Medicare card (Image: CMS) (Image: Centers for Medicare and Medicaid Services)

Overall Medicare supplement (Medigap) insurance enrollment rose 4% in 2018, to 13.6 million, and enrollment in policies based on the Medigap “Plan G” template climbed 39%, to 645,000.

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Analysts at Mark Farrah Associates have published those figures in their latest Medigap market update. The analysts based their work on financial reports filed by 196 Medigap coverage issuers.

Letter Plans

The Medigap market gives insurers a way to sell coverage that helps consumers cope with the many gaps in the “Original Medicare” Medicare Part A hospitalization benefits and the Medicare Part B physician and outpatient services benefits.

In 1990, Congress created the “letter plan” system, to try to help give consumers a way to shop for different types of Medigap policies on an apples-to-apples basis. A policy based on a particular letter plan must cover the standardized package of benefits associated with that letter plan template.

Traditionally, the richest letter plan, Medigap Plan F, has been the most popular type of Medigap coverage.

Congress recently changed the letter plan rules to keep people who will become newly eligible for Medicare from signing up for Plan F coverage, because of concerns that Plan F policies do such a good job of protecting consumers from out-of-pocket expenses that consumers with that type of coverage end up getting too much low-value care.

Starting in 2020, the richest Medigap coverage that people who become eligible for Medicare will be able to get will be Plan G coverage. A Medigap Plan G policy covers most of what a Medigap Plan F policy covers, but a Plan G policyholder must take responsibility for paying the Medicare Part B physician and outpatient services annual deductible. This year, the Medicare Part B deductible is $185.

Plan F policies accounted for 52% of The number of people with Plan F coverage fell by 15,000 in 2018, to about 7 million.

Finances

The Medigap issuers in the Mark Farrah database collected $31 billion in premiums in 2018 and spent $25 billion on claims.

In 2017, the issuers collected $30 billion in premiums and paid $23 billion in claims.

What an Agent Is Seeing

Danielle Kunkle Roberts, the co-owner of Boomer Benefits of Fort Worth, Texas, has helped tens of thousands of clients sign up for Medigap and Medicare Advantage plan coverage.

Medicare plan sales during the recent annual election period and the recent Medicare Advantage open enrollment period was “pretty good,” Roberts said in an interview.

Her agency helps clients with post-sales service, and she said selling Medigap coverage to Original Medicare enrollees is still somewhat more attractive than selling Medicare Advantage plan coverage, because post-sale service is simpler for the Medigap purchasers.

The Medicare Advantage plans impose more preauthorization requirements and are more likely to deny enrollees access to care, Roberts said.

But Boomer Benefits has developed procedures for showing customers what kinds of restrictions they might face if they sign up for Medicare Advantage plans, as well as the extra benefits they might get with the plans.

When customers get enough information before enrolling in Medicare Advantage plans, “those that do are generally happy with the benefits structures,” Roberts said.

The Hole

Roberts said the real problem she sees in the Medicare plan break is that only about 10% to 15% of her firm’s customers have long-term care insurance, or some kind of equivalent arrangement for paying for long-term care expenses.

“The main thing you want people to know is that Medicare doesn’t pay for long-term care,” Roberts said.

If consumers begin thinking about long-term care planning at age 64, when they are about to age into eligibility for Medicare, “that’s way too late,” Roberts said.

Resources

A copy of the new Mark Farrah Associates Medigap market report is available here.

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