Medicare Supplements: Changing Landscapes

MEDICARE SUPPLEMENTS

By Maggie Stedt and David Ethington

The Medicare Supplement sales landscape is undergoing changes with a number of carriers here in California. With substantial rate increases, changes in guarantee issue guidelines, and withdrawals of some carriers from the marketplace, today’s agent must do their due diligence when presenting and submitting Medigap plans.

A few carriers such as Aetna and Anthem Blue Cross require underwriting for individuals who are voluntarily leaving their group plans if they are not new to Medicare Part B coverage. It is important that the application be truthful for this situation as checking the box as involuntary when voluntary can be considered misleading and a misrepresentation and could place the coverage at risk if discovered down the road.

(How’s your E and O Coverage?)

Carriers are becoming more diligent in reviewing the applications for eligibility under a Guaranteed Issue situation. For example, UHC AARP is now requiring the submission of a copy of the recent billing in addition to a copy of the current Medicare Supplement ID card for the Birthday Rule GI. Agents should always submit a copy of the current ID card with the application and the Replacement form.

While the basic coverage is the same under all the Medicare Supplement plans, there are variations in underwriting rules, the actual rates, when rates change, additional benefits such as vision and hearing, gym membership, and when you may submit applications under the birthday rule. In addition, a number of carriers are offering New to Medicare discounts for specific plans (usually Plan G) and some offer household discounts (that vary from carrier to carrier). Most offer discounts for automatic payment options (usually checking account or savings accounts).

Commission payments have also changed for many plans. Many plans are greatly reducing the payable commissions for applications submitted under the Birthday Rule GI. A couple of the plans are only paying a one-time commission at a low rate. While we as agents place our clients with the plans that best fit their needs, we need to be aware of the impact on our business and ability to continue to service our clients.

When proposing a Medicare Supplement plan, make sure to determine the eligibility of the individual. Review the Guarantee Issue Guidelines specific to each company that you are presenting. Never assume. If there are no published GI Guidelines, then the plan follows the CA Medicare Supplement plan regulations.

Once you have reviewed the coverages and additional benefits offered by each plan with your client, you should review when rates can change i.e., at their attained age and when the base rate changes are typically scheduled. This is a financial decision by the client to determine what fits their budget along with the actual coverage. Many clients today are grappling with the rather substantial increases in their Medicare Supplement premiums. I believe it is a good time for our aging clients to consider moving from a Plan F to a Plan G. There can be a substantial savings in monthly premiums. The only difference being that Plan G does not cover the annual Part B deductible. When comparing the F to the G plans with clients, I always show the Part B deductible cost on a monthly basis, so it is a true apple to apples comparison. In 2026, you divide $283 by 12, which gives you an amount of $23.58. Add $23.58 to the Plan G premium to give you the apples to apples comparison when reviewing the Plan G premium vs the Plan F premium. Of course, you will mention that the Part B premium is typically increased every year. Medicare (CMS) typically releases the new amounts in early November.

An example of a savings for a 75-year-old client of mine was a move from a Plan F at $442 a month premium currently to a Plan G with a premium of $301.44. That resulted in a savings of $1,404 a year including the cost of the Part B deductible (not counting household discounts). In today’s inflationary times, this savings amount is welcomed by many.

A number of clients are considering Plan N and the higher deductible plans of F and G. The advantage of the N is lower premiums. However, with the $20 office copay and the $50 emergency room copays, greater usage could actually mitigate the plan premium savings. In addition, Plan N does not cover the excess charges that providers could charge under Part B. Agents need to be mindful of where the client lives and travels as they could be exposed to excess charges. The most I have seen in my years of experience was in Dallas, Texas, where the excess reached $10,000. While most providers don’t apply it, I am finding there are a number of anesthesiologists who have figured out that they can, and they do. I also see it more commonly charged in Northern California.

The Higher Plan Deductible Plan F and G plans are becoming more popular with their lower premiums and the inclusion of a maximum out of pocket. This year, the maximum is $2,950. The covered individual is subject to the Part A deductibles and copays. In addition, once the Medicare Part B deductible is met, then Medicare will generally pay up to 80% for Part B expenses leaving the covered individual to pay the 20% up to the maximum out of pocket amount. The added feature with the High Deductible F and G plans is that they cover the excess charges once the maximum out of pocket is met.

Note: Medicare says “generally” as Medicare will cover a limited number of lab tests at 78% instead of the 80%, so the covered person is liable for the additional 2% as the Medicare Supplement plans will not cover the 2%.

Who typically is attracted to the High Deductible Plans? I find that many new Medicare Beneficiaries who are coming off of high-deductible individual and group plans are attracted to these plans. Many have Health Savings accounts that have the funds to cover the maximum out of pocket. And, looking at individuals, I find my engineers, accountants, and car salespersons are attracted to these plans. In this past AEP, a number of my PPO MAPD clients found the high-deductible plans were a great option as they continue to have access to their various providers and have the safety of the maximum out of pocket.

When presenting these High Deductible Plans, make sure that the client understands that later down the road to go to a Plan G or N or another higher-level plan, they will be subject to underwriting. We are fortunate as agents selling Medicare Supplements in CA that we still have many companies that have a great rating with Standard and Poor’s, offer sellable rates, provide outstanding claims service and service to us as brokers, and have a strong Birthday Rule GI plus some GI’s that other states don’t offer.

A great resource for understanding coverages and underwriting requirements is your local plan’s Account Executive who can offer help and support. Most of the Broker Customer service folks are also great to work with. Conduct your due diligence when presenting the Medigap plans. The rates may be good but pay attention to the GI rules, the underwriting rules, and eligibility requirements. A solid sale will result in a long relationship with your clients! Good Selling!

Carriers are becoming more diligent in reviewing the applications for eligibility under a Guaranteed Issue situation.