I’ve had a number of questions from agents regarding the wisdom of continuing to offer Medigap plans E, H, I and J (Plan High Deductible J would also fall into this category, but I think this is widely sold).
As an aside, if you’re not aware that Med Supp plans are changing, type “Medigap Modernization” in the search box on this blog (upper right hand corner of this webpage directly above “feeds”) to find a number of previous blog postings I’ve done on this subject. In addition, you can visit our Events Calendar and Register for an upcoming “Future of Medicare” Webinar to learn more about the changes not only in Medigap but, also, the changes in the Medicare Advantage market.
With Medigap Modernization coming June 1st, 2010 (about 1 year away), the current standardized plans E, H, I, J and High-J will no longer be available for NEW sales. Some agents are concerned about selling a plan which is “going away”. Here is my view on the subject:
- While it’s true that these 5 plans will not be available for NEW sales for June 1st, 2010 and later effective dates, the same can be said of ALL of the Medigap plans you are currently selling. For example, if you sell a Plan F today, the “Policy Form” for that plan will not be available either for NEW sales for June 1st, 2010 effectives and later. The Plan F’s sold with June 1st, 2010 and later effectives will be on a different “Policy Form” with slightly different benefits (a relatively modest Hospice benefit will be added), and these two “blocks of business” will be treated as entirely different plans in the eyes of the state insurance departments.
- Some of these plans (especially Plan J) will include additional benefits (namely, At Home Recovery and Preventative Care) which will NOT be available after June 1st, 2010. However, the existing Plan J’s will be GRANDFATHERED and a Medicare Beneficiary will be allowed to keep these plans. Think of this similarly to the “Pre-Standardized” Medigap plans which in some cases included Private Rooms, Private Duty Nursing or limited Nursing Home benefits. Ironically, today I got an e-mail from an agent who ran across a Medigap plan which was originally purchased in 1976!!
In conclusion, while I understand the concerns of agents who are currently selling the plans which are “going away”, I don’t think that you are doing any disservice whatsoever to your client by selling these plans. You may want to take the opportunity to explain the changes coming and the limited time window to acquire a plan with these additional benefits and assure your client that when the new plans come out, you will be there to assist them in deciding if a new plan makes sense for their individual situation.
To compare a competitive Plan J in your state, feel free to use our Medicare Quote Engine. You can compare up to 4 Med Supp plans at a time and you will simply select Plan J from the dropdown menu.
Craig,
I turned 65 in Feb. 2010. I have a period of time to select a medicare supplement plan. All of this “plans are going away, etc. is very confusing. I hope I never have to use any ins. plan, but I know I have to have one in case of an accident, etc. I currently do not go to doctors, do not get sick and take no prescription drugs. However, I do want to pay into a pool in case I should need future care and to help others who do have to use these services.
I just want to get into a simple plan that would pay with no hassles or red tape if ever needed. Also I would like to think I could get into one that will be there and be affordable over the long haul. I plan to live a long time. I don’t want the premiums to skyrocket, and I want the plan to stay.
Thanks.
Sharon
Sharon:
I would be glad to offer you assistance with your insurance. I am a Marketer for Ritter Insurance and can be reached at 800-769-1847 x-213.
Craig…
Thank you and Duncan White for your input on this question. I think it is important and has long term implications.
I fear that if all the current plans are closed to new enrollees as you suspect, there will indeed be higher premium concerns for ALL current plan clients. Hopefully that won’t happen. Please follow me on this:
It is clear that plans E,I,F,J, are disappearing in June.
However, your thinking that there will be “closed books” and no new enrollees in ALL the current plans come June
tells me that in fact ALL current plans are disappearing in June. The implication is that the current “F” plan will have to have a different identity, maybe “F+” or something. And if that is true why don’t the official announcements about the June changes state that all plans will be discontinued which is what no new enrollees really amounts to?
Either Medicare is not explaining the change well or they have something special planned in June that they are withholding. Being in Missouri, I’m going to call our Dept of Insurance to see what they know. Please continue to keep us up to date on this.
Larry
Larry:
I think you may just have a typo here, but to be clear, it’s E, H, I and J (and high deductible J) which are “going away”.
Your description of the new plan F as F+ is pretty accurate. The new plan F and the old plan F will be treated by the Departments of Insurance as TOTALLY different blocks of business (based on the NAIC model which most states are adopting).
Since you mentioned you sell in Missouri (I’m sure you are aware, but I’ll mention this for others who might be following), you have additional guaranteed issue rights which are granted by the State of Missouri and are not Federally mandated Medigap protections. I would suspect that, for purposes of guaranteed insurability, the state of Missouri (and California, for that matter) will look at the new plan F and old plan F as the same plans.
If you are contacting the MO DOI, I’d appreciate it if you reported back on your findings. Specifically, I’d be very interested to hear how MO will handle the guarantee issue rights from the “old plans” to the “new plans”. Example, would an old Plan F be GI to the new plan F in MO? Which plans, if any, would be GI if an insured is coming from discontinued plans, like E, H, I or J? etc., etc.
Craig… I can see where today’s enrollees in the eliminated June 2010 plans (E,H,I,J) are going to be forever stuck in these plans, resulting in an aging plan population (no new enrollees), resulting in large premium increases (sicker group). They will be stuck since at future open enrollment periods they will be restricted to changing to a company offering the SAME discontinued plan with the same population problems. Make sense?
Of course, come June 1, 2010 companies could be REQUIRED to open enrollment briefly to give these people a new plan choice (unlikely).
The upcoming open enrollment period this fall will not allow any more choice for existing clients BUT wouldn’t it be a good idea to steer new applicants away from these plans?.
Larry:
I think your first paragraph makes sense. Without new enrollees, the “closed books” will tend to have higher increases than “open books”.
Second paragraph, I think it’s unlikely that there will be an open enrollment out of old plans.
Since all plans (A-L) will be closing effective 6/1/09, I don’t think it makes much difference if you sell a plan J which will not have a new version or a plan F which will have a new version. In both cases, the old versions will be discontinued and therefore will operate as “closed books”.
I don’t know how some of the individual states will handle some of the old plans (like J) where there are guaranteed issue rules (examples: CA, MO, ME, NY).
Craig
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Craig,
Is there any chance that insurance companies transfer existing plan “F” (example) holders into the new plan “F”.
Joe
Joe:
CMS is recommending that the Insurance Companies make the new plans guaranteed issue, however, they are not requiring this. Most companies who currently underwrite Medicare Supplement business would most likely not want to move their Med Supp business from the old block to the new block without re-underwriting it.
There will be some comanies, I believe, who will take this business on a guaranteed issus basis. Perhaps AARP or local Blues plans would be inclined to accept business without underwriting.
Craig