Blog: The Senior's Advocate
Posted on: Mar 17, 2014
The undeniable truth about Medicare is that the whole process is confusing. There's the supplemental plans, the "Advantage" plans, the Part D options….and enough acronyms to drive a sane person crazy. Add to that the growing number of insurance agents pounding on your door, the pile of confusing mail and the government "experts" constantly modifying plans….and you're fit to be tied.
Here then are a few tips that if followed, will result in far greater success when buying supplemental insurance.
1. Stop buying insurance from agents.
Insurance guys and gals tend to have favorites, or carriers that they are comfortable working with. In many cases, the commission rates, incentive trips, and sales leads provided to the agent are a factor. The Medicare landscape changes with frequency, with one carrier being well priced for a short period, followed by substantial increases. In addition, when a line-up of agents are all telling you something different, things get confusing. The best way to avoid this problem is to do the following:
• Make sure that the agent you are working with has access to a multitude of carriers, and definitely avoid "captive" agents, who work exclusively for one carrier
• Always ask, "What other carriers offer the same plan in my area?" We have literally seen scenarios where one carrier pays close to $300 more commission than another…for the same exact plan! In most cases, carriers who pay less commission to the agent have had more stable rates with smaller increases.
2. Don’t take the “easy” way out.
Most agents love to sell Medigap plan "F", but it's usually not the best plan for you. The honest truth is that because commission is a percentage of the premium you pay….plan F pays the agent the most. Plus, it's the only plan that pays both Medicare part A and B deductibles and all Part B co-insurance, which makes it very attractive. If you are in "open enrollment", or can qualify for coverage, plan G is almost always the way to go.
Here's why: Plan G requires you to pay the Part B deductible of $140 per year, but pays everything else the same as plan F. Most plan F premiums are far more than it's friend plan G, but only for the convenience factor. Would you pay $300 per year more just to have a $140 deductible paid on our behalf? Here's the other big secret about plan F: It has larger and more frequent rate increases than the other plans. Because Plan F is used for the "Guaranteed Issue" privilege, (for those folks who have lost coverage elsewhere), Plan F almost always has more claims due to the absence of medical underwriting. The sicker the pool of people, the more the rates go up. When you apply for a plan G…you'll know that everyone, except those who just turned 65, had to qualify based on their health. Healthier people=lower rates.
3. Stop buying into marketing tactics and sales clichés.
Here's a short list of some of the most popular sales pitches used to convince a person to enroll, followed by the real interpretation:
• "The customer service is great and they pay claims really fast." Bologna. A good Medigap plan pays everything automatically that Medicare approves, and most clients will NEVER have to work with the carrier except for premium payment changes or a billing address change, etc. What's more…it's not as if the Medigap carrier is paying you, they are paying the doctor or the hospital. So whether they pay the claim in 2 days or 2 weeks is completely irrelevant.
• "This carrier hasn't had a rate increase in years!" Bad sign…a carrier who hasn't asked for a rate increase in more than 2 years is probably long overdue for one, and you'll be along for the ride when it happens. It is far smarter to enroll in a plan that has just recently adjusted its rate, as the chances of you experiencing a large bump in price are far less. Little increase are ok, and necessary based on the claims activity. Huge ones are usually the result of a carrier trying to "buy" the business by maintaining a lower rate until it hits the number of clients it wants…then blasting them all with a massive rate increase.
• "This company also offers the Part D benefit, so you can have both plans with same carrier." Run away from this guy as fast as you can. It makes no sense to even consider a Medigap plan based on the Part D benefit. Any responsible agent would offer to run a complete prescription drug analysis before recommending a part D. The best one for you is the one that has the least out of pocket costs for that year, and is very rarely ends up being the same company as the proposed Medigap. You could end up overpaying WILDLY. Our staff runs the official Medicare Rx comparison for every client at no cost, which ensures the most efficient plan each year.