The Era of the Double-Digit Premium Hike
For years, Medicare supplemental insurance—commonly known as Medigap—was seen as a predictable expense. In some states, like Ohio, year-over-year increases typically hovered between 3% and 5%. However, the landscape is shifting toward a “new normal” of double-digit spikes.
Industry experts are now seeing rate increases of 10% to 15% as standard, with some jumping even higher. For instance, recent filings for Plan G policies—the most popular supplement type—showed increases ranging from just over 12% to more than 26% in the first quarter of 2026.
The volatility is stark. Illinois-based broker John Jaggi reported a staggering 45% premium increase for more than 80 of his customers enrolled in a Chubb plan. Jaggi noted that in his 49 years as a broker, he had never seen a premium increase seize effect immediately for everyone rather than on their policy anniversary.
What is Driving These Costs?
Several systemic factors are pushing premiums upward. Insurers are facing “upward pressure on their claims experience,” according to Brett Mushett of Telos Actuarial. This is driven by:
- Increased Utilization: Beneficiaries are using medical services more frequently.
- Demographic Shifts: An aging population naturally leads to higher healthcare needs.
- Economic Pressures: Rising labor and medical costs are being passed down to the consumer.
- Medicare Adjustments: Annual changes to Medicare deductible and copayment rates directly impact the amount supplemental plans must cover.
Navigating the “Medigap Trap”
As premiums rise, many beneficiaries consider switching to private-sector Medicare Advantage plans, which offer out-of-pocket caps. However, this move can create a restrictive cycle known as the “Medigap trap.”
While joining a Medicare Advantage plan is straightforward, returning to traditional Medicare and purchasing a Medigap plan is often difficult. Outside of a small 12-month window, beneficiaries may be required to answer health-related questions. This medical underwriting can lead to being turned down or charged prohibitively high premiums due to pre-existing conditions.
Ways to Switch Without Medical Underwriting
Depending on where you live, We find specific protections that allow you to change plans without facing health questions:
- The Birthday Rule: At least 16 states have a “birthday rule” allowing enrollees to switch Medigap plans annually around their birthday without underwriting.
- Guaranteed Issue States: Four states—Connecticut, Massachusetts, Maine and New York—require insurers to offer at least one Medigap policy to all applicants regardless of medical history.
Alternative Strategies for Managing Rising Costs
When faced with “unbelievable increases,” beneficiaries have a few levers they can pull to lower their monthly expenses, though each involves a trade-off.
One option is moving to a Medigap plan with a deductible. These plans typically charge significantly lower monthly premiums than those that cover a larger portion of annual costs. However, the trade-off is a high annual deductible, which currently sits just under $3,000.
For many, this financial risk is too high. As insurance agent Patricia Mack noted, many seniors are simply not comfortable with a $3,000 deductible, leaving them stuck between rising premiums and high out-of-pocket risks.
The Future of Medicare Policy and Out-of-Pocket Caps
With the current trend of rising costs, there is growing pressure on policymakers to intervene. Senator Ron Wyden (D-Ore.) has highlighted that traditional Medicare is the only federal health insurance program that lacks an out-of-pocket cap.
Proposed solutions include:
- Legislative Caps: Congress could implement a hard cap on out-of-pocket costs for beneficiaries.
- Subsidies: The federal government could subsidize the purchase of Medigap coverage to make it more affordable.
While these measures would protect seniors, they would also increase the federal budget, making them difficult to pass in the current legislative environment. For now, beneficiaries must rely on brokers and careful plan comparison to manage their healthcare spending.
Frequently Asked Questions
Plan G is one of the most commonly purchased Medicare supplemental policies. It helps cover costs that traditional Medicare does not, though premiums for these plans have recently seen increases ranging from 12% to 26% in some areas.
Yes, unless you are in a guaranteed-issue state or are within your initial enrollment window, insurers can use medical underwriting to deny coverage or charge higher premiums based on your health history.
The birthday rule is a protection in at least 16 states that allows Medigap enrollees to switch to a different supplemental plan around their birthday without undergoing medical underwriting.
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