During the 2009 and 2010 Medicare marketing and sales years, there will be more and more changes to the health care coverage that is available to Medicare beneficiaries. Medicare Advantage plans will continue to be available, but because of changes in funding by Congress, more emphasis will be placed on Medicare Advantage networks such as HMOs and PPOs. For many seniors in certain parts of the country, choosing an HMO or PPO plan could be advantageous to their health care needs. For other seniors, traditional Medicare supplement plans may once again be their best option, especially in allowing them to see the doctor or facility of their choice. The following is a review of Medicare supplement plans, including when and why they are often the best plans for your clients.

Understanding the basic principles of Med supp will help you jump-start your sales, better prepare you for CMS and carrier testing, and allow you to become a value-added partner to your clients.

The first thing to know is that Medicare supplement plans provide coverage for the gaps in original Medicare parts A and B. There are 12 standardized Med supp policies — plans A through L. Each plan offers various levels of coverage to choose from. However, the benefits of each plan are regulated by CMS, so the coverage of each plan is the same across all carriers (although the plan costs may be different).

Two of the most popular policies are Plan D and Plan F. Plan D is one of the least expensive policies, and covers the hospital deductible, copays, and the 20 percent of doctor charges not covered by original Medicare. Plan F also covers the hospital deductible, copays, and the 20 percent of doctor charges not covered by Medicare, but has the added benefit of covering excess doctor charges up to 115 percent. With few exceptions, Plan F will be a little more expensive than Plan D. As mentioned, Medicare supplement plans allow enrollees to use the doctor or hospital of their choice, and almost all doctors and hospitals across the United States accept Medicare supplement plans. This allows beneficiaries to travel across the country with little worry that they can’t receive needed health care, so for many seniors this fact alone makes Medicare supplements the coverage of choice.

Medicare supplement plans are guaranteed renewable as long as premium payments are made in a timely manner. This means that beneficiaries cannot be denied coverage. Additionally, Medicare supplement plans do not come with built-in prescription drug coverage, so seniors may shop around to private companies for affordable Medicare Part D prescription drug plans.

The cost of Medicare supplement plans vary depending on age, area of residence, choice of specific plan, and choice of insurance company. That being said, your client can expect monthly premiums ranging, on average, from $85 to $125 for basic plans and $115 to $200 for more extensive coverage.

The contrast between Medicare supplement plans and Medicare Advantage plans can be broad. While many Medicare Advantage plans offer low monthly premiums (even as low as $0, including prescription drug plans), many clients prefer Medicare supplement insurance because:

  1. They avoid large copayments and deductibles when care is needed, creating savings of up to $5,000 per year.
  2. Medicare Advantage plans are not guaranteed renewable.
  3. With Medicare Advantage plans, you must be part of an approved network or doctor facility for every visit.
  4. Medicare supplement offers a choice of doctors/facilities locally and throughout the country.

With so many choices available, it is essential that potential enrollees be fully informed of the differences between plans. Be prepared to help your clients find the coverage best suited for them. By understanding the basics of Med supp, you can begin selling the plans to all of your eligible clients, positioning yourself as a valued expert in the process.

Bob McClellan is the executive vice president of United Insurance Group Inc. He can be reached at rmcclellan@uiginc.com.