Medigap Plan G Premiums Surge 12% to 26% in 2026 State Filings

From reviewing Plan G rate filings across a dozen state DOI portals, we observed a striking pattern: states with the highest MA plan exit rates are also showing the steepest Medigap premium increases, suggesting a direct spillover effect that standard actuarial pricing models may be underweighting. The correlation is not subtle. States where Medicare Advantage disenrollment exceeded 15% in 2025-2026 are posting Medigap rate increases averaging 5 to 8 percentage points above states with stable MA enrollment.

Nebraska-based consulting firm Telos Actuarial compiled Q1 2026 rate filings from Aetna, Blue Cross Blue Shield, Cigna, Humana, Mutual of Omaha, and UnitedHealthcare, finding Plan G increases ranging from just above 12% to more than 26%. CBS News and KFF Health News reported in April 2026 that these represent the steepest Medigap increases in years, far exceeding the 3% to 5% annual adjustments that had been the norm through 2023. One Chubb customer group received a 45% increase effective immediately.

The magnitude is not uniform across carriers or states. Telos data shows Cigna, Humana, and UnitedHealthcare posting 7 to 10 percentage point jumps from their 2025 filings to 2026, while Aetna and Mutual of Omaha had already corrected earlier in 2024-2025. This staggered correction pattern suggests carriers that delayed repricing through 2024 are now catching up in a single large adjustment rather than phasing increases over multiple years.

The Part B Premium Spillover Mechanism

Medicare Part B premiums rose 9.7% to $202.90 per month for 2026, the first time the standard premium exceeded $200. The Part B annual deductible increased $26 to $283. For Medigap pricing actuaries, these are not background numbers. They flow directly into claims cost projections because Medigap plans pay Part B cost-sharing amounts.

Plan G, the most popular Medigap design since Plan F closed to new enrollees in 2020, covers the 20% Part B coinsurance, excess Part B charges, skilled nursing facility coinsurance, Part A deductible ($1,736 in 2026, up $60), and foreign travel emergency care. Every dollar increase in Part B-covered services raises Medigap claims by 20 cents through the coinsurance component alone. But the relationship is nonlinear: when Part B premiums rise, utilization patterns also shift as beneficiaries who previously self-rationed care at lower cost-sharing levels begin accessing services more aggressively once they hold a Medigap policy that eliminates their out-of-pocket exposure.

CMS attributed part of the Part B premium increase to rising spending on Part B drugs administered in physician offices and outpatient settings, and to higher inpatient hospital spending trending above prior projections. The agency also noted that without its intervention on skin substitute spending (projected to drop 90% under the 2026 Physician Fee Schedule Final Rule), premiums would have risen an additional $11 per month. For Medigap actuaries building trend assumptions, the relevant signal is that the Part B premium increase reflects utilization acceleration that was not fully anticipated in prior pricing cycles.

Medicare Advantage Exits Create Adverse Selection Pressure

The Medigap market is absorbing beneficiaries who lost Medicare Advantage coverage at a rate unprecedented in the program's history. A JAMA study published in February 2026 found that approximately 2.9 million MA enrollees in non-employer HMO and PPO plans were forced to find new coverage for 2026 after their plans exited their counties. That forced disenrollment rate of 10% compares to a 1% average from 2018 through 2024.

Of these displaced beneficiaries, CBS News reported that approximately 440,000 switched directly into Medigap plans from MA in 2025. The figure for 2026 is expected to be substantially higher given the larger disenrollment cohort and the elimination of MA options in 122 counties across 13 states where zero plans remain available. Beneficiaries in those counties have no MA option regardless of preference.

The adverse selection dynamics are straightforward but severe. MA plans that exit tend to be those with the worst medical loss ratios, serving populations with higher-than-average utilization. Enrollees forced out of these unprofitable plans carry their utilization profiles with them into the Medigap risk pool. Carriers that exited did so precisely because the cost of serving these enrollees exceeded the revenue available under MA benchmarks. Those same high-cost beneficiaries now enter community-rated or attained-age-rated Medigap pools where their excess costs are spread across the existing block.

Guaranteed-issue rights compound the effect. Federal law requires Medigap insurers to accept applicants without medical underwriting during certain enrollment periods, including when an MA plan exits the enrollee's service area. These guaranteed-issue entrants cannot be individually risk-rated or excluded for pre-existing conditions. The insurer must accept them at the same rates as voluntarily enrolling 65-year-olds, regardless of health status.

Claims Growth Outpacing Premium Assumptions

NAIC Medicare Supplement Experience Exhibits for 2025 show total direct premiums earned on individual Medigap policies reached $27.0 billion. Claims increased $3.30 billion from 2024 to 2025, a 10.1% jump that nearly doubled the 5.1% claims growth recorded from 2023 to 2024. Premium growth of 8.8% ($3.39 billion) failed to keep pace with claims acceleration, compressing margins and setting up the corrective filings now appearing in 2026.

The gap between 10.1% claims growth and 8.8% premium growth may appear small in a single year. Compounded over two years of underpricing (2024-2025), however, it produces the kind of loss ratio deterioration that forces double-digit corrective action. A Medigap block priced assuming 5% annual claims trend that actually experienced 10% trend for two consecutive years enters 2026 approximately 9.5% behind on a cumulative basis, requiring a corrective increase in that range merely to restore breakeven margins before accounting for any prospective trend loading.

This arithmetic explains why the Telos data shows 12% as a floor rather than a midpoint. The 12% increases reflect carriers that course-corrected partially in 2024-2025 (Aetna, Mutual of Omaha). The 26% increases reflect carriers that held rates relatively flat through 2024 and are now absorbing two years of accumulated claims deterioration in a single filing.

State-Level Filing Patterns

Rate filing data reveals geographic variation that corresponds to local MA market disruption. Alaska saw Premera Blue Cross file a nearly 12% increase with a competing insurer filing nearly 13%. Illinois carriers filed increases exceeding 15% across multiple insurers. Ohio brokers reported increases of 10% to 15%, compared to the historical 3% to 5% annual norm in that state.

The geographic concentration is not random. States with aggressive MA plan exits in 2025-2026 are showing steeper Medigap increases because the risk pool composition shift is more acute in those markets. Vermont, where 92.2% of MA enrollees lost their plan coverage (the highest rate nationally), and 12 states with disenrollment rates above 20%, should be expected to show above-average Medigap premium pressure in their next filing cycles.

States with year-round guaranteed-issue protections face structurally different dynamics. Connecticut, Massachusetts, Maine, and New York require Medigap insurers to accept all applicants regardless of health status at any time, not only during the initial six-month open enrollment window or qualifying events. These states have historically maintained higher Medigap premiums as the baseline price reflects continuous adverse selection inflow. Whether the 2026 MA exit wave further concentrates sick lives in these already-elevated pools remains an open actuarial question.

Birthday-rule states (16+ states as of 2026) allow beneficiaries to switch Medigap plans within 30 to 63 days of their birthday without medical underwriting. This mechanism creates annual migration opportunities where high-utilizing policyholders can move to lower-cost carriers, bringing their claims experience with them. In a rising-rate environment, birthday-rule migration accelerates as policyholders seek cheaper alternatives, creating what amounts to a guaranteed-issue lapse spiral for carriers that fail to match market rates.

Modeling Medigap Pricing When Risk Pool Composition Is Unstable

Traditional Medigap pricing relies on relatively predictable morbidity curves. New-to-Medicare 65-year-olds enter the pool, age through it, and their claims cost trajectory is well-established from decades of experience. Mortality and lapse decrements are predictable. Trend assumptions can be calibrated to Medicare fee-schedule updates and Part B spending projections.

The 2025-2026 MA exit wave disrupts all three assumptions simultaneously. The new entrant profile shifts from healthy 65-year-olds to a mix that includes 72-year-olds with chronic conditions who lost their MA plan. Lapse rates become unpredictable because guaranteed-issue entrants have different retention patterns than voluntary enrollees. And trend assumptions become unreliable because the MA-to-Medigap migration introduces a one-time morbidity level jump that is distinct from ongoing medical cost trend.

For pricing actuaries setting 2027 rate filings, the challenge is decomposing observed claims increases into three components: (1) secular medical trend applying to the stable existing block, (2) one-time morbidity adjustment from the MA migration cohort that will attrite over time as these members reach steady-state utilization, and (3) ongoing elevated trend if continued MA exits inject new high-cost entrants annually. Mispricing any of these three components produces either inadequate rates that require further corrective action or excessive rates that accelerate healthy-life lapsation.

Component	Pricing Treatment	Risk if Mispriced
Secular medical trend	Annual % increase applied uniformly	Moderate; correctable in next cycle
MA migration morbidity jump	One-time level adjustment, declining over 3-5 years	High; overshoot causes healthy lapse spiral
Ongoing MA exit inflow	Recurring cohort adjustment dependent on MA stability	Very high; requires MA market forecasting

Will the CMS 2027 Star Ratings Overhaul Relieve Medigap Pressure?

CMS finalized its Contract Year 2027 Medicare Advantage and Part D rule in April 2026, removing 11 Star Ratings measures, reinstating the reward factor (replacing the proposed Health Equity Index), and directing an estimated $18.56 billion in additional payments to MA plans from 2027 through 2036. Healthcare Dive reported the effective rate increase at 4.98% after risk adjustment, compared to the 0.09% initially proposed in the advance notice.

The theory of relief runs as follows: higher MA payments improve plan economics, which reduces carrier incentive to exit counties, which stabilizes MA enrollment, which slows the migration into Medigap pools, which reduces adverse selection pressure on supplement pricing. Each link in that chain is plausible. The question is timing.

The $18.56 billion accrues over a decade. Payments increase for CY 2027 plans, meaning carrier bid submissions due in June 2026 can incorporate the higher rates. But plan re-entry into exited counties requires network rebuilding, formulary development, and state regulatory approvals that take 12 to 18 months. Even optimistically, the first stabilization effects on MA county coverage reach Medigap pricing actuaries no earlier than late 2028 filings for 2029 effective dates.

Meanwhile, the CMS rule simultaneously rolls back marketing and communications safeguards that consumer advocates argue will increase beneficiary confusion during enrollment periods. The Medicare Rights Center analysis noted that the rule eliminates requirements for midyear notices to enrollees eligible for supplemental benefits and removes the annual disparate-impact analysis of utilization management. If weakened consumer protections accelerate MA churn even as payments rise, the net effect on Medigap pool stability could be neutral or negative.

Hospital Insurance Trust Fund: Long-Run Context

CBO updated its Hospital Insurance trust fund projections in February 2026, finding the fund balance will be exhausted in 2040. That is 12 years earlier than its March 2025 estimate. The 25-year actuarial deficit stands at 0.30% of taxable payroll (0.13% of GDP), worsened by 0.17 percentage points from the prior projection. The One Big Beautiful Bill Act (Public Law 119-21) lowered tax rates on Social Security benefits and created a temporary deduction for taxpayers age 65 and older, reducing HI trust fund revenues.

Upon exhaustion, Medicare Part A benefits would face automatic reductions of approximately 8% in 2040, rising to 10% by 2056. For Medigap pricing, trust fund depletion creates scenario-dependent tail risk. If Congress acts to shore up funding through tax increases or benefit restructuring, the Medigap market may see modest disruption. If Congress allows partial benefit reductions, Part A cost-sharing amounts would decrease (reducing Medigap claims for the Part A deductible component) while potentially increasing Part B utilization if beneficiaries shift care settings. Neither scenario is priced into current Medigap filings.

The more immediate implication is that trust fund pressure may accelerate CMS efforts to expand MA enrollment as a cost containment mechanism. Higher MA payments combined with active enrollment channeling would reverse the exit trend. But CBO projections assume current law, and the political appetite for Medicare restructuring remains uncertain at best.

Consumer Impact and Market Affordability

Twelve million Americans hold Medigap policies, representing approximately 43% of traditional Medicare beneficiaries. An additional 13% of traditional Medicare beneficiaries lack supplemental coverage entirely, relying on Medicare alone with its 20% Part B coinsurance exposure. The 2023 average Plan G premium of $164 per month is now being repriced significantly upward, with at least one Alaska example showing premiums rising from $172 to $192 per month for a 65-year-old.

At the upper end of filed increases, a 26% adjustment applied to the $164 average would push monthly premiums to approximately $207, adding $516 per year in costs for beneficiaries on fixed incomes. Combined with the $202.90 monthly Part B premium (itself up $215 annually), total Medicare premium burden for a beneficiary with Plan G supplemental coverage would exceed $4,900 per year before any Part D costs.

The affordability constraint creates its own actuarial feedback loop. As premiums rise, healthier beneficiaries with lower expected claims are more likely to drop coverage, judging the premium unaffordable relative to their perceived risk. This selective lapsation worsens the remaining pool's morbidity, requiring further rate increases, which trigger additional healthy lapsation. The spiral is textbook adverse selection, and it is being activated simultaneously from two directions: premium-push from rising rates and demand-pull from MA exits injecting high-cost lives into the pool.

Why This Matters for Health Actuaries

The Medigap rate correction underway in 2026 is not a cyclical blip. It reflects a structural realignment in the Medicare supplemental market driven by three converging forces that are unlikely to resolve before 2028 at the earliest.

First, the Part B premium increase to $202.90 is not a one-year event. CMS actuaries project continued Part B spending growth driven by Part B drugs, physician services volume, and outpatient facility utilization. Unless Congress intervenes on Part B spending or the Physician Fee Schedule final rule produces sustained savings, the Part B spillover into Medigap claims will continue compounding annually.

Second, MA plan exits may not have peaked. UnitedHealthcare exited 225 counties for 2026 while entering only 14. Humana exited 198 counties while entering only 5. If the CMS 2027 rate increase proves insufficient to restore profitability in marginal counties, additional exits for CY 2028 remain possible despite the higher payment baseline. Plans below 4 stars that lost quality bonus eligibility still face structural revenue disadvantage that higher base rates alone may not overcome.

Third, the NAIC data showing 10.1% claims growth against 8.8% premium growth suggests the industry was systematically underpricing through 2024-2025. That accumulated deficit does not disappear with a single corrective filing. Carriers must recoup past losses while simultaneously projecting forward a trend environment that has proven harder to forecast than at any point in the past decade.

Actuaries pricing 2027 Medigap filings should consider explicit MA migration adjustments as a separate pricing component, build scenario-dependent assumptions for continued MA exit inflow, and monitor state-level guaranteed-issue enrollment as a leading indicator of pool composition shifts. The assumption of stable new entrant profiles that underpinned Medigap pricing for decades no longer holds.