Significant Rise in Medicare Supplement Premiums: What You Should Know

John Jaggi, a seasoned insurance broker from Illinois, reported an unprecedented 45% increase in premiums for over 80 clients enrolled in a Medicare supplemental plan last August. "In my 49 years as a broker, I've never encountered a uniform premium rise effective immediately, rather than on each policy's anniversary," Jaggi shared regarding the unexpected hike from insurer Chubb. This policy covers costs unmet by traditional Medicare, and absence of coverage could expose consumers to substantial medical expenses annually.

Insurers, including Chubb, have not responded to inquiries concerning this surge. Currently, more than 12 million traditional Medicare participants, representing 43%, possess a Medigap policy. Meanwhile, 13% lack this or any alternative supplemental coverage, leaving them potentially liable for significant healthcare costs in severe illness scenarios. Recent trends indicate that double-digit increases in Medigap premiums are becoming increasingly common, with predicted substantial hikes persisting beyond last year's levels.

A Telos Actuarial analysis of early 2026 rate filings reveals that major insurers like Aetna, Blue Cross Blue Shield, Cigna, Humana, Mutual of Omaha, and UnitedHealthcare are proposing Plan G rate increases of 12% to over 26%. "These figures, despite being from a limited dataset, suggest that insurers are adjusting rates in response to heightened claims expenses," noted Brett Mushett of Telos.

Variations in premiums persist, influenced by factors such as plan type, geographic location, and age of the insured. For instance, the average monthly Plan G premium was $164 in 2023, with higher rates likely this year. Regional discrepancies exist; in Ohio, annual premium increases have jumped from an average of 3-5% to 10-15%.

Increased usage of medical services and rising medical and labor costs are among factors driving up premiums. Some states have specific Medigap rules impacting everyone, including those moving in or out of Medicare Advantage plans, which affects rates. “Premiums going over 20% are becoming less uncommon,” stated Chalen Jackson, vice president of government affairs at Integrity.

Policy proposals suggest potential federal interventions, such as establishing caps on out-of-pocket expenses for Medicare recipients or subsidizing Medigap policies. However, legislative changes face challenges due to their budgetary impacts.

Eligibility for Medicare begins at age 65, allowing beneficiaries to purchase a Medigap plan within the initial six months of enrollment without health assessments. However, subsequent opportunities to change Medigap plans become restrictive, emphasizing the significance of initial enrollment decisions. Certain states have adopted "birthday rules," facilitating annual policy changes without medical underwriting, which benefits users but also influences overall rate structures.

Shifting from traditional Medicare to Medicare Advantage plans is an option when Medigap costs increase. Medicare Advantage offers out-of-pocket cost caps but limits provider choice within network confines and complicates reversion to traditional Medicare later.

A considerable portion of Medicare Advantage members, approximately 2.6 million in 2025, lost their coverage, compelling many to switch plans. Nevertheless, around 440,000 transitioned to Medigap policies due to limited local alternatives. For cost reductions, brokers recommend plans with deductibles, although these have higher initial out-of-pocket costs that might deter some consumers.