 and want to switch from Medicare Advantage back to Original Medicare plus a supplement
• Your Medicare Advantage plan is discontinued or non-renewed
• You move outside your Medicare Advantage plan’s service area
• You lose employer-sponsored coverage

These rights provide valuable opportunities to secure Medicare supplement coverage regardless of your health status.

Smart Shopping Strategies

The most straightforward approach is shopping the same plan with different carriers. Plan G from one company provides identical coverage to Plan G from another company—they’re government-standardized. Yet the same coverage might cost $180 with one carrier and $130 with another, creating potential annual savings of $600 or more.

In most states, switching requires medical underwriting, which involves health questions but typically no physical examination. Underwriting standards vary dramatically between carriers. Health conditions that disqualify you with one company may be perfectly acceptable to another.

Agent Tip

Time is critical when shopping for Medicare supplements. Every year you wait means paying higher rates at any new carrier due to age-based pricing. I always tell clients to shop their options as soon as they receive their rate increase notice.

Common Mistakes to Avoid

Don’t accept rate increases without exploring alternatives. Many people assume they’re stuck with their current carrier, but shopping around often reveals significant savings opportunities.

Never cancel your existing coverage until you have confirmed replacement coverage in place. A gap in Medicare supplement coverage can leave you exposed to potentially catastrophic medical bills.

Don’t assume you won’t qualify for underwriting without actually checking. Health standards vary widely between carriers, and what disqualifies you with one company might be acceptable to another.

Avoid assuming that carriers with low recent increases are necessarily safer options. They may simply be behind on their rate corrections and could implement significant increases in the near future.

Timing Your Decision

Medicare supplement policies renew on your anniversary date—whenever you originally enrolled—not necessarily in January like many other insurance products. Rate increases typically take effect around your anniversary date, giving you time to shop for alternatives before the new rates kick in.

The best time to make changes is as soon as you receive your rate increase notice. This gives you maximum time to explore options and complete any necessary underwriting before your current rates increase.

Working with Professional Help

Independent Medicare agents can assess which carriers are most likely to approve your application before you apply, potentially saving you time and avoiding unnecessary medical record requests. They can also help you understand the trade-offs between different plan options and carriers.

Choosing the right Medicare supplement company involves more than just comparing prices—you need to consider rate stability history, financial strength, and underwriting practices.

Frequently Asked Questions

Why are Medicare supplement rates increasing so much?

Medicare supplement rates are rising due to rapidly increasing medical costs, particularly expensive Part B drugs like chemotherapy and biologics. Carriers also underpriced plans for years and are now making necessary corrections to ensure long-term sustainability.

Can I switch Medicare supplement plans without medical underwriting?

In most states, switching requires medical underwriting unless you qualify for guaranteed issue rights. However, 20 states have Birthday Rules allowing annual switches without underwriting, and some states offer year-round open enrollment.

Will my rates continue to increase after switching carriers?

Yes, all Medicare supplement plans experience rate increases over time due to medical inflation and age-based pricing. However, switching to a carrier with better rate stability can slow the pace of future increases.

Is High Deductible Plan G worth considering?

High Deductible Plan G can provide significant savings for healthy individuals. With a $2,950 deductible but much lower monthly premiums, many people save money even if they meet the deductible annually. Plus, rate increases tend to be more stable.

How long does it take to switch Medicare supplement plans?

The process typically takes 2-6 weeks, depending on whether medical underwriting is required. Applications without underwriting (like Birthday Rule switches) can be processed much faster than those requiring health questions and medical records.