When President Bush signed the Medicare ModernizationAct in 2003, most people were unaware the tremendous impact that this legislation would haveon health benefits for the senior population. Not only did the act provide prescription drug coverage known as Medicare Part D, but also created Medicare Part C – Medicare Advantage (MA) plans. Medicare Advantage plans are offered by private health insurers and the plans actually replace the client’s Part A and Part B coverage. When a patient needs care they present their MA card, instead of their Medicare card, to the medical provider. The provider then submits their bill to the MA plan instead of Medicare. Medicare Advantage plans did not really gain traction until the 2005 enrollments for January 1, 2006 and later effective dates. The primary national carriers for agent sold business for the 2006 plan year were PacifiCare & Humana. The buzz was on!
Seniors began buying these plans in huge numbers. Agents who were in the market found a receptive audience for plans that usually had $0 to low premiums and everyone qualified regardless of their health (the one exception is “end stage renal” patients are not eligible for coverage). Agents who were not in the market often found that their clients purchased a
MA plan from another agent. It is estimated that over 5,000,000 people enrolled in MA plans in 2006 and enrollments continue to grow. Benefits for MA plans must, by law, be at least as good as Medicare coverage. However, where Original
Medicare plans are standardized by law, MA plan designs are not. Regulation of MA plans is done at the federal level by CMS – regulation of Medicare Supplement plans are by the state Departments of Insurance. Benefits for MA plans resemble individual and group medical plans for the under 65 market. MA plans generally have co-pays for physician’s visits and hospital admissions and include an annual maximum out of pocket cost for the insured.
We are often asked, which plan is the best for my client – Original Medicare and a Medicare Supplement, or a Medicare Advantage plan. Well it depends…. The place to begin is an evaluation of the prospect/client’s current situation. What is the prospect’s financial situation, how is their health, are they receptive to a new concept or do they desire to have their coverage through the established Medicare system?
Some of the situations where a MA plan may be the best choice are:
• Individuals on Medicare disability
• Individuals with very limited budgets
• Individuals covered by expensive Medicare Supplement plans who are not in good health
• Individuals that are on Medicaid (about 20% of total eligible clients)
Situations for Original Medicare:
• Clients who want the security of Original Medicare and guaranteed renewable MS coverage
• Clients who want total choice of providers
• Clients who want coverage without co-pays and deductibles (like Plan F MS)
The Brokerage Resource believes that it makes good business sense for agents to have one or more solid MA carriers in their portfolio. Medicare privatization has about doubled the available market – these additional prospects are almost all more appropriately covered under a MA plan. MA plans are not for everyone, but when combined with a portfolio of solid Medicare Supplement carrier like Mutual of Omaha, agents will have the proper products to meet the needs of all Medicare eligible individuals.
In March, look for our exhibition booth at the NCAHU Symposium and the NC Financial Services Expo in Winston Salem. Additional information will be available.