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What People Get Wrong About Their Medicare Plan Premium

Are your Medicare plan’s premiums going up in 2024? It’s not uncommon for premiums to go up, especially with all the inflation we’ve had in recent years. We get many questions about premiums, especially as we move into a new year.

Today, we’re going to give you a little more insight into premiums for Medicare Advantage, Medicare Part D, and Medigap plans. Keep reading to learn more about how insurance companies calculate premiums for these Medicare plans.

Man with questions about his Medicare plan's premiumPremiums Are Not Based on You Alone

First, let’s talk about what does NOT impact your plan’s premium. Medicare premiums do not go up based on how much you use the plan. They also don’t increase based on the prescriptions you fill. Medicare plan premiums increase annually based on the collective costs of the plan as a whole. They’re based on group costs, not just you as an individual.

Medicare Part D Premiums

The Local Medicare Specialists team has extensive knowledge of rising Part D premiums. A fact that's overlooked by many is that Part D providers sometimes discontinue specific plans annually. If you happen to be on one of these plans, you'll usually be shifted to the more expensive plan available in your area. It can be surprising to find a notably increased premium when reviewing your Annual Notice of Change letter. However, don't worry! The Annual Election Period (October 15 – December 7) is designed for such situations. Be sure to review your Part D plan during AEP so that your Medicare advisor can look for cost-saving opportunities.

Medicare Advantage Premiums

Similarly, Medicare Advantage plans don't adjust your premium depending on your service usage or the cost of your claims. Many Advantage plans come with no premiums. However, some areas might have higher premium rates. It's essential to always check this aspect of your plan. Should your carrier adjust the plan premium for the upcoming year, remember it's a general change, not one targeted at you. Everyone in the same zip code will have the same adjusted premium.

Just as we mentioned for Part D plans, it’s important to review your Medicare Advantage plan during AEP.

Medigap Premium Increases

Moving on to Medigap plans, their pricing differs from Part D and Medicare Advantage plans. Medigap premiums can rise due to a number of reasons, including age, inflation, promotional strategies, the collective claims amount for all subscribers in a region, and other factors. It's incorrect to assume that an increase in your premium is only because of your individual claims in a year; there are multiple determinants involved.

Should you notice a significant premium hike and wish to change your plan, it's possible. However, the method will vary based on your plan type. This is where Local Medicare Specialists are extremely helpful. Read on to find out how to save money on your Medigap plan.

What to Do if Your Medicare Plan Premium Increases

If you notice a considerable rise in your Medicare plan’s premiums for the upcoming year, you have the option to make adjustments during the Annual Election Period, also known as the Fall Open Enrollment. Let’s look at a few things you can do during this time.

Changing Medicare Advantage and Part D Plans

It's crucial not to overlook your Annual Notice of Change (ANOC). Make sure to go through this letter in the fall, as neglecting to do so and failing to alter your plan could result in you paying a higher premium next year. Here's what you should pay attention to:

  • Premium

  • Deductible

  • Maximum out-of-pocket limit

  • Copays/coinsurance for services

  • Provider network

  • Drug formulary to confirm your medications are included

Additionally, for those on a Part D drug plan, your Annual Notice of Change letter will provide details on any modifications. Should there be a premium adjustment, the letter will specify your updated premium for the subsequent year.

If you decide the changes will negatively impact your coverage, work with your Medicare advisor to look for a better plan for the upcoming year.

Changing Your Medigap Plan

A common misconception is that Medigap premiums rise on January 1st, similar to Advantage and Part D plans. However, this isn't accurate. Typically, Medigap policies undergo an increase on the anniversary of your policy, making your hike date distinct to you.

Stay vigilant for mail roughly 30-60 days ahead of your policy’s anniversary. You should receive a letter from your provider detailing your new premium and the increment.

If the rate increase exceeds your expectations, reach out to our team for a rate comparison. We assist beneficiaries daily in transitioning between Medigap plans for various reasons. Some providers are more flexible with medical underwriting, and certain states offer unique rules for plan switches without underwriting. Our team is well-versed in these intricacies and offers complimentary comparisons.

Save on Medicare in Arizona with Local Medicare Specialists

Anytime you receive information about a change in your Medicare plan’s premium, regardless if it's for an Advantage plan, Part D drug plan, or Medigap plan, it's vital to discern the right steps to take. The key to remember is that the frequency of your plan usage, medication procurement, or the costliness of your claims doesn't influence your Medicare plan's premium rise. Price increases are a given, driven by inflation and escalating healthcare expenses.

Stay calm, and if you're considering exploring your plan or understanding alternatives, don't hesitate to contact our team!

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