Medicare Supplements: A Beginner’s Guide
Dipping your toes into the Medicare supplement sales arena doesn’t have to be intimidating; in fact, it can be your golden ticket to a booming career.
Whether you’re an insurance newbie or just looking to build on your current offerings, we’ve put together this great beginner’s guide on Medicare supplement insurance and the need for agents to offer their clients this valuable service.
Who Is This Beginner’s Guide For?
This guide is perfect if you want to learn more about Medicare Supplements, but it’s especially great for those already offering products and services relating to insurance and finances.
For example:
- Property & Casualty (P&C) Agents
- Auto Insurance Agents
- Certified Financial Planners (CFP®)
- Agents with a “niche” such as Final Expense
- Health Insurance Agents
If you already have a book of business, you’re primed for Medicare Supplement sales. People already want and need supplemental insurance, and they’re going to go somewhere to get it – they might as well get it from you.
Why Medicare Supplement Sales?
There are a ton of prospects in the Medicare market. Ten thousand seniors turn 65 every single day – that’s a lot of prospects that need Medicare Supplements.
When we look at a person that is going onto Medicare, it’s pretty confusing and overwhelming. Seniors get a ton of Medicare-related mail. It’s truly information overload.
It’s a serious sense of relief when that senior has someone that can explain how Medicare works.
These prospects are very overwhelmed when they’re trying to figure it out on their own, and you don’t have to come up with some slick sales pitch to get them to buy from you. You’re already a tremendous asset, and your help is truly wanted and appreciated.
A lot of prospects have retired from large companies that no longer pay for their post-65 health insurance. Many companies now offer a reimbursement so that the retirees can go out and buy their own insurance. It works great, but it leaves the retiree with a lot questions, and they need our help.
In sum, there are three great reasons to get into the Medicare Supplement market:
- There are lots of prospects
- Medicare is standardized
- There’s a built-in need for a secondary insurance with Medicare
What Are Medicare Supplements?
Medicare Supplements are insurance policies sold by private insurance companies. They’re meant to supplement Original Medicare coverage, because Medicare does not cover everything!
As an example, Medicare Part B generally covers about 80% of the bill – the remaining 20% could wreck a senior’s finances in an instant. A Medicare Supplement plan can cover that 20% in full.
Medicare Supplement plans are also called Medigap for this reason; they fill in the gaps left behind by Medicare.
A few quick things to know about Medicare Supplements:
- They don’t include drug coverage – a separate, Part D prescription drug plan is needed.
- Plans are lettered from A-N (Plan F, G, and N are the most popular options).
- Benefits for each plan letter are standardized by the federal government in most states, meaning you get the same exact benefits no matter which insurance company you buy from.
- In Massachusetts, Minnesota, and Wisconsin, standardized plans can be changed without federal approval.
A Word on Medicare Advantage
You should be aware there are two main routes a senior can take when it comes to their health insurance:
- Original Medicare with a Medicare Supplement and a Part D drug plan
- A Medicare Advantage plan
We’re not going to get into Medicare Advantage in this article, but you will want to consider both options when helping a senior with their insurance plan.
Medicare Supplement Plans A-N, Explained
There are currently 11 Medicare Supplement plans available:
- Plan A
- Plan B
- Plan C
- Plan D
- Plan F
- High-Deductible Plan F
- High-Deductible Plan F
- Plan G
- Plan K
- Plan L
- Plan M
- Plan N
I always find it the most interesting to find out which plans people are buying the most. What is the most popular?
I’ll narrow it down to the top 3:
- Plan F (for those who are eligible)
- Plan G
- Plan N
It’s much easier to narrow it down to a couple of plans so that you don’t have to understand the benefits of them all.
IMPORTANT: As of January 1, 2020, Plans C and F are no longer available to people who are new to Medicare. If you already have either of these 2 plans (or the high deductible version of Plan F) or are covered by one of these plans before January 1, 2020, you’ll be able to keep your plan. If you were eligible for Medicare before January 1, 2020, but not yet enrolled, you may be able to buy one of these plans.
Here’s a chart showing the coverage that comes with each plan (you can find this chart in the Medicare & You Handbook).
Differences Between Medicare Supplements
I just mentioned Medicare Supplement benefits are standardized, which means a Plan G is a Plan G, no matter which company you buy it from.
So… if the benefits are the same, what makes a supplement different from carrier to carrier?
The two main differences are going to be:
- Cost
- Underwriting
What is the company charging the consumer for the insurance, and what health questions are they asking?
If you have a client and you apply for coverage with one company, and they can’t pass those health questions, you have a lineup of other companies with a different set of health questions.
How Rates Are Set
This isn’t something you’ll share with a client, but it’s helpful for you to understand.
There are ways in which Medicare Supplement rates are set:
- Community Rated – priced the same for everyone (not common)
- Issue Age – priced on your age when you are issued the policy
- Attained Age – based on current age
Open Enrollment vs. Guaranteed Issue
Medicare Supplement open enrollment and guaranteed issue (GI) situations are going to be the most complex thing we cover today. Stay with me, though.
Medicare Supplement Open Enrollment
Your Medicare Supplement open enrollment period is a 6-month window starting on your Part B effective date.
You have 6 months where you can apply for a Medicare Supplement policy without going through underwriting. In other words, you don’t have to health qualify.
Your clients only get this opportunity once in their life. They don’t have to worry about pre-existing conditions or underwriting.
Once that person gets outside of their open enrollment period, they have to be able to pass health questions in order to qualify to change from one insurance company to the next.
If I have a client with Cigna, and Cigna has had some rate increases over the course of a few years, and I see that Mutual of Omaha can save my client some money for identical coverage, the kicker is they have to be able to pass health questions. If they can health qualify, I can give my client a much better price for identical coverage.
Outside of the 6-month window, a person will always have to pass underwriting to switch Medicare Supplements.
Guaranteed Issue
Guaranteed issue (GI) happens when you lose coverage. For example, if you’re on group insurance and you lose it because you’re retiring. That’s really common.
Another common example is perhaps you’re losing your Medicare Advantage plan. They announce to you that they’re terminating their plan in your zip code. That’s a guaranteed issue situation where you can buy a particular plan without having to pass health questions.
For folks who were first eligible for Medicare prior to January 1, 2020, they have a window where they can buy plans A, B, C*, D*, F*, G*, K, or L without having to pass any health questions. That window is 60-63 days depending on which state you’re in. We stick with 60 days to be on the safe side.
*Plans C and F are no longer available to people who are new to Medicare on or after January 1, 2020. However, if you were eligible for Medicare before January 1, 2020 but not yet enrolled, you may be able to buy Plan C or Plan F. People eligible for Medicare on or after January 1, 2020 have the right to buy Plans D and G instead of Plans C and F.
The Ideal Medicare Supplement Client Profile
When we’re thinking about an individual who would really like and benefit from a Medicare Supplement, here’s what our list of bullets looks like:
- Requires more medical attention
- Likes a simple plan with preferably no co-pays
- Does not appreciate or like physician and hospital networks
- Likes to travel – is a snowbird
- Fears change
A Medicare Supplement is usually a no-brainer for snowbirds since the alternative option – a Medicare Advantage plan – is going to have networks.
Folks who don’t like change or plans that get tweaked every year are going to like a supplement. Medicare Supplements stay the same year-in and year-out – no surprises.
The Ideal Medicare Supplement Client Profile
When we’re thinking about an individual who would really like and benefit from a Medicare Supplement, here’s what our list of bullets looks like:
- Requires more medical attention
- Likes a simple plan with preferably no co-pays
- Does not appreciate or like physician and hospital networks
- Likes to travel – is a snowbird
- Fears change
A Medicare Supplement is usually a no-brainer for snowbirds since the alternative option – a Medicare Advantage plan – is going to have networks.
Folks who don’t like change or plans that get tweaked every year are going to like a supplement. Medicare Supplements stay the same year-in and year-out – no surprises.
If you are interested in adding Medicare sales to your agency, please reach out to me so I can help you get started! Remember that there are a lot of seniors that need help in understanding Medicare, but also have a need for insurance to cover the gaps that original Medicare has. I will be scheduling our online Medicare University program again this year starting in April, so be on the lookout for more information to come soon! Our Medicare University is a great opportunity to learn the basics of Medicare and learn about marketing to seniors and the power of cross selling Medicare to help cover their gaps in coverage. Seniors NEED your help with Medicare!
Thank you!
Rick Roberts