By now you are probably aware that all Medicare Supplement plans underwent a change effective June 1, at which time a new series of plans called “Modernized Medicare Supplement” plans were introduced. As is customary in our business, existing Med Supp policies are “grandfathered,” and remain in force, but every new plan now offers a somewhat different set of benefits in comparison to the old plans.
In short, the new plans were created by the “Medicare Improvements for Patients and Providers Act of 2008 (MIPPA 2008). Plans E, H, I, and J were eliminated, with H, I, and J being discarded because of their outmoded Prescription Drug features. Plan E was eliminated as being repetitious to Plan D. Two benefits of the old Med Supp plans, the “Preventive Care” benefit and the “At Home Recovery” benefit were entirely removed from all of the Modernized series.
Simultaneously, new plans M and N were introduced, and reflect the trend in American medical insurance towards co-payments and co-insurance. While the entire body of work in Medicare Supplement now allows for eleven choices (down from 14), and considering that most Med Supp companies do not offer all plans, most have chosen add Plan N to their portfolio.
So, what’s the reason? Quite simply, Plan N most closely resembles a comparison to Medicare Advantage plans, due to its similarity with co-pays and co-insurance. It is not possible to compare Plan N with an MAPD (Medicare Advantage Prescription Drug) plan because the Plan N does not contain any prescription drug benefits, so then, logically, it would have to be coupled with a “stand alone” Part D (Prescription Drug) plan, to achieve closer similarity to an MAPD.
People who are not looking for Prescription Drug coverage can make Plan N their choice, and pay a lower premium than say a Plan F, which covers the Part A and Part B deductibles and coinsurances. That is the trade off. The Plan N has (up to) a $20 co-pay for each office visit covered under Part B (after the annual deductible), and (up to) a $50 co-pay for each emergency room visit that does not result in admittance to the hospital under Part A.
Thus, the client chooses a plan expecting to pay some deductibles and co-pays and in return enjoys the savings in premium. The Med Supp companies in turn, reduce their loss experience (and claims handling expenses) and can offer the lower premium. If the policyholder seldom uses doctor services he or she has saved money with lower utilization, and reduced premium, which results in a somewhat “double bonus.” The theory should work for both customer and company.
The American health care landscape for several years, by necessity, has conditioned policyholders to accept deductibles and coinsurances. So, it stands to reason that a policyholder coming off a group health policy, or an individual major medical plan, is accustomed to the idea of deducts and co-pays. Plan K continues that concept, as do Medicare Advantage plans.
In addition, the High Deductible Plan F is also still available in the new “Modernized” series. With this plan the policyholder agrees to shoulder the first $2,000 of Medicare covered expenses, with the remainder being covered by the Medicare Supplement plan. This plan should develop an even greater premium savings for the customer (than the Plan K), and is well worth taking a look at. But, again, some people prefer to pay a higher premium for the regular Plan F, and not worry about any Part A or Part B deductibles or coinsurances in their Medicare choice.
The presentation, which must be clear and offer the new variety of Med Supp plans, is up to the producer, but the choice is up to the prospect. Do good work.