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Last Updated:
3/12/03
ARE THE BENEFITS AND COSTS THE SAME WITHIN EACH OF THE STANDARD PLANS?
Benefits in plans are standardized. For example, a Plan F policy from one insurance company has the same benefits as a Plan F policy from another insurance company. Costs are NOT the same, however. It is very important to compare premiums when shopping for a policy and weigh the benefits versus the costs.
There are three methods that insurance companies use for calculating the annual premiums: attained age, no age rating (sometimes called "community-based"), and issue age.
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"Attained age" is the most frequently used method. Premiums are based on the policyholder's current age and increase automatically as he/she grows older. Costs are therefore lower for younger seniors but may increase considerably with the policyholder's advancing age. |
| In the "no age rating" method, a Plan's premiums are the same for all policyholders regardless of the age of an individual. These policies are relatively less costly for older seniors, especially for those over the age of 75. |
| "Issue age" means that the premium is set by the policyholder's age when the policy is first bought. The policyholder continues to pay premiums as if the age remains constant. For example, if a policy is bought at age 65, the premiums will always reflect the rates for a 65 year old regardless of his/her advancing age. |
Insurance companies can increase their premiums due to inflation or high claims costs. Think carefully before buying a policy that strains your budget today as the premium will likely increase in the future.