Why New York Medicare Supplement Rates Keep Rising—and Your Options

Many of our New York clients have recently received letters notifying you that your Medicare Supplement premium is increasing again. I understand how frustrating this is—especially for people who are healthy, rarely use their coverage, and feel as though the monthly premium continues to rise regardless.

I want to explain why this keeps happening, why New York is different from most other states, and what options you have if the premiums are becoming difficult to justify or afford.

First, your rate increase is not because you personally used too much medical care.

New York Medicare Supplement insurance is generally priced on a community-rated basis. Your insurance company cannot deny your application or charge you a different premium because of your health, medical conditions, claims history, or because you are currently receiving medical treatment.

In fact, New York requires companies selling Medicare Supplement insurance to accept applications throughout the entire year—not only when someone first enrolls in Medicare.

This provides New York residents with extremely valuable protection.

In many other states, once a person’s initial Medicare Supplement enrollment period has passed, the insurance company may ask medical questions, use medical underwriting, charge more, or decline the application altogether.

That is generally not how it works in New York. New York residents can usually compare and change Medicare Supplement companies or plan designs throughout the year without being rejected because of their health.

Someone who is currently enrolled in Medicare Advantage may also be able to return to Original Medicare during an allowed federal enrollment period and apply for a Medicare Supplement plan. In New York, the Supplement company cannot reject that person simply because their health has declined.

The protection, however, comes with a financial tradeoff.

Because people can enter the New York Medicare Supplement market regardless of their health, some people may wait until they expect to need more medical care before purchasing more comprehensive Supplement coverage.

In practical terms, that means the Medicare Supplement insurance pool may include more people with significant and expensive medical needs. The insurance companies spread those claims across everyone enrolled in that block of business. That structure can place additional upward pressure on premiums.

This is one important reason Medicare Supplement premiums in New York can be considerably higher than in states where insurance companies are permitted to medically underwrite applicants.

However, it is not the only reason premiums increase.

The New York Department of Financial Services reviews Medicare Supplement rate requests. The Department considers the carrier’s previous claims, how frequently members use medical services, projected medical-cost trends, administrative expenses, financial condition and profits. Rising hospital charges, physician costs, medical utilization and new medical technology also contribute to increasing premiums.

What can you do if your premium is getting too expensive?

There is no single answer that is right for everyone. Your choices generally include:

1. Keep your current Medicare Supplement plan.

For someone who uses a significant amount of medical care, sees numerous specialists, travels frequently or values the broad provider access available through Original Medicare, paying the higher premium may still make sense.

The goal is not automatically to move everyone simply because a rate increased.

2. Compare the same Medicare Supplement plan with another company.

Medicare Supplement benefits are standardized by plan letter. For example, the basic medical benefits provided by one company’s Plan G are the same as the basic benefits provided by another company’s Plan G.

The premiums, customer service, discounts and rate history may still differ. There can be meaningful price differences between companies offering the same plan letter.

3. Consider a less expensive Medicare Supplement plan design.

Depending on your circumstances, another Supplement option—such as Plan N or a high-deductible Plan G—may reduce your monthly premium in exchange for accepting additional deductibles, copayments or other out-of-pocket responsibility.

A lower-cost Supplement plan can sometimes provide a reasonable middle ground between an expensive comprehensive Supplement and a Medicare Advantage plan. A lot of our clients are choosing the high-deductible Plan G+ through Globe Life. This is an example of a plan with the same coverage, same benefits and same features of a United Healthcare plan G, but with a much lower monthly premium.

4. Consider Medicare Advantage.

A Medicare Advantage plan may have a substantially lower monthly plan premium. However, you will generally pay copayments or coinsurance as you receive medical care.

You must also carefully review the plan’s doctor and hospital network, prescription coverage, prior-authorization requirements and annual maximum out-of-pocket exposure. Medicare Advantage may be a good fit for some people, but it is not automatically the right answer simply because the monthly premium is lower. There are significant differences between a Medicare Supplement and a Medicare Advantage Plan.

It is also important to understand that you cannot leave a Medicare Advantage plan on any random day of the year.

Most changes are made during Medicare’s Annual Enrollment Period from October 15 through December 7. People already enrolled in Medicare Advantage generally have another opportunity to make one change between January 1 and March 31. Certain life events may also create a Special Enrollment Period.

The expectation moving forward

I would not expect Medicare Supplement premiums to remain flat indefinitely. Medical costs and claims continue to rise, and New York’s consumer protections will continue to affect the cost of maintaining comprehensive Supplement coverage.

That does not mean everyone should abandon their Medicare Supplement plan. It means that your coverage should be reviewed periodically instead of assuming that the plan you selected several years ago will always remain the best financial choice.

Sometimes the right decision is to stay exactly where you are. Sometimes another Medicare Supplement company or plan can lower the premium. For other clients, Medicare Advantage may be worth considering after we verify the doctors, hospitals, prescriptions and potential out-of-pocket costs.

Please do not cancel your existing coverage until any replacement coverage has been approved and its effective date has been confirmed.

If you received a rate-increase notice and would like us to review it, please send our office a copy. We will help you understand the increase and determine whether a more affordable alternative is available without sacrificing the coverage that matters most to you.