Medigap premiums leap, and consumers have few alternatives

After nearly five decades in the insurance industry, Illinois-based broker John Jaggi was faced with a situation he had never encountered before. Last August, over 80 of his clients who were enrolled in the same Medicare supplemental plan from Chubb were hit with a staggering 45% premium increase. This immediate and substantial hike caught Jaggi off guard, as he had never seen such a drastic change in premiums outside of the policy anniversary.

Medicare supplemental plans, also known as Medigap policies, are essential for covering deductibles and costs not included in traditional Medicare. Without this additional coverage, beneficiaries are at risk of facing unlimited out-of-pocket expenses. Unfortunately, double-digit premium increases for these policies are becoming more common, leaving brokers like Jaggi scrambling to find affordable alternatives for their clients.

The rise in premium rates for Medigap policies is not limited to Chubb. Other major insurers, such as Aetna, Blue Cross Blue Shield, Cigna, Humana, Mutual of Omaha, and UnitedHealthcare, have also implemented significant rate hikes for Plan G policies, the most popular type of supplement. These increases range from over 12% to more than 26% in the first quarter of 2026.

According to Brett Mushett, a consulting actuary with Telos Actuarial, these rate adjustments reflect the carriers’ need to balance their claims experience with the rising costs of medical services and labor. Factors such as increased healthcare utilization by beneficiaries, the aging population, and fluctuating medical expenses all contribute to the upward pressure on premiums.

In response to the escalating costs, policy experts have proposed solutions such as capping out-of-pocket expenses for Medicare beneficiaries or providing subsidies for Medigap coverage. However, implementing these changes would require congressional approval, which seems unlikely in the current legislative climate due to budgetary concerns.

For individuals facing high Medigap costs, switching to a Medicare Advantage plan with out-of-pocket caps may be a more affordable option. However, this decision comes with limitations, such as network restrictions and potential difficulties in returning to traditional Medicare with a Medigap plan in the future.

Overall, the rising premiums for Medigap policies highlight the challenges faced by Medicare beneficiaries in navigating their healthcare coverage options. Brokers like Jaggi continue to assist clients in finding suitable alternatives amidst the ongoing increases, emphasizing the importance of informed decision-making and proactive planning in managing healthcare costs.