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AmeriLife and Prosperity Life Create a Medigap Program

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What You Need to Know

  • AmeriLife has backing from Thomas H. Lee Partners.
  • Prosperity Life is in the portfolio of Elliott Management Corp.
  • The program's application process offers point-of-sale underwriting and electronic and voice signature tools.

Two private equity-backed companies hope to use their capital to create a high-tech Medicare supplement (Medigap) insurance program.

AmeriLife Group has launched the new Prosperity Medigap program together with Prosperity Life Group.

A Clearwater, Florida-based distributor with backing from Thomas H. Lee Partners, AmeriLife has relationships with 35 marketing organizations and about 200,000 insurance agents, brokers and advisors.

New York-based insurance company Prosperity Life is part of the Elliott Management Corp. portfolio.

Prosperity is writing the new Medigap policies through its SBLI USA Life Insurance Company and S.USA Life Insurance Company subsidiaries.

Product Details

Federal law requires Medigap issuers to base the policies on standard product templates identified by letters. The companies say the Medigap program will include Plan F, Plan G and Plan N policies.

The companies say they also will offer a technologically advanced electronic application process.

The E-application process includes electronic and voice signature tools, a system for underwriting the applicant while the applicant is with the agent or broker and a system for Prosperity to make decisions about the applications while the applicants are still with the producer.

Scotty Elliott, an executive at AmeriLife, said in a statement that he believes the high-tech approach will set the program apart from the competition.

The Markets

AmeriLife and Prosperity have started by introducing the Medigap program in Alabama, Arizona, Georgia, Indiana, Michigan, Nebraska, Nevada, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and West Virginia.

The companies expect to be selling the product in about 30 states by the summer of 2022.

What It Means

Congress created the modern Medigap market in 1990, by creating a standardized framework for private health insurance products that fill in the many gaps in traditional Medicare Part A hospitalization coverage and the Medicare Part B physicians and outpatient services coverage.

In some ways, the Medigap market has helped served as a model for commercial products that supplement government health insurance coverage all around the world.

But, in 2020, Medigap issuers served only about 13.9 million of the people eligible for Medicare, according to data from Mark Farrah Associates, and that enrollment figures was down from 14 million people a year earlier.

Medigap enrollment has drifted as the total number of people eligible for Medicare has increased to 63 million, from 61, and as the number of people with Medicare Advantage plans, which serve as soup-to-nuts alternatives to traditional Medicare coverage, increased to 27 million, from 25 million.

Medigap may be lagging partly because the Medigap program is much older than the Medicare Advantage program and has relied more heavily on live human agents meeting in person with the customers.

The AmeriLife-Prosperity program could equip live-human agents to compete harder against websites and big, high-tech Medicare Advantage plan call centers.

(Photo: Emilia Mariana Ungur/Shutterstock)