Sale of “Ancillary Products” to Fill in Gaps in of Medicare Advantage Highlight Both Coverage Shortfalls and Need for Stronger Regulation of the MA Marketplace

As Medicare’s annual enrollment period progresses until December 7th, beneficiaries face an onslaught of insurance industry marketing materials aimed at convincing them to enroll in Medicare Advantage (MA) products, often using enticements of “extra” benefits.  MA plans are often touted as offering “lower costs” and “affordable coverage” with “better health outcomes” for enrollees.

In marked contrast to the proclamations of the insurance industry, many of the same people selling MA products, who tout the benefits and cost-savings achievable through MA plans,  also highlight and rely upon MA products’ shortcomings in order to cross-sell “ancillary products” to the same beneficiaries. These ancillary products include hospital indemnity plans, and add-ons to cover things such as ambulance trips, skilled nursing facility stays, cancer diagnoses, and even dental, hearing and vision care (which many MA plans already cover to varying degree).  Some of the same insurance companies that offer MA plans also offer and promote ancillary products to “fill in the gaps” of their primary insurance.

Agent and broker communications to each other (and sometimes to prospective clients) are often variations of this example, from an agent website:

If you are selling Medicare Advantage plans, you need to be cross-selling Hospital Indemnity plans to your clients. While some Medicare Advantage plans offer $0 monthly premiums, beneficiaries are left with some gaps in coverage – especially out-of-pocket costs for hospital stays and procedures. For a client living on a fixed income, unexpected costs like that can throw off their budget drastically. The good news is that hospital indemnity plans can fill in these gaps for your clients – at a price they can afford.

In our view, the existence and permitted sale of these products represent failures of both policy and of the market. Fundamental and structural change is needed in order to meaningfully tackle what ails the Medicare program. An overhaul of Medicare Advantage marketing rules, among other things, is urgently needed.

Read the full article at https://medicareadvocacy.org/ma-and-selling-extra-products/