For some agents and brokers, the Medicare supplement insurance market could be a refuge from the reform vortex in 2015.
A Medicare supplement policy, or Medigap policy, helps consumers fill in the many enormous coverage gaps left by the original Medicare Part A hospitalization plan and the Medicare Part B physician services plan. Congress has made changes over the years but last subjected the market to a sweeping overhaul in 1992 — when it imposed the “letter plan” product standardization system.
The reformers do have their knives out for Medigap products: Some would like to kill the plans that do the most to protect the enrollees from out-of-pocket costs, based on the principle that protecting patients against “skin in the game” encourages them to turn seeing doctors into a hobby. Any legislation or regulation that chills the Medicare Part A and Part B programs may give Medigap products pneumonia.
But Medigap issuers that have adapted to the letter plan system can sell the products without facing the same level of government micro that issuers in the Medicare Advantage private managed care plan market face. The Medigap market has attracted many small and midsize insurers, and the issuers have helped foster the growth of a large community of Medigap wholesalers and Medigap retail producers.
Mark Farrah Associates has estimated that insurers generated $23 billion in Medigap premiums in 2013 from insuring 10.5 million Medicare enrollees, and analysts seem to think the market is likely to enjoy modest growth in 2015, without the kind of cataclysmic crashing and banging facing the major medical market. To some extent, the Medigap market can help a producer who also sells individual major medical even out business flow: Medigap producers get some year-end business related to consumers’ losing access to the Medicare Advantage or Medigap plans they’ve been using, but individual’s open enrollment period is linked to their birthday anniversaries, not to a single deadline for all. That means producers can sell a significant number of policies even in the summer, when the new Patient Protection and Affordable Care (PPACA) enrollment period calendar system sharply limits insurers’ ability to sell individual major medical coverage.
See also: 9 questions to ask about Medigap
For about what has been going on in the Medigap market, and what might go on in that market in the coming year, read on.