As co-owner of an agency that specializes in Medicare products, I’m often asked by industry colleagues whether we have “made the switch” to selling Medicare Advantage products. Certainly Medicare Advantage plans have become popular among seniors in recent years due to their low premiums and built-in drug cards. But we still find the Medigap market to be a thriving one, with nearly 70 percent of our client base opting for these traditional and comprehensive plans.
The obvious next question, then, is: How do we sell against Medicare Advantage plans, which are so much cheaper? The answer is that we don’t sell against anything. We educate and then let our clients decide.
Perhaps one of the best things about working the senior health insurance market is your role as an educator. We explain to prospective clients that for most beneficiaries there are two primary coverage choices: Medicare Supplements or Medicare Advantage plans. Then we outline the benefits of each type of insurance and let them decide.
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The fact that the lion’s share of our clients opt for the more traditional and significantly more expensive Medigap plans goes to show that not all beneficiaries make their decisions based on price. There are certain groups of clients for whom a traditional Medigap plan makes a lot of sense, and these folks would greatly appreciate it if you wouldn’t just talk at them about zero-dollar premiums.
If you’d like to grow your Medigap policyholders, here are a few tips to help you become a Medicare Supplement Superstar.
1. Find the natural fit
There are certain groups of clients who are naturally inclined toward Medigap plans. These include snowbirds or frequent travelers who intend to make some tracks around the nation during their retirement. Sticking with original Medicare and a supplement allows these folks to access any Medicare provider in the nation, whether they’re vacationing in Florida or taking the grandkids ice-skating in Michigan.
While Medicare Advantage plans have out-of-area benefits for emergencies and urgent care, some people have doctors in both locations and want to access familiar health care providers regardless of which state they happen to be in at the time.
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Individuals with chronic health conditions are sometimes good candidates, too. There are times when the numbers just make sense.
A client was referred to me whose Medicare Advantage plan was leaving the county, thus creating a special election period for her to choose either another Medicare Advantage plan or get a guaranteed issue window into a Medigap plan. She suffers from rheumatoid arthritis, and her treatment regimen included a monthly injection in her doctor’s office. Unfortunately this shot, which helped control her symptoms, had a retail price of $2,000, and her share under her Medicare Advantage plan was $400.
She had been skipping the injections regularly due to the cost. We moved her to a Plan F with a premium of around $160 per month, and her injection was covered in full, saving her thousands per year and ensuring she could get her injections regularly. She was a natural candidate for a Medicare supplement.
Retiring business owners are also good prospects. A person who has had a rich benefits plan in place for many years will often enjoy the flexibility of Medigap plans, which have no network restrictions and require no referrals to see specialists. If your client mentions that he is coming off a company plan with a $300 deductible and low prescription copays, or has been paying an outrageous small group premium in order to maintain a low-deductible health plan, chances are that he is quite open to the concept of paying a higher premium for robust coverage.
Talking with your clients about their lifestyle and health care needs is the simplest way to spot good Medigap candidates. Explain the benefits and costs for both kinds of plans, and you’ll be surprised at how many will opt for a traditional Medicare supplement despite the cost.
2. Make a doctor call
In every market there are always some doctors who accept very few Medicare Advantage plans. Many retirees these days are leaving employer-based PPO plans that offered them quite a bit of freedom in choosing providers, and if they’re used to that, they might like the freedom of choice a Medigap plan allows. Make a few phone calls to their doctors’ offices. Some folks may be treating with several specialists, and you can’t always find one Medicare Advantage plan that offers all those doctors in the same network. Original Medicare with a Medigap plan is often an attractive choice for a person who doesn’t want to change any of his favorite physicians.
3. Know the numbers
One of the biggest complaints about Medigap plans is the annual price increases. Most carriers have annual rate changes due to rising health care costs. However, there are some nuances among these carriers you can use to distinguish them with your clients. For example, some carriers tend to have only one annual increase, while others increase rates both on the policy anniversary and on the client’s birthday.
Many beneficiaries find the latter to be too frequent, even if the increases are small. They feel like they’re being nickel-and-dimed with increases all the time. You’ll be surprised at how long your clients will stick with a carrier that has modest and predictable once-annual increases. This simple tactic builds longevity in your book of business.
4. Know your clients who know numbers
Certain beneficiaries are number-crunchers. You can usually spot this when the client asks for data most don’t, or if they email you to confirm the breakdown of what they heard you say they will spend. If you meet a number-cruncher, introduce them to Plan G. While Plan F is far and away the most popular plan, the Plan G covers almost all the same benefits but is often less expensive altogether. Even after figuring in the Medicare Part B deductible that they will pay back out, Plan G can sometimes leave your client with an additional $200 a year in her pocket. I’ve found that a client who is a numbers whiz will opt for Plan G even if the annual savings is only around $50 over Plan F. They will appreciate you going the extra mile to help them save a few bucks, and this builds client loyalty.
5. Help with Part D
This piece of advice usually generates the most protest from other agents, but I stand by it because it works. There is no disputing the commission paid to agents on a Part D sale is pitiful, and what’s worse, you have the same compliance risks on that small Part D sale as you do on the larger Medicare Advantage sale. Many agents today will help their client with a Medigap policy and then refer them to Medicare.gov to choose their own drug plan. While this may save you time, it also gives your client a reason to go elsewhere.
Maybe this year they will research their own drug plan, but next year when they’ve forgotten how to do that and meet another agent who’s willing to help them shop both their supplement and their drug plan, you run the risk of losing them. Part D is time-consuming, but we pick up dozens and dozens of policies every year from clients who tell us that their other broker wouldn’t help them with their annual Part D shopping. Enough said.
Growing your Medigap business takes an investment of time, and it’s not a get-rich-quick product. The average Medigap policy will pay you a commission of about $25 a month. However, most carriers pay level commissions for seven years, and only a small percentage of your clients will want to shop the policy annually.
If you sell these products month in and month out every year, you’ll find yourself with a surprisingly lucrative book in a few years, and all you’ve had to do is provide a little education to clients who want help understanding a confusing government health program like Medicare. In addition to the solid career you can make in this market, you’ll have a book of clients who genuinely appreciate you, and that’s priceless.
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Danielle Kunkle is the co-owner of Boomer Benefits, an agency that specializes in Medicare-related insurance products nationwide. She is the immediate past-president of the Fort Worth Association of Health Underwriters and currently sits on the board of the state association as its quarterly magazine editor.