Let’s say that you have decided, upon turning 65 years old, that a Medigap plan is best. To quickly review, there are reasons for selecting a Medigap plan.
- No network, irrespective of Medigap carrier
- Language never moves
- Language is standardized across carriers
- Rate increases must be justified by the math of money and Medical Loss Ratio
- Just because it is competitive, people wrongly assume stuff by blindly choosing any ‘ole carrier, and obtain the wrong price. For those of you keeping score with money, wrong = too high. Waste of money.
- The carriers have different underwriting questions for those that are older than 65.5 years old, and you, the newly 65-year-old is likely to be “mixed in” with those people, upon which future rate increases will be based. A consumer cannot reasonably know the background here, it will take the VERY retentive in order to understand the subtleties, or you need to have it explained to you.
- The different plans are identical within a specific “letter,” but that is not the same thing as each plan is exactly the same to each other. Those slight differences may be worth it (or not) today, but then there is the future to consider. There is a REASON that a certain book (ahem) spends a great deal of time mentioning the harrowing backdrops: demographic, fiscal and economic realities that we all are certain to face. There are potential ripple effects to this, and some of those plans make provisions for this today, and some do not.
- When you add these factors together, it can be that people choose the wrong carrier’s plan at a higher price for either cost or benefit reasons, or both, This makes no financial or coverage sense, but This Happens. These people are giving away free options.
Why Don’t People Pursue Not-Widely-Known?
- Everyday consumers believe they know better for themselves (That is your prerogative, please do not ask for our sympathy in this instance).
- People are excessively skeptical of “people like me.”
Truths About Premiums
- Premiums very competitive, but that doesn’t mean that ALL carriers are within a tight premium range. While the top 2-3 carriers can be <$10/month from one another, #4 can easily be another $10/month higher, for an annual difference of >$200. Easily.
- Carriers are intentionally selecting location and plan combinations. It is self-evident to us because we see all of the data. Our clients in Tuscon are very likely to have a different carrier from our clients in Miami, and different again in Ann Arbor. We are examining premium grids nationwide, and even within the same state, premiums vary. If you add together the information on this Newsletter, you will recognize one theme: carriers are not randomly guessing, they are specifically estimating, and then adjusting. Those two are not even close to the same thing.
Truths About Compensation
- We don’t control the compensation.
- The differences in compensation are so small, I cannot tell you which carrier/plan combination results in the highest compensation in advance.
- In many cases, lower premiums = higher compensation.
- People with licenses are required to disregard this when making a recommendation. There is a subtle point here, which is that all people do not have access to the full set of competitive carriers, so some licensed people will not know the full set of details here, and you can correctly presume that we are set up intentionally to deliver the optimal combination across locations.