25 Things You Must Know Before Recommending a Medicare Supplement Plan to Your Client

Medicare Supplement plans. They’re absolutely necessary for Medicare recipients, and yet only 25% of the U.S. population are purchasing them. Close to 4 million individuals will turn 65 this year according to the National Census, and that, in and of itself is staggering.

​Medigap policies are what close the gap on health related insurance costs that traditional Medicare does not cover. Seniors struggle with the complexities of the Medicare system, and assisting them with their choices and giving them solid advice on which plan to purchase is what can set you apart from other insurance professionals. However, before you go writing your clients into Medicare Supplement or Medicare Advantage plans, here are some things to consider…not only for them, but for you, yourself.

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1. Consider the number of years the carrier or parent company has been in business. Specifically, how many years have they been offering Medigap plans.
2. Who owns the carrier? Is it a domestic company or is the parent company overseas?
3. What other types of insurance and lines of business does the carrier represent?
4. Is the company a stock or mutual company? A mutual company being owned by the policy holder wherein short-term earnings are less important.
5. How many states is the carrier entrenched in?
6. What are the financial ratings for the carrier? S&P, A.M. Best ratings are key in deciding which plan and which carrier to offer.
7. How often does the carrier implement rate changes and when was the last hike?
8. Does the company have sister carriers? If so, how many?
9. Tobacco rates are always higher, and that has to be considered when you have clients who use tobacco products, as they are a liability.
10. What are the family and household discount rates like? Are they worthwhile and substantial enough to make a difference in a client’s policy?
11. Competitiveness of the rates. A carrier must have competitive rates to even be considered. If their rates are exponentially higher than other carriers, that’s a red flag.
12. What types of preexisting conditions are included, if any?
13. What is the size of block in each state?
14. Understanding the loss ratio of plans in state and nationally is critical factor.
15. Are their re-insurers involved and fronting? Who is actually insuring the client?
16. Who owns the product you’re offering? (i.e. Amerilife, AIMS, AARP)
17. Knowing the carrier distribution channels is an important factor.
18. How are the plans issued? Are they attained age or issue age?
19. What is the average for attained age annual rate increases?
20. Researching the loss history rate changes should be part of your “homework” when researching a carrier and the plans they provide.
21. What does the upline hierarchy look like for you as a producer? How many levels are between you and the carrier?
22. How user-friendly is the carrier? Do they offer electronic applications and quick Underwriting decisions? Ease of doing business makes your life and your clients’ less stressful.
23. What are the compensation/commission schedules?
24. Support and back office assistance. If you need help understanding where your policy is in the system and what is holding it up or what key components might be missing, having a carrier with knowledgeable staff and timely support is crucial.
25. Knowing your contract, your vested interests and releases from the carrier are to safeguard your income and potential earnings.

By Sam Corey, Jr. and Carolyn Portanova