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FAQ: Medicare Supplement Plan Pricing

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An agent asks, “Is the lowest priced Medicare supplement plan the best option for my clients?”

In an effort to sell Medicare supplement plans at the lowest possible price, some agents are adding to the confusion for seniors.

The reality is that many people do not fully understand the difference between a Plan N and a Plan F supplement, and may be afraid to ask during the sales process. Because of this, agents should always take the initiative to explain the difference.

Case in point

Here’s an example: A prospect called our office to say that she had recently experienced a rate increase on the Medicare supplement Plan F she had had for many years. Following this rate increase, her long-time agent had moved her to a Plan N, which was cheaper than her old Plan F. However, when she received her first bill, it included a $162 charge for her Part B deductible. This charge was a complete surprise to her. As you might imagine, she was very upset.

What she should have learned upfront from her agent is that Plan N does not cover the part B deductible. This means that every time she goes to the doctor she will face a $20 co-pay, and every time she visits an emergency room, her co-pay will be $50. Because this client is a high user of medical services, the money she saved by moving to Plan N will actually cost her much more out-of-pocket during the year.

The needs-assessment route

After carefully explaining to her the benefits for both Plan N and Plan F, it became clear that she would have been much better served by staying on the Plan F supplement, even with her rate increase. We were able to move her to a Plan F.

Taking the needs-assessment route vs. the price-point route will make a client much happier over the long-term. If her old agent would have taken the time to go over the benefits of each plan and to thoroughly compare her needs, he would have not faces an irate client and, ultimately, lost a case.

So, a word of warning: Make sure you go over all the benefits of Plan F (100 percent coverage) and Plan N (lower premiums). Make sure your client knows that there is a trade-off for the lower premium — don’t just gloss over the issue. Clients never like rate increases, and neither do agents, for that matter. Sometimes, however, even with the rate increase, the old plan may be the best fit.