Welcome to Part II of our two-part series regarding the most frequently asked questions our agency encounters about Medicare Supplement insurance policies. In this installment, we discuss the nuances of these plans including: rates, underwriting, making changes and the agent’s role.
Learning About Medicare Supplement Rates & Increases
Can My Rates Go Up Each Year? Why Do They Increase?
Yes, rates with most plans and most carriers increase each year. It does not matter which type of plan you choose (Attained Age, Issue Age or Community Rated) as rates usually increase on your yearly anniversary.
There are several reasons for increases including: changes to Medicare, overall claims experience, policyholder birthday, etc. It’s important to understand that each year CMS shifts more costs to Medicare supplement policies and that affects rates for all plans – both new and old.
With most supplements, your rates are locked in for 12 months. After your 12 month rate lock is over, then rates can increase at irregular times. Insurance companies are not obligated to stay on a 12 month cycle, but many do.
Can I Be Singled Out For A Rate Increase?
Insurance companies cannot single you out for a rate increase. Rates will increase equally for everyone in your block of business which could include several thousand people.
When rates increase, they are adjusted for all policyholders in your block. For instance, United Healthcare might announce a 4% increase on all plans next year for the state of Ohio and that would be that. Another carrier, Stonebridge Life, might announce an increase in that state of New Jersey of 6% on all plans except Plans G & N – which will increase by 4%. Insurance companies are not obligated to raise rates on all plans equally.
Are Some Carrier’s Rate Increases More Friendly Than Others?
Without a doubt, some carriers have a much better track record with rate increase history than others. In our experience, this is one of the most important aspects of Medicare supplement insurance – renewal rates.
You don’t want to shop on first year rates alone. You want to ask about renewal history with the carriers you are interested in. All plans experience rate increases – even Issue Age Medicare supplements. As it can be difficult to switch carriers in the future, buying a plan with stable rates is of utmost importance.
Is It Possible To Know What My Rates Are Going To Be In The Future?
No. If you’re age 65, you can ask about rates for an 80 year old, but that number would be for an 80 year old applying today. As agents, we only know new business rates and in some cases renewal history. We have no way of knowing what your rates will be in the future – no on does.
Can I Get Rated-Up Based On My Health?
There are a lot of factors that can affect your rates including: your state and zip code of residence, gender, age, tobacco use, height/weight, marital status, etc. These are all items you want to disclose to your broker when discussing rates.
If you’re in your open enrollment window, then some of these factors won’t matter. Very few carriers underwrite to your overall health. You are either accepted or declined if applying outside of open enrollment or guaranteed issue periods.
Are Issue Age Plans Better Than Attained Age? What About Community Rated Plans?
In our experience, you are simply shopping for a Medicare supplement carrier with a history of reasonable rate increases. It’s important to know that there really is no silver bullet here – all carriers raise rates to some extent.
Even though an Issue Age plan might not raise your rates because you are older, that does you no good if there normal rate increases are 5% above the next best Attained Age plan. In many cases, Issue Age plans increase rates just as quickly (if not more so) than Attained Age supplements.
On the other hand, Community Rated plans charge the same rate for everyone (male or female) who is the same age and living in the same state. That can be beneficial to males living in the most expensive zip codes, but detrimental to a female living in a less expensive zip code. In other words, Community Rates plans may only benefit a select few.
Thus, you may not want to put too much emphasis on how a plan is rated. It’s better to focus on an insurance company’s historical performance of rate increases.
What About Preexisting Conditions? Are They Covered?
If you are in an Open Enrollment or Guaranteed Issue window, then Medicare supplement carriers cannot ask about the status of your current health. They must accept you (not necessarily for all plans) and cover any conditions you have right away.
If you are outside of one of these windows, then you must go through medical underwriting by answering several yes/no health related questions. A phone interview may be required as well.
Typically one of two things will happen if medical underwriting is required: You will either be accepted or turned down for coverage. If you are accepted, then most carriers will cover any preexisting conditions assuming you have been truthful during the application process.
There is at least one insurance company that can adjust their rates based on medical underwriting. This is not the norm, but it means a healthier person will pay less than someone who has one of the conditions listed on the application. Again, this is a moot point during Open Enrollment & Guaranteed Issue windows of time.
Changing Medicare Supplement Insurance Carriers
Can I Be Turned Down If I Want To Switch Plans Or Carriers?
Yes. In most cases, medical underwriting will be required if you want to switch from one insurance company to another – or if you want to upgrade or downgrade your supplement (like moving from a Plan N to a Plan F, for instance.)
A few states have a few exceptions to these rules, but most don’t. There is no annual Open Enrollment for Medicare supplement insurance, so you want to choose a strong plan with a reputable carrier the first time. The Annual Election Period (AEP) that runs from October 15th through December 7th each year does not allow you to switch Medicare supplements no questions asked. Medical underwriting is still required at this time in almost all cases.
Are Discounts Offered If I’m Married Or I Pay A Certain Way?
Yes, several carriers offer marital discounts. These can range from 5% -12% for the policyholder. Some insurance companies require that both spouses apply while others do not. And in other cases, a discount will be made available so long as someone age 50 or older is living in the same household.
Usually the least expensive way to pay your premiums is monthly or annually. If you pay monthly, most carriers will require an automatic bank draft or credit card debit. Very few carriers will send a paper bill each month.
Other companies will bill you quarterly or semi-annually, but a a check for the first installment will be required with the application. In our experience, a monthly bank draft is the least expensive and most reliable way to pay for and keep your insurance in force.
Supplemental Insurance – An Agent’s Perspective
Do I Need A Medicare Supplement?
I can’t answer that. It’s insurance like any other – your home, your car, etc. Some insureds may access their policy infrequently, but that’s okay. We have a saying in this industry: The best kind of insurance is the kind you don’t use.
However most people buy a supplement for the proverbial rainy day. Anecdotally, I worked with a person recently who did not own a supplement. She had to pay a $3,000 bill after an emergency room visit and overnight hospital stay for what turned out to be a caffeine attack. The out of pocket costs she paid (after Medicare covered its portion) were a rude awakening. (She’s a client now.)
What Are The Most Popular Medicare Supplement Plans?
The policies purchased most often from our agency are Plans F, G, N and High Deductible F. We see some interest in the others, but these four are the most popular by far.
Plans F & C are very much alike, but more carriers offer F, it can be less expensive than C, and it covers Part B Excess Charges – so it might be a better choice. Plans G and D are also a lot alike, but Plan G is offered by more companies, has only one gap (the $183 Part B deductible), and can be less expensive than D.
Plan N is just a step below Plan G. It is the only plan that requires a copay at the doctor’s office ($20 maximum) and emergency room ($50), but it is very reasonably priced. Part B Excess Charges are very rare and disallowed in some states (Ohio for instance) and that can make Plan N a good choice.
High Deductible F is the least expensive Medicare supplement of them all. In many areas it can be around $30 a month for a 65 year old. It does have a $2,240 deductible (for 2018), but many of our healthier clients like the premium savings it offers. Additionally, it does not have network limitations like $0 Medicare Advantage plans sometimes do.
Which Medicare Supplement Insurance Plans Offer the Most Value?
In our opinion, the Medicare supplements that offer the most value are Plan G on the higher end and High Deductible Plan F on the lower end. Plan N is probably in that discussion as well.
In many cases, the difference in premium between Plan F and Plan G more than makes up for the one-time $183 Part B deductible that G does not cover. And Plan G is not a guaranteed issue plan. That can translate to smaller rate increases with Plan G – and stable rates are the holy grail of Medicare supplement insurance
As mentioned in the previous question, High Deductible F is very inexpensive. In fact, it has the lowest rates available in many areas of the country. And your premium savings can help to cover the deductible if it’s ever encountered. If there is one knock against HD Plan F, it’s that you may have trouble upgrading your coverage in the future if you have health issues.
Do I Pay An Agent To Help Me Enroll? Does It Add To The Cost?
No, you never pay an agent and it never adds to the cost. If you are a 65 year old female in Pennsylvania and you want a Plan G from Mutual of Omaha, then the cost will be the exact same no matter your source of purchase – even if you call Mutual of Omaha directly.
Prices are controlled by law and agents cannot mark-up or mark-down the rates – no matter how much we like you. We earn a commission on the sale if you buy from us – or someone at the insurance company gets compensated for the sale. Either way, someone wins.
In our opinion, you are much better off with a knowledgeable independent brokerage (like ours, of course) who can shop rates from several carriers. It’s much easier to learn the good, bad and the ugly from someone who has long term experience with several different insurance companies – and it does not cost you one penny extra!
Do I Really Need An Insurance Agent’s Help?
Here’s the primary issue: You don’t know what you don’t know. Working with Medicare beneficiaries daily, it’s amazing the amount of misinformation and misunderstanding that we encounter. We talk to people who have made decisions (sometimes bad ones) on something their doctor or their neighbor told them.
Trust us, it’s wise to consult a professional – someone who works in this industry daily and has years of experience. Almost every single prospective client we talk to says, “Oh, I didn’t know that” at least once during our educational conversations.
Again, it doesn’t cost you a thing and the vast majority of us are very helpful and easy to work with. Plus it’s always a good idea to have an agent at the ready when you have questions or need help with your policy(s) in the future.