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

3/23/2016

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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.

  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
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Bipartisan Budget Act of 2015  -  How does this effect your clients preparing to draw Social Security?

11/23/2015

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​On November 2nd, 2015 President Obama signed the Bipartisan Act of 2015. This budget will provide funding for the 2017 fiscal year. Numerous changes were made to Social Security as part of this budget, and will go into effect May 1st, 2016. These changes will affect your clients who will be approaching retirement age and are looking to draw on their Social Security benefits.
What are the changes?

The biggest changes were the elimination of the ‘File and Suspend’ and ‘File and Restrict’ strategies. These changes will go into effect May 1, 2016. However, if your clients are at full retirement age under the current law, they can still file and suspend their Social Security benefits.

‘File and Suspend’

This allows a lower-earning spouse to receive a higher benefit based on their spouse’s work history. If your client chooses to suspend their benefits (which increase 8%/year until age 70), they will still be able to take advantage of delayed retirement credits, because they are not yet receiving their Social Security benefits.
​
‘File and Restrict’

This strategy allows clients at the full retirement age (normally age 66) to restrict their application to spousal benefits. Typically one worker claims benefits, and the spouse only claims spousal benefits to increase their total payment from Social Security. The spouse can then claim their own higher benefit at a later date, age 70 for maximum benefits . By doing this, they are not receiving their own benefits, allowing them to continue to grow.

Other Important Factors

If your clients are 66, or turning age 66 before May 1, 2016, they will still be able to file and suspend. Alternatively, if your clients already have one of these strategies in place, they will not be impacted by this new law. Your clients who are age 62 or older by December 21st, 2015 will only be able to claim spousal benefits when they turn age 66, and then switch to their own benefits at age 70. This provides greater benefits than each claiming benefits only from their own account.

By Carolyn Portanova
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    Carolyn Portanova is the Director of Marketing at The Brokerage Resource and has been with the firm since 2012. 

    She oversees all marketing and communications for the organization and works closely with the firm's independent agents and advisors to help them promote their own brands.

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