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CNO to Reboot Medigap Products in 2022

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What You Need to Know

  • CNO seems to be the only company saying much about Medigap products so far this earnings season.
  • It says it wants to continue to invest in both its Medigap and its Medicare Advantage offerings.
  • The company now has about 3,000 exclusive field agents certified to sell Medicare products.

CNO Financial Group says it will be updating its Medicare supplement insurance product line in 2022, in an effort to make the policies more appealing to consumers.

At this point, “our market is experiencing a secular shift away from Medicare supplement and toward Medicare Advantage,” Gary Bhojwani, CNO’s CEO, told securities analysts last week.

Medicare supplement insurance policies are also known as “Medigap” policies. Bhojwani and other CNO executives talked about Medigap policies during a conference call, while going over earnings for the third quarter. The quarter ended Sept. 30.

The company’s new annualized premiums from Medigap policy sales fell to $8 million during  the latest quarter, from $11 million in the year-earlier quarter.

Bhojwani said CNO intends to invest in both its Medigap products and its Medicare Advantage plans, to ensure that it’s well-positioned to meet customers’ needs and preferences.

“In 2022, we will be launching a new Medicare supplement product that we believe is more aligned with consumer preferences,” Bhojwani said.

CNO has also spent money to improve its Medicare Advantage plan sales system, and it has increased the number of exclusive field agents licensed to sell Medicare products 14% from a year ago, to about 3,000, he said.

Medigap Policies vs. Medicare Advantage Plans

The Medigap program gives private insurers a chance to sell standardized insurance products to consumers who use traditional Medicare coverage.

The Medicare Advantage programs gives private insurers a way to use a combination of government Medicare subsidy money and enrollees’ own premium payments to provide what amounts to an alternative to traditional Medicare coverage.

Many agents prefer selling Medigap policies to selling Medicare Advantage plans, because Medigap policy sales rules are simpler, the policies give patients more freedom to use whatever doctors and hospitals they want to use, and Medigap commissions have tended to be higher.

More on this topic

A web broker, eHealth, said when it released its earnings for the second quarter that the estimated lifetime constrained value of commissioners per approved member was $938 for Medigap policies and $908 for Medicare Advantage plans.

Sales Season

Consumers have the easiest time enrolling for Medigap coverage during a six-month period after they turn 65.

The Medicare Advantage program has an annual enrollment period system. The enrollment period for 2022 coverage began Oct. 15 and is set to end Dec. 7.

CNO appears to be the only carrier that has said much about Medigap policy sales during the analyst calls companies are scheduling in connection with the third quarter.

Executives from Anthem, Cigna, CVS Health, Humana and UnitedHealth have all said that they’re happy about what they’ve seen during the Medicare Advantage annual enrollment period so far.

CNO’s Earnings

CNO is reporting $100 million in net income for the third quarter on $968 million in in revenue, compared with $129 million in net income on $1 billion in revenue for the third quarter of 2020.

Overall sales of health-related products held steady at $39 million.

Sales of stand-alone long-term care insurance increased 1%, to about $30 million.

Pictured: Gary Bhojwani (Photo: CNO)