“Lock in” is a term used to describe the period of time during which most Medicare beneficiaries are unable to change their underlying Medicare coverage. In years past, an open enrollment period (OEP) ran from Jan. 1 through March 31, but PPACA eliminated the OEP and replaced it with the Medicare Advantage disenrollment period (MADP). During the MADP, you can only leave Medicare Advantage, giving the Medicare beneficiary limited options. This year, the new MADP ran from Jan. 1 to Feb. 14. Now that MADP has ended, we are firmly in the Medicare lock-in period.
Fortunately, this does not mean that Medicare sales are also in lockdown – in fact, there are four unique marketing opportunities that this new period can present to you and your clients.
1. Aging into Medicare
It’s been widely reported that the first wave of baby boomers started retiring in January 2011 and are now eligible to enroll in Medicare. The statistics are compelling: Roughly 2.6 million baby boomers will celebrate their 65th birthday in 2011 – that’s 7,000 per day.
Not all of these boomers will enroll in Medicare Part B. Some may continue to work or obtain coverage through a former employer or their spouse. Those who do enroll in Part B will qualify for either Medicare supplement with Part D coverage or for Medicare Advantage. Better yet, none of these plans require underwriting if the Medicare beneficiary is turning 65.
As a rule of thumb, choose a Medicare supplement plan unless the Medicare beneficiary is unable or unwilling to pay the premium. Original Medicare with a Medicare supplement and a Part D plan is a tremendous value with very predictable out-of-pocket expense. That being said, some prospects won’t be able to afford the monthly premiums. In cases such as these, look for low or no-premium options in the Medicare Advantage market. Oftentimes, depending on your geography, beneficiaries can obtain the Medicare prescription drug benefit included with Medicare Advantage at a zero-dollar monthly premium.
The relative value of Medicare supplements depends on how healthy someone perceives himself to be. If they don’t see themselves using the coverage, they may not see the value in the Medicare supplement premium. Since many baby boomers are active and healthy, they may be unwilling to pay the premiums even if they can easily afford to do so. In these cases, a low or no-premium option in the Medicare Advantage market can be an attractive option. The primary reason is that Medicare Advantage includes a “maximum out of pocket,” which puts a cap on the enrollee’s maximum financial exposure. Original Medicare without a Medicare supplement puts the Medicare beneficiary at potentially unlimited financial exposure.
2. Special needs plans
Special needs plans are a type of Medicare Advantage plan (HMO or PPO) that are available to special populations. There are three types: dual eligible, chronic illness, and institutional.
Dual eligible plans are for individuals who qualify for both Medicare and Medicaid; you can sell them at any time to those who qualify. Chronic illness plans are for those whom a physician has certified as being treated for a qualifying medical condition that is specifically designated in the plan. Institutional SNPs are for those who are confined to a long term care facility.
In ranking the sales potential for each type of SNP, dual eligible plans offer the best opportunities. The dual eligible population is significant: Approximately 21 percent of those who have Medicare are dually eligible. The dual population by state can vary widely, from a low of 12 percent in Utah to a high of 41 percent in Maine.
Marketing to dual eligibles is complicated somewhat by the fact that 36 percent of all dual eligibles are younger than 65. By comparison, only 16 percent of all Medicare beneficiaries are younger than 65. Relatively speaking, there are more dual eligibles under the age of 65 than there are 65 and older.
Traditional marketing that works well in the 65-and-older market will not be as effective when marketing to the dual eligible population, including direct mail and telemarketing. Successful marketing requires more of a grassroots approach; you will be far more successful building relationships with such centers of influence as low-income housing managers, churches, social workers, and caseworkers.
Chronic SNPs require similar specialized marketing. As you develop your marketing plan, keep in mind that the qualification to enroll in these plans requires a particular medical condition. In some cases, you may find events sponsored for those with diabetes or similar diseases, which would be a good place to market your services.
Institutional SNPs offer the smallest opportunity as they are marketed directly by the insurance companies rather than through insurance agents.
3. Special election periods
During the lock-in period, you can also enroll in a Medicare Advantage plan during a special election period (SEP). Generally, a change in the Medicare beneficiary’s status with their current coverage will trigger an SEP. For example, if the Medicare Advantage enrollee moved out of their current plan’s service area, they would be dropped from that plan, creating a special election into a new plan. Similarly, an individual who loses employer group or retiree coverage would also be eligible for a special election.
Beyond the SEPs triggered by changes in coverage, there are two SEPs that are based on an individual’s financial status:
1. Those who are receiving the Medicare low-income subsidy (for example, those in the Medicare Savings Program) can enroll in Medicare Advantage year round.
2. If a person is enrolled in their state’s Pharmaceutical Assistance Program (SPAP), they are eligible for one election into a Medicare Advantage plan, which includes the Medicare prescription drug benefit.
4. Medicare supplement
Finally, you can sell Medicare supplement plans year-round to an individual on original Medicare A and B. This can be confusing to some agents, but keep in mind that the underlying coverage (Medicare parts A and B) is not changing – in fact, these individuals are locked into original Medicare.
That said, they can change their supplemental coverage at any time. In fact, a very high percentage of Medicare supplement business sold replaces another Medicare supplement plan. Direct marketing can be very effective in generating leads for Medicare supplement products: In a very common type of direct mail lead, you can offer to evaluate a Medicare beneficiary’s coverage to see if they can save money on their policy.
Consider taking advantage of one or more of these four marketing opportunities during Medicare’s lock-in period. By doing so, you’ll be able to sell Medicare plans year round and build your client base.
For more exclusive Medicare coverage, visit ASJ’s Medicare Resource Center.
Past Medicare stories from ASJonline.com: