An agent says serving Medicare supplement buyers is still easier
than serving Medicare Advantage enrollees.
Overall Medicare supplement (Medigap)
insurance enrollment rose 4% in 2018, to 13.6 million, and enrollment in
policies based on the Medigap “Plan G” template climbed 39%, to 645,000.
Analysts at Mark Farrah Associates have
published those figures in their latest Medigap market update. The analysts
based their work on financial reports filed by 196 Medigap coverage issuers.
Letter Plans
The Medigap market gives insurers a way to
sell coverage that helps consumers cope with the many gaps in the
“Original Medicare” Medicare Part A hospitalization benefits and the Medicare
Part B physician and outpatient services benefits.
In 1990, Congress created the “letter plan”
system, to try to help give consumers a way to shop for different types of
Medigap policies on an apples-to-apples basis. A policy based on a particular
letter plan must cover the standardized package of benefits associated with
that letter plan template.
Traditionally, the richest letter plan,
Medigap Plan F, has been the most popular type of Medigap coverage.
Congress recently changed the letter plan
rules to keep people who will become newly eligible for Medicare from signing
up for Plan F coverage, because of concerns that Plan F policies do such a
good job of protecting consumers from out-of-pocket expenses that consumers
with that type of coverage end up getting too much low-value care.
Starting in 2020, the richest Medigap coverage
that people who become eligible for Medicare will be able to get will be Plan G
coverage. A Medigap Plan G policy covers most of what a Medigap Plan F policy
covers, but a Plan G policyholder must take responsibility for paying the
Medicare Part B physician and outpatient services annual deductible. This year,
the Medicare Part B deductible is $185.
Plan F policies accounted for 52% of The
number of people with Plan F coverage fell by 15,000 in 2018, to about 7
million.
Finances
The Medigap issuers in the Mark
Farrah database collected $31 billion in premiums in 2018 and spent $25
billion on claims.
In 2017, the issuers collected $30 billion in
premiums and paid $23 billion in claims.
What an Agent Is
Seeing
Danielle Kunkle Roberts, the co-owner of
Boomer Benefits of Fort Worth, Texas, has helped tens of thousands of clients
sign up for Medigap and Medicare Advantage plan coverage.
Medicare plan sales during the recent annual
election period and the recent Medicare Advantage open enrollment period was
“pretty good,” Roberts said in an interview.
Her agency helps clients with post-sales
service, and she said selling Medigap coverage to Original Medicare enrollees
is still somewhat more attractive than selling Medicare Advantage plan
coverage, because post-sale service is simpler for the Medigap purchasers.
The Medicare Advantage plans impose more
preauthorization requirements and are more likely to deny enrollees access to
care, Roberts said.
But Boomer Benefits has developed procedures
for showing customers what kinds of restrictions they might face if they sign
up for Medicare Advantage plans, as well as the extra benefits they might get
with the plans.
When customers get enough
information before enrolling in Medicare Advantage plans, “those that do
are generally happy with the benefits structures,” Roberts said.
The Hole
Roberts said the real problem she sees in the
Medicare plan break is that only about 10% to 15% of her firm’s customers
have long-term care insurance, or some kind of equivalent arrangement for
paying for long-term care expenses.
“The main thing you want people to know is
that Medicare doesn’t pay for long-term care,” Roberts said.
If consumers begin thinking about long-term
care planning at age 64, when they are about to age into eligibility for
Medicare, “that’s way too late,” Roberts said.
Resources
A copy of the new Mark Farrah Associates
Medigap market report is available here.
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