Long Term Care and Medigap Rating Methodology
The rating methodology is often used for long term care (i.e. attained age) and medicare supplement (Medigap) determines how premium rates may change over time. The three types of rating methodology are as follows:
- Attained Age (AA): These policies use pricing methods which automatically increase the premium as you age. These policies are usually less expensive during the first year, but the premium will increase automatically as you enter new age brackets. These automatic increases may be combined with premium increases based on inflation and higher medical costs, resulting in exceptionally steep increases as you get older.
You may be "priced out" and find it costly to go elsewhere at an advanced age. California law requires a notice on each policy or certificate disclosing any automatic premium increases based on age.
- Issue Age (IA): These policies use a pricing method based on your age when the policy is first issued. The premium may increase with inflation, but not because you enter an older age bracket. Policies using this method appear slightly more expensive initially, but premiums do not automatically increase and are more reasonable in an older age bracket.
- Community-Rate (CR): These policies, also called No-Age Rated policies, charge everyone the same rate, regardless of their age.