Podcast Center
Video Center
Webcasts
Resource Center
Events
October 04, 2010 at 08:00 PM
Selling health plans in the Medicare market is easy. It’s best to sell the cheapest health plan because seniors live on fixed incomes and want the lowest premium possible, right? Well, unfortunately, that new, cheap plan’s premium will keep increasing until it’s one of the most expensive around. But seniors can be switched to this year’s cheapest plan, right? Well, maybe — but be careful, because it may be a trap.
Going beyond price
Many agents sell products to their senior clients on the basis of cost alone, because plan benefits are the same and they believe all seniors are price-conscious. They don’t even bother to present their moderately priced plans because they’re afraid that another agent will come in behind them with a lower premium. All this does is establish a cycle where every time a premium increase is announced, the client comes back and buys a cheaper plan. Agents end up spinning their wheels writing the same book of business over and over again. Or worse, the client goes to another agent with a cheaper plan. If you sell the plan based on price, you will lose it on price later on.
Seniors actually tend to be more conscious of value than price. In fact, the price-conscious senior may be a stereotype. Seniors’ financial well-being has steadily increased over time – according to the U.S. Census Bureau, the proportion of Americans who are 65 years old and older and have a high income has increased, from 18 percent in 1974 to 31 percent in 2007. Another 33 percent of seniors had a mid-range income. Net worth has increased almost 80 percent for seniors over the last 20 years, yet many agents are still framing the conversation around price. This may be easier in the short run, but are you only interested in the short run? Is your customer?
Educate clients about long-term costs
Younger seniors tend to be more price-conscious than older seniors because they’re new to the market. People just turning 65 may shop for price because they think all health plans are the same, but it’s your responsibility to show them the bigger picture and explain the long-term costs. Often, new plans will come into the market at a lower premium to gain market share. However, the plan can’t sustain itself at those low rates, and within three to five years, premiums will have increased to match or exceed others in the market.
If past performance is any indicator of the future, the lowest premiums today will be among the highest premiums a few years from now. Those clients will keep churning from plan to plan as they get older – if they can even qualify. Customers who have developed health problems over time will likely find themselves stuck on a plan they can no longer afford.
By the time people reach 80 years old, though, they’ll have learned better. At that age, a senior may bump up against high deductibles, co-insurance, and copayments in a low-premium Medicare Advantage plan, but won’t be able to pass the underwriting necessary to switch to a Medicare supplement. They’ll be stuck because their agent didn’t discuss how health care needs and costs would change as they grow older.
