Now that Medicare has modernized Medicare supplement plans at the same time as the first of 78.2 million baby boomers begin turning 65, there are vast opportunities for agents serving the senior market.
MIPPA, the 2008 Medicare Improvements for Patients and Providers Act, made significant changes to the Medicare Advantage (MA) program. Most of the changes, such as the prohibition on cold calling, were largely viewed as negative by agents and brokers. These MA changes overshadowed the positive effects the law has on Medicare supplement products. In fact, MIPPA has created an opportunity for agents to reenergize their Med supp sales.
Med supp has a very high satisfaction rate among policyholders – 9 out of 10 are likely to recommend Med supp products to others. A 2009 survey from America’s Health Insurance Plans and the BlueCross BlueShield Association found that 88 percent of policyholders are satisfied with their coverage, and 62 percent are very satisfied. Additionally, the price differential between Med supp and Medicare Advantage is continuing to narrow, making Med supp an attractive alternative.
The creation of new risk pools brought about by MIPPA is further narrowing the gap. Most importantly for agents, Med Supp has no annual enrollment period and can be sold year-round.
Modernizing the plans
Over time, the standardized supplement plans have not kept up with the changes in Medicare. MIPPA modernizes Medicare supplement by adding two new plans, eliminating others, and updating benefits. The plans created in 1990 have been effectively replaced with plans created in 2010. The MIPPA changes apply to all policies with an effective date of June 1, 2010 or later. Of course, the previous plans remain guaranteed renewable.
Two new value plans, M and N, have been created. To keep the premium down, Plan M increases cost-sharing by covering 50 percent of the Part A deductible, and Plan N includes co-pays for doctor and emergency room visits.
Benefit changes include the addition of a hospice benefit to all plans, elimination of the at-home recovery and preventive care benefits, and increasing the Part B excess charge benefit in Plan G to 100 percent.
Part D coverage has caused plans H, I, and J to become redundant and they have been eliminated. The elimination of at-home recovery and preventive benefits made Plan D and E the same, and Plan E was eliminated.