Whether you have been selling individual long-term care insurance (LTCI), individual major medical insurance, or, possibly, limited-benefit medical coverage, you may think of the Medicare supplement insurance has a storm shelter.
The Medicare supplement market, also known as the Medigap market, went through its period of upheaval in the early 1990s, as the federal law that created the standardized “letter plans” we see today took effect.
See also: AHIP: Medigap Plan N is coming on strong
Medigap issuers, and the agents who sell the products, face plenty of oversight from the Centers for Medicare & Medicaid Services (CMS) and state insurance regulators.
Members of Congress showed they could stand up to Medigap lobbyists a few months ago when they passed legislation that, in theory, could ban the sale of new “zero-dollar” Medigap plans, or plans that patch all of the out-of-pocket costs left by both the traditional Medicare Part A hospitalization plan and the Medicare Part B physician services plan, after 2020.
See also: Why Medigap sellers’ ears are burning
But the provision takes effect “in the future,” and Congress has often had a way of keeping painful Medicare provisions from taking effect once the future actually arrives.
Because issuers of Medigap mostly use cash premiums and federal subsidy payments from this year to pay claims incurred this year, they are much less vulnerable to fluctuations in interest rates than LTCI issuers are.
Because Congress specifically excluded the Medigap market from most Patient Protection and Affordable Care Act (PPACA) provisions, the market is much less vulnerable to PPACA disruption than many other non-Medicare health insurance market sectors are.
But what do the insurers really think of that market? If you enter it, are you really entering a refuge, or just “jumping from the frying pan into the fire”?
One way to start to answer the question is to look at trends in the Medigap plan agent compensation databases CMS created for 2015 and 2016.
For a look at what we found when we found when we compared the two data files, read on.
1. The number of Medigap plans in the spreadsheets did not increase very much.
The CMS spreadsheet for 2016 Medigap agent comp included 37,095 separate plans, or just 35 more than the 2015 comp spreadsheet.
That means the number of plans agents could sell will increase just 0.01 percent.
2. Many issuers may not really value you much more than they value a bunch of ants.
The Medigap agent spreadsheets list the minimum level of compensation a plan issuer will pay an agent and the maximum.
Only 11,268 of the 2016 plans show a minimum compensation amount other than $0 or “null.”
The number of plans that offer some minimum compensation level other than $0 or null is 6 percent lower than it was in 2015.
The median minimum compensation level for a plan with a compensation level other null has held steady at $0.
See also: Why is that retirement plan ticking?
3. More issuers are willing to pay agents top dollar in some situations.
On the bright side, the median value of the maximum level of agent comp a plan will pay increased 5.1 percent between 2015 and 2016, to $429 per policy.
The number of plans that paid a maximum amount of $400 or more for at least some sales increased 12 percent, to 30,177.