Nebraska Regulators Fight Medicare Supplement Policy Underpricing

Two Nebraska regulators say making sure that an issuer of a new Medicare supplement insurance policy sets sustainable rates is important.

In some cases, the regulators warn, newcomers to a market may set prices too low because of weak actuarial work or a desire to gain market share.

“Such underpricing will lead to rates that are not sustainable, requiring large rate increases greater than trend and aging in later years,” according to a slide deck prepared by Michael Muldoon, the chief actuary at the Nebraska Department of Insurance, and Margaret Garrison, an examiner at the department.

Muldoon and Garrison will present the slide deck March 15 in Phoenix, during a Health Actuarial Task Force session at the National Association of Insurance Commissioners’ spring meeting.

What it means: Unrealistically low insurance prices can hurt your clients.

Medicare supplement insurance: The original Medicare program exposes enrollees to deductibles, coinsurance bills and co-payment charges.

Some Medicare enrollees use Medicare Advantage plans to fill the holes. Others fill the holes with Medicare supplement insurance, or Medigap, policies. About 14 million people have Medigap coverage, according to the American Association for Medicare Supplement Insurance.