MEDICARE SUPPLEMENTS
Walking the Plan F tightrope
As much as this is a secret in our industry , it is reality that many companies punish agents for putting the clients first .
Sylvia Gordon , JD is president of Gordon Marketing , a national Medicare FMO . Together with her sister , Rebecca Gordon , they host a weekly Youtube show , The Wednesday Wrap Up . She is a frequent national speaker on digital marketing for insurance agents . Sgordon @ gordonmarketing . com
Insurance agents have to walk a tightrope to serve our clients and the interests of the insurance companies . These interests are often at odds and most recently came up when Medicare Supplement legislation surrounding Plan F and C changed in 2020 .
When “ The Medicare Access and CHIP Reauthorization Act of 2015 ”, also known as MACRA , was passed , agents were warned not to predict a “ death spiral .” Yet , seasoned agents knew that MACRA would negatively impact our Medicare Plan F clients on most plans , in most states . In simple terms , if no new Plan F business could be sold , existing Plan F blocks would experience higher rate increases than plans that could be actively sold to new , healthy and younger members .
We agents were admonished not to move our clients from Plan F to Plan G , even though that is exactly what we should have done when the rate climate warranted it . Moving healthy members from F to G only accelerated the price increases on Plan F . As 2021 rate increases were announced , Plan F outpaced Plan G , sometimes by a large amount .
Feeling the effects With the law only changing on 1 / 1 / 2020 , we ’ ve just begun to start to feel the results of MACRA . Rate increases on Plan F are hefty and will only get worse year after year as no new clients are coming into those blocks of business . Will this cause more clients to move to MAPD ? Yep . Ask yourself how long you could endure double digit rate increases on a fixed income ?
But agents need to be careful of moving large amounts of carrier or face termination . As much as this is a secret in our industry , it is reality that many companies punish agents for putting the clients first . One large SGA wrote a lot of Medicare Supplements with X company . When X took larger rate increases than the rest of the industry , the SGA moved all his clients ( that were healthy enough to move ). X promptly terminated his contract and placed a Do Not Recontract ( DNR ) on his contract for life .
Never burn a bridge
The lesson here is never burn a bridge with an insurance company . Agents can ’ t serve their clients if they have no products to sell . It will almost always come back to haunt you if you lose access to a carrier , so protect those relationships and always be thinking long term with your career .
Which brings us back to MACRA and what to do in the face of Plan F rate increases . Hopefully you spread your business out among several carriers . If you don ’ t take care of your clients , many will leave you for a MAPD 800 # they see on TV . But if you move all your Plan F clients to a MAPD , you risk losing your contracts . This is a topic no one likes to talk about , but agents should consider their behavior from the point of view of the insurance companies before moving large blocks of clients — even when it is in the best interest of the clients .
50 Perspectives Q4 2021