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.
Sell the right plan the first time
Since two-thirds of seniors have middle to high incomes, they don’t need to find the cheapest health plan. They want value, and the health plan with the best value will meet their personal needs at the right cost. This is where you come in; your job is not to sell a plan, it’s to help people buy the right plan.
You must use the warm-up to collect facts while building rapport. What is the client’s risk tolerance? Are they comfortable with cost-sharing, or would they prefer insurance that takes care of everything? How healthy do they expect to be in five, 10, or 15 years? Do they have any chronic conditions? Do such conditions run in their family? How much do they expect to pay for health insurance?
The answers to these questions will help you guide your client toward the right plan. Whether you’re captive or independent, you need a variety of plans in your portfolio to meet your clients’ needs. Some clients will prefer Medicare Advantage, and some will prefer Med supp; some will truly need a low-cost plan, and some will want the best that money can buy. You should be prepared to meet all their needs.
Build your business on referrals
When you put forth the effort to sell the right plan and building relationships, it will create stable, happy clients. It will also create the type of environment where you’re earning referrals, and great businesses are built on referrals. However, you’re not guaranteed a referral just because you’ve made your clients happy. Often, clients believe that their agent is too busy to take on more customers – or worse, they don’t really know their agent. You must let customers know how important referrals are to you, but you also should be able to demonstrate your own value as an agent. The customer must trust their agent, and they must believe their agent cares about them. You can only accomplish this through actions – and it begins from the first meeting, when the questions you ask your client demonstrate that your goal is to help them buy the right plan.
Danny Amos is the market manager for Sterling Health Plans in the Lafayette, LA market. He can be reached at [email protected]. Todd Tippets is vice president of marketing for Sterling Health Plans. He can be reached at [email protected].