Key Takeaways

• Medigap premiums in 2025 continue to rise steadily, making it essential for postal retirees and workers to monitor these costs closely.

• Understanding how Medigap premium adjustments work can help you better plan your long-term health care expenses during retirement.

The Changing Reality of Medigap Premiums

When you first enroll in a Medigap plan, the promise of stable coverage is reassuring. However, as you move through retirement, you may notice something unexpected: your Medigap premiums often do not remain flat. In 2025, premium increases continue to be a reality for many postal retirees and workers, even if your health stays the same and you never switch plans.

Several factors drive these cost increases, and being aware of them can help you stay ahead financially.

Why Medigap Premiums Rise Over Time

Premium increases are not random. They are influenced by several specific factors, each of which affects your plan differently:

Age-Based Pricing Models

Many Medigap plans use an “attained-age” pricing model. This means your premium is based on your current age and goes up as you get older. Some plans use “issue-age” pricing, where your starting age matters most, but even these can still rise due to inflation or company-wide adjustments.

• Attained-age plans increase yearly simply because you age.

• Issue-age plans may increase due to broader cost trends rather than your personal age.

Inflation and Medical Costs

Even if your health remains excellent, broader medical inflation impacts everyone. In 2025, health care costs continue to rise, affecting hospital fees, doctor visits, and medical procedures. Medigap plans, which are designed to pick up the costs not covered by Original Medicare, adjust their premiums accordingly.

• Rising hospital and outpatient service costs directly impact premiums.

• Increased use of expensive technologies drives up overall expenses.

Changes in Plan Membership

The risk pool—or the group of people enrolled in the same plan—plays a big role. If a plan has fewer healthy members over time and more members using benefits frequently, the insurer may raise premiums for everyone.

• An aging group of enrollees leads to higher average claim costs.

• Healthier individuals switching plans can leave behind a “sicker” pool, increasing risk.

Regulatory and Legislative Changes

Medicare-related regulations continue to evolve. Policy updates or government mandates can lead to cost shifts that impact insurers, who then adjust premiums.

• Changes to Medicare Part A and B deductibles and coinsurance in 2025 indirectly influence Medigap premiums.

• Legislative reforms around health care pricing create ripples that affect supplemental plans.

How Often Do Medigap Premiums Increase?

Typically, Medigap premiums are reviewed and adjusted once per year. Some plans announce increases in the fall to align with Medicare Open Enrollment, while others communicate changes earlier.

• Annual increases are common and usually take effect on January 1.

• Some plans adjust mid-year, although this is less typical.

It is wise to review your plan notices each year to understand any upcoming changes.

How Big Are the Increases in 2025?

While Medigap premium increases vary by location, age, and plan type, many postal retirees and workers are seeing annual adjustments between 3% and 6% in 2025. However, those in their 70s and 80s often experience steeper increases due to attained-age pricing.

• Younger retirees (mid-60s) may see smaller incremental increases.

• Older retirees (70+) may see premiums rise more sharply year after year.

What You Can Do About Rising Medigap Premiums

Though you cannot control many factors causing these increases, you do have options to manage the impact.

Review Plan Options Periodically

While you can apply to switch Medigap plans at any time of the year, be aware that underwriting may apply. Health conditions can affect your ability to change plans or secure lower premiums.

• Compare plans annually to ensure your coverage still fits your needs.

• Be mindful of underwriting questions if considering a switch.

Consider Alternative Coverage Strategies

For some postal retirees and workers, coordinating FEHB (Federal Employees Health Benefits) or PSHB (Postal Service Health Benefits) with Medicare may offer more cost-effective alternatives to Medigap.

• Some PSHB plans coordinate benefits with Medicare and reduce out-of-pocket costs.

• Integrated coverage may include dental, vision, and prescription drug benefits.

Budget for Gradual Increases

Planning ahead can make a big difference. Assume a gradual increase in your health care budget each year during retirement.

• Building annual premium increases into your retirement income plan can reduce financial stress.

• Setting aside an annual “health care inflation” reserve helps cover unexpected jumps.

Why Premium Stability Early On Can Be Misleading

When you first purchase a Medigap plan, especially in your mid-60s, your premium may look stable for a few years. However, as you age, even small annual increases compound. By the time you are in your mid-70s or early 80s, your monthly premium may have doubled or tripled from when you first enrolled.

• Early stability often leads retirees to underestimate long-term costs.

• Later premium jumps can feel sudden without early financial preparation.

Understanding Guaranteed Renewable Rights

In 2025, all standardized Medigap policies are guaranteed renewable. This means your insurer cannot cancel your policy as long as you pay your premium. However, guaranteed renewal does not mean guaranteed rates.

• Insurers can raise rates for classes of policyholders with state approval.

• Individual premium increases tied solely to your personal health status are prohibited.

This protection offers peace of mind but still requires financial readiness.

The Role of Medicare Policy Changes in Medigap Premiums

Medicare changes often cause ripple effects on supplemental coverage costs. For instance:

• Increases to Medicare Part A deductibles and coinsurance shift more cost burden to Medigap plans.

• New care delivery models and billing structures alter how much Medigap plans must pay.

In 2025, with continued adjustments to hospital and skilled nursing facility coverage, Medigap policies may see further cost pressures.

How Location Influences Premium Adjustments

Where you live can also affect how much your Medigap premium rises. Urban areas often have higher medical costs, which insurers factor into their pricing models.

• Premiums in large cities may rise faster than in rural areas.

• States with stricter insurance regulations may experience smaller annual hikes.

Understanding regional trends helps you benchmark your own premium changes more realistically.

Should You Consider Dropping Medigap Coverage?

For some retirees, rising premiums may prompt thoughts of dropping Medigap coverage. Before making this decision, consider:

• Without Medigap, you face higher out-of-pocket costs for hospital stays and doctor visits.

• Enrolling in a different type of plan later may require health underwriting.

• Dropping coverage now could expose you to greater financial risk if your health declines.

Weigh the costs of premiums against the potential exposure to larger medical bills carefully.

Importance of Annual Plan Reviews for Postal Retirees

In 2025, Open Season for the Postal Service Health Benefits (PSHB) Program occurs from November to December, overlapping slightly with Medicare’s Open Enrollment Period. This is a key time to review your total health care coverage package.

• Evaluate how your PSHB plan and Medicare coordinate.

• Assess whether maintaining Medigap still makes financial sense based on your overall needs.

Even if you decide to stick with your current coverage, understanding your options is essential to financial peace of mind.

Rising Medigap Premiums: A Manageable Challenge

Medigap premiums may not stay as steady as you once hoped, but with awareness and proactive financial planning, they remain a valuable part of a comprehensive retirement health care strategy. As a postal retiree or worker, you have unique access to the PSHB Program and Medicare coordination options that can help mitigate the effects of rising costs.

If you need personalized help evaluating your options, consider speaking with a licensed insurance agent listed on this website who can provide guidance tailored to your situation.