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Beyond Medicare – Meeting the Needs of Senior Customers


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There is no time like the present for insurers to consider growing their senior product portfolio with either Medicare Advantage or Medicare Supplement insurance. However, it’s important to understand some clear differences between these products and which needs they address for customers.

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Beyond Medicare – Meeting the Needs of Senior Customers

  1. 1. How Can Insurers Help Meet the Needs of Seniors? Beyond Medicare
  2. 2. Part A Hospital coverage (includes skilled nursing, nursing home care, hospice, home health services) Part B Medical insurance (includes medically necessary and preventitive services) Part D Prescription Drug coverage (optional) See historical timeline Medicare is a social insurance program in the U.S. that helps people age 65 and older — plus those with permanent disabilities, End Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS) — to pay for many healthcare services. The program includes: What Is Medicare?
  3. 3. Consumers who are Medicare eligible can choose private health insurance offered by insurance companies in two forms: Medicare Advantage or Medigap (Medicare Supplement). Additional Coverage Options Medicare Advantage Private Health Insurance (Part C) A substitute for Part A and Part B (like an HMO or PPO) Medigap Policies Private Health Insurance (but the consumer must have Part A and Part B) Can help pay some of the healthcare costs that Original Medicare does not cover (like copayments, coinsurance, and deductibles)1 1, What’s Medicare Supplement Insurance (Medigap)
  4. 4. How do seniors select Medicare options?
  5. 5. There are two main coverage choices for qualifying enrollees to first consider. Private insurance companies approved by Medicare provide this coverage. Provides same level of coverage as Original Medicare, but excludes hospice care. Part A (hospital insurance) is typically free if consumers paid Medicare taxes while working, but does include deductibles and coinsurance. Part B (medical insurance) requires monthly premium payments and includes a deductible and coinsurance. Original Medicare Medicare Advantage OR
  6. 6. Next, they decide on Prescription Drug coverage (Part D). Most Medicare Advantage plans offer Prescription Drug coverage. For those plans that don’t, a Medicare Prescription Drug plan can be purchased. These Prescription Drug plans are run by private companies approved by Medicare. These plans requires a monthly premium. OR Medicare Advantage Original Medicare
  7. 7. If Original Medicare is chosen, then Medigap (Medicare Supplement) is an additional option to consider. If a consumer wants to fill coverage gaps left by Original Medicare, a Medigap policy from a private insurance company will do that. Medigap Medicare Advantage Original Medicare
  8. 8. What is the market for Medicare and other coverages?
  9. 9. 2004: 2014: 2025: 41.9M 55.8M 73.9M Sources: Kaiser Family Foundation, A Primer on Medicare: Key Facts About the Medicare Program and the People it Covers, 2015; CSG Actuarial, The Future of Medicare Supplement, 5th Annual Market Projection, 3rd Quarter 2015 Medicare enrollment is projected to grow nearly 40% by 2025. Medicare’s Eligible Beneficiaries 37% increase over 2014
  10. 10. Source: CSG Actuarial, The Future of Medicare Supplement, 5th Annual Market Projection, 3rd Quarter 2015 Senior Enrollee Forecast to 2025: Medicare Advantage Projected EnrolleesPast Enrollees 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 30M 25M 5M 0 10M 15M 20M
  11. 11. Source: The Henry J. Kaiser Family Foundation, Medicare Advantage 2015 Data Spotlight: Enrollment Market Update, June 2015 (Based on analysis of Centers for Medicare and Medicaid Services (CMS) Medicare Advantage enrollment files, 2015) Most Medicare Advantage customers are enrolled in an HMO or PPO plan. Traditional Fee-for-Service Medicare (Parts A and B) 69% Medicare Advantage 31% 2015 HMO 64% Local PPO 24% PFFS 2% Other 3% Reginal PPO 7%
  12. 12. Source: CSG Actuarial, The Future of Medicare Supplement, 5th Annual Market Projection, 3rd Quarter 2015 Senior Enrollee Forecast to 2025: Medigap Projected EnrolleesPast Enrollees 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 30M 25M 5M 0 10M 15M 20M Medigap is a multi-billion- dollar business close to in 2014 with new annualized sales of in 2025 projected to reach new annualized sales of total premium$25B $3.6B $6.9B
  13. 13. Source: AHIP Center for Policy and Research analysis of the NAIC Medicare Supplement Insurance Experience Exhibit, for the Years Ended December 31, 2011, 2012, 2013, 2014 Medigap enrollment has seen continued growth since the first Baby Boomer turned age 65 on Jan. 1, 2011. It is projected to continue at this pace through 2025. 2014 11.2M 2013 10.6M 2012 9.9M2011 9.7M
  14. 14. How does Medicare Advantage work?
  15. 15. To qualify for a Medicare Advantage plan, an individual must be enrolled in both Medicare Part A and Part B. Medicare pays the private insurance company a fixed amount every month. Some plan options require an additional premium payment from the insured. Like HMO or PPO healthcare options, Medicare Advantage policyholders may experience network restrictions.
  16. 16. The total number of Medicare Advantage plans nationwide is in the thousands. Source: The Henry J. Kaiser Family Foundation, What’s In and What’s Out? Medicare Advantage Market Entries and Exits for 2016; MPR/Kaiser Family Foundation analysis of CMS’s Landscape files for 2015-2016, using preliminary Landscape files released September 15, 2015 for 2016 (Note: excludes SNPs, employer-sponsored (i.e., group) plans, demonstrations, HCPPs, PACE plans and plans for special populations) 203 1,742plans continuing from 2015 to 2016 new plansdiscontinued plans 259 1,945 plans available in 2015 2,001 plans available in 2016
  17. 17. How does Medigap work?
  18. 18. Medigap provides coverage for those who choose Medicare’s original fee-for-service (FFS) benefit design (Parts A and B).1 Any standardized Medigap policy is guaranteed renewable, even if you have health problems. This means the insurance company cannot cancel the Medigap policy as long as the premiums are paid. 1 AHIP, Medigap Insurance: Myths vs. Facts, 2015 Medigap helps consumers to budget their medical expenses with predictable out-of-pocket costs throughout the year.1
  19. 19. 1 Plan F is also offered as a high-deductible plan by some insurance companies in some states. If you choose this option, this means you must pay for Medicare-covered costs (coinsurance, copayments, deductibles) up to the deductible amount of $2,180 in 2016 before your policy pays anything. 2 Up to an additional 365 days after Medicare benefits are used. 3 Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in an inpatient admission. 4 For Plans K and L, after you meet your out-of-pocket yearly limit and your yearly Part B deductible ($166 in 2016), the Medigap plan pays 100% of covered services for the rest of the calendar year. Note: This table reflects the benefit design for standardized Medigap plans under the 2008 Medicare Improvements for Patients and Providers Act (MIPPA). Source: Centers for Medicare & Medicaid Services, 2015 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare There are 11 standardized plans for insurers to consider bringing to market. BENEFITS BA F1 LC G MD K N Medigap Policies Coverages Medicare Part A coinsurance and hospital costs2 Blood (first 3 pints) Part A hospice care coinsurance or copayment Skilled nursing facility care coinsurance Medicare Part A deductible Medicare Part B deductible Medicare Part B excess charges Foreign travel emergency (up to plan limits) 80%100% 75% 50% $2,480 Out-of-pocket limit in 20164 $4,960 3 Medicare Part B coinsurance or copayment Medigap Plans
  20. 20. First $ Plans (C,F,J) Grandfathered States Plans G and N All Other Plans Source: CSG Actuarial, The Future of Medicare Supplement, 5th Annual Market Projection, 3rd Quarter 2015 The most popular Medigap plan among consumers is Plan F, and Plans G and N are increasing in popularity. 2012 69.1% 5.2% 7.7% 18.0% 2011 67.4% 5.5% 6.3% 20.7% 2010 66.8% 5.7% 5.0% 22.6% 68.4% 2014 5.3% 13.1% 13.2% 68.5% 2013 5.3% 10.7% 15.5%
  21. 21. Why Consider Selling Medigap?
  22. 22. Given the 10k consumers a day turning 65, insurers should consider offering Medigap. Medigap offers more flexibility and financial stability for seniors considering Medicare coverage options. Medigap allows policyholders to visit any provider who accepts Medicare. There are no network restrictions. Since there are no network constraints, there are no concerns with traveling throughout the U.S. If a provider accepts Medicare, Medigap policies will cover the payment. Out-of-pocket costs may be capped (depending on the plan), which allows policyholders to budget for medical expenses.
  23. 23. Offering Medigap can help senior consumers and in turn enhance your business results. Attract and Retain Clients For insurers targeting or currently serving those reaching retirement age, having a product that addresses their emerging needs could help attract and retain them as customers. Expand Distribution Reach Adding Medigap to your company’s portfolio may allow you to expand the number of agents selling your products and, if using a captive sales force, reduce how often they are going “outside” to meet clients’ needs. Financial Benefits Medigap is a product that is not so capital-intensive, and has premiums that are predominately based on attained age and are annually renewable. Portfolio Diversification Expanding your product portfolio could complement your existing product offerings and show that your company is being proactive in addressing the current and future market conditions.
  24. 24. © 2016 General Re Corporation | This presentation is intended to provide background information for our clients and professional staff. It is time sensitive and may need to be revised and updated periodically. If you want to explore how your company can get into the Medigap market, I’d love to hear from you. +1 207 347 4612 Stacy Varney Head of Marketing & Account Management, Portland