Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - This week’s deep dive is Medicare Supplement 101

3. Compliance Chatter 📢 - Telephone Consumer Protection Act 47 U.S.C. § 227.

4. Sponsor Snapshot 🚀 - brought to you by USA Senior Care Network.

5. Data Visual of the week 📊 - Data Visual highlighting Med Supp enrollment by plan.

It’s only a 5 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

Medicare Supplement 101

If you’ve been following along with the MMI newsletter, you’ve learned that Medicare Parts A and B provide coverage for hospital stays, skilled nursing facility care, hospice care, outpatient, doctor, and preventative services as well as medical supplies.

You’ve also learned that Medicare coverage has gaps and that beneficiaries have out-of-pocket costs to cover including:

🏥 → deductibles, copays, & coinsurance.

Medicare Supplement (“Med Supp”) policies are designed to help with those costs.

Med Supp enrollment grew 36% over the last 10 years and is an important part of the Medicare market.

Let’s take a closer look.

History

The evolution of Medicare Supplement insurance is a relatively recent history. Medicare Supplement coverage began the same year that Medicare was enacted, 1966. In those early years, plan benefits varied greatly between companies and states. As Medicare benefits and rules changed, so did the regulations governing Medicare Supplement insurance.

In 1980, Medicare Supplemental insurance was brought under federal oversight. Through the 90s and early 2000s, additional legislation was enacted to:

• standardize plans and benefits

• require guaranteed plan renewal (a major protection for beneficiaries!)

• prohibit Companies from offering prescription drug coverage to new beneficiaries

Legislation in the last 10-15 years has further refined standardized plan options that companies may offer. In 2010, Plans E, H, I, and J could no longer be marketed to new applicants, but Plans M and N were introduced.

Most recently, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was enacted. Under this new regulation Medicare Supplement policies are no longer able to provide coverage for the Part B deductible (Plans C and F) to those newly eligible for Medicare as of January 1, 2020 or later. Why? The overall intent was to help slow Medicare spending. As lawmakers saw it – by requiring a deductible, the beneficiary has a stake in making sure their visit to the doctor justifies the cost.

While Medicare Supplement benefits are regulated at the federal level, individual states are responsible for reviewing rate and commission levels, along with managing eligibility requirements for their market.

Administration

Medicare Supplement insurance is provided by private insurance companies. Companies either use a third-party administrator (TPA) or their own operations units to assist with application processing, underwriting and policy issuance, along with ongoing premium and claims administration.

Medicare Supplement claims are run through the primary payor, Medicare, first. Once a claim is processed through Medicare, it is passed along to the secondary payor: the Medicare Supplement insurance company. Claims are largely processed electronically through auto adjudication by the companies or TPAs who administer the plans.

Eligibility

A beneficiary will have original Medicare, Parts A and/or B, before purchasing a Medicare Supplement policy. Beneficiaries enrolled in a Medicare Advantage plan (Part C) are not eligible for a Medicare Supplement policy. Requirements for enrolling can be confusing when you’re new to Medicare; the chart below provides a simple overview of when a beneficiary may be eligible for a Med Supp policy.

Medicare beneficiaries have a 6-month “Open Enrollment” period to apply for a Medicare Supplement policy, which starts the first month they have Medicare Part B and they are 65 or older.

During that time, beneficiaries can enroll in a Medicare Supplement policy from any Company – with no health questions or underwriting!  

This initial Med Supp “Open Enrollment” period is a one-time enrollment window. It doesn’t repeat every year like the Medicare Advantage Annual Enrollment Period (AEP).

After this initial “Open Enrollment” period, beneficiaries may not be able to buy a Medicare Supplement policy without going through some level of medical underwriting.

In some states, however, Companies may be required to offer special Medicare Supplement enrollment windows annually.

These special windows may be as simple as –

• An existing Med Supp policyholder can move to another plan without passing underwriting.

Or as wide-ranging as –

• Any Medicare beneficiary can obtain any policy from any Company at any time.

Coverage

Medicare Supplement plans have standardized benefits and plans are designated by letter-coding.

There are currently 10 standardized plans that Companies may offer:

A, B, C, D, F, G, K, L, M, N

A comparison of benefits for some of the more popular plans is provided below:

*Plans C and F, which provide coverage for the Part B deductible, aren’t available to beneficiaries who were newly eligible for Medicare on or after January 1, 2020.

**Plan N pays 100% of the costs of Part B services, except for copayments for some office visits and some emergency room visits.

Standardized means any plan bought from one company is identical to the same plan bought from any other company. This is also true regardless of where you live and how old you are. 

Valerie 👵 – a 65-year-old beneficiary in Idaho – will receive the same benefits for a Medicare Supplement Plan G as Louis 👴 – an 81-year-old beneficiary in Florida. 

(Of course, there are always exceptions to the rule – MA, MN, & WI are special and do not offer the 10 standardized plans available in other states.)

Other key coverage highlights for Medicare Supplement plans include:

• A Medicare Supplement policy will renew with the same plan benefits if the beneficiary continues to pay their premiums.

• Any doctor that accepts Medicare will also accept Medicare Supplement insurance.

In some states, companies may also choose to offer Medicare Select plans or High-Deductible plans. 

Medicare Select plans require beneficiaries to use specific hospitals or specific doctors to be eligible for full benefits. They typically have a lower premium than a standard plan. 

High-deductible plans start paying for benefits after a beneficiary has met an annual deductible. Plans F and G may be sold with a high-deductible option. These plans also typically have a lower premium than a standard plan.

Statistics

2022 Beneficiary counts for original Medicare, Medicare Advantage plans, and Medicare Supplement insurance are shown below.

While Telos Actuarial research indicates a slight decrease in Medicare Supplement enrollments in 2023, it is anticipated that enrollments will return to a growth rate that exceeds the Medicare enrollment growth rate, creating robust opportunities for insurance carriers, reinsurers, agents, and marketing organizations in the Medicare Supplement market.

Sources:

1. 2023 Medicare Trustees Report

2. NAIC Medicare Supplement Experience Exhibits

3. CMS.gov

4. Other Public Company Sources

5. Telos Actuarial Projections

DATA VISUAL of the Week 📊

This week’s data visual comes from Telos Actuarial. It shows how the distribution of policies by plan in Medicare Supplement has changed over time.

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)