Why Medicare Supplement Rates Have Increased So Much in 2025 and 2026

Over the past two years, Medicare supplement (Medigap) policyholders across the country have experienced something many long-time agents and clients have rarely seen before—double-digit premium increases becoming the norm rather than the exception. For decades, most Medigap plans saw relatively modest annual adjustments, often in the 3% to 6% range. Today, increases of 10%, 15%, and even 20%+ are increasingly common, with some isolated cases exceeding 40%.

As an independent Medicare broker with more than 20 years of experience, I’ve worked through multiple rate cycles, but the current environment is clearly different. Understanding why these increases are happening can help Medicare beneficiaries make better decisions about their coverage and avoid costly surprises.

Below are the primary drivers behind the recent surge in Medigap premiums.

1. Post-Pandemic Utilization Surge

One of the biggest factors impacting Medigap pricing is a sharp increase in healthcare utilization following the COVID-19 pandemic.

During 2020 and parts of 2021, many Medicare beneficiaries delayed elective procedures, routine screenings, and even necessary care. This created a temporary dip in claims for insurance carriers. However, that lull didn’t eliminate the need for care—it simply postponed it.

Now, we are seeing a “catch-up effect.”

Patients are returning for:

• Joint replacements
• Cardiac procedures
• Cancer screenings and treatments
• Diagnostic testing

This surge in delayed care has led to a significant spike in claims costs for insurers. When claims rise quickly, premiums must follow to keep plans financially sustainable.

2. Persistent Medical Inflation

Healthcare costs have been rising faster than general inflation for years, but the current environment has intensified that trend.

Key cost drivers include:

• Higher hospital and facility charges
• Increased physician reimbursement rates
• Rising pharmaceutical costs
• Labor shortages leading to higher wages for healthcare workers

Even modest increases in Medicare deductibles and coinsurance amounts can ripple through Medigap plans, since these policies are designed to cover those gaps. When the underlying costs increase, supplemental plans must adjust accordingly.

3. Aging Risk Pools

Medigap plans are particularly sensitive to the health and age of their risk pool.

Unlike employer-sponsored insurance, Medigap plans tend to:

• Retain members for many years
• Gradually age as policyholders get older
• Experience increasing claims as members move into their 70s and 80s

As a block of business ages, claims naturally rise. If younger, healthier individuals are not entering the pool at the same rate, the overall risk level increases—leading to higher premiums.

This is especially relevant for older Medigap “blocks” that have been in force for many years.

4. Medicare Advantage Disruptions and Guaranteed Issue Influx

A major and often overlooked factor in recent rate increases is the disruption in the Medicare Advantage (MA) market.

Over the past two years:

• Millions of beneficiaries have lost their MA plans due to carrier exits or plan terminations
• Many of these individuals received guaranteed issue rights to enroll in Medigap plans

This is significant because guaranteed issue rules prevent insurers from underwriting applicants based on health conditions.

The result?

A disproportionate number of high-cost, high-utilization individuals are entering Medigap plans.

As noted in industry reporting, hundreds of thousands of beneficiaries have transitioned from Medicare Advantage to Medigap in a short period. Many of these individuals:

• Have chronic health conditions
• Require ongoing care
• Undergo expensive procedures shortly after enrolling

This creates immediate upward pressure on claims—and ultimately premiums.

5. State-Level Regulations and Consumer Protections

Certain state rules, while beneficial for consumers, can also contribute to higher premiums.

For example:

• “Birthday rules” in some states allow beneficiaries to switch Medigap plans annually without medical underwriting
• Continuous or annual guaranteed issue rights in states like New York and Connecticut allow enrollment regardless of health status

While these protections improve access to coverage, they also introduce more uncertainty for insurers. When individuals can move freely between plans—especially after developing health issues—carriers must price for higher risk across the entire pool.

6. Elective Surgery “Stacking”

Another emerging trend is what many in the industry refer to as “elective surgery stacking.”

This occurs when:

• New enrollees join a Medigap plan
• They quickly schedule multiple procedures they had been delaying

Because Medigap plans often provide very comprehensive coverage (especially Plans G and N), beneficiaries may face minimal out-of-pocket costs. This can accelerate the timing of care, leading to higher short-term claims for insurers.

While this behavior is understandable from a consumer standpoint, it adds to the overall cost burden carriers must manage.

7. Increased Fraud, Especially in Telemedicine

Fraud has always been a concern in healthcare, but recent years have seen a notable increase—particularly in telemedicine.

During the pandemic, insurers expanded telehealth access significantly. While this improved convenience and access to care, it also created new opportunities for abuse.

Examples include:

• Billing for services not rendered
• Unnecessary diagnostic testing
• Fraudulent durable medical equipment (DME) claims

Even a relatively small percentage of fraudulent claims can have a meaningful financial impact when applied across millions of policies. Carriers must account for these losses when setting future rates.

8. Carrier “Catch-Up” Pricing Adjustments

In some cases, insurers simply underpriced their products in prior years.

When claims experience comes in higher than expected, carriers must “correct” pricing. This can result in:

• Larger-than-normal rate increases
• Multiple consecutive years of elevated adjustments

Recent filings from major carriers have shown increases ranging from roughly 12% to over 25% for popular plans like Plan G. Industry experts note that insurers are actively recalibrating premiums to reflect current and projected claims trends.

9. Market Competition and Pricing Cycles

The Medigap market is cyclical.

At times, carriers aggressively price plans to gain market share. This often leads to:

• Lower initial premiums
• Rapid enrollment growth

However, if pricing is too aggressive, it eventually leads to:

• Higher claims ratios
• Steeper rate increases in later years

Many of the increases we’re seeing today are partially the result of these earlier competitive pricing strategies.

What This Means for Medicare Beneficiaries

For consumers, these trends can feel frustrating and unpredictable. However, there are still strategies to manage costs effectively:

• Review your plan annually to ensure it remains competitive
• Consider switching carriers if medically eligible
• Evaluate high-deductible options for lower premiums
• Compare Medigap vs. Medicare Advantage Most people on a Medigap plan will not want to switch to a Medicare Advantage plan, however, some folks might feel it’s necessary to consider this option.

The key is staying proactive. Reach out to a knowledgeable agent for guidance and comparison quotes.

Final Thoughts

The recent spike in Medicare supplement premiums is not the result of a single issue, but rather a combination of powerful forces:

• Increased healthcare utilization
• Ongoing medical inflation
• Aging populations
• Medicare Advantage market disruptions
• Regulatory dynamics
• Fraud and systemic inefficiencies

While these pressures are unlikely to disappear overnight, understanding them provides valuable context—and helps explain why today’s rate environment looks so different from the past.

How I Help Clients Navigate These Changes

With over 20 years of experience as an independent Medicare broker, I work with clients to:

• Evaluate all available Medigap carriers
• Identify more stable pricing trends
• Navigate underwriting and switching strategies
• Compare alternatives when appropriate

If you’re in Georgia or another state where I’m licensed and want a second opinion on your current coverage, I’m happy to help.

Visit my website at Insurance Advisors (insuranceadv.com) to learn more or schedule a consultation.