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How Can Insurers Help Meet the Needs of Seniors?
Beyond Medicare
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?
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 Medicare.gov, What’s Medicare Supplement Insurance (Medigap)
How do seniors select Medicare
options?
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
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
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
What is the market for Medicare and other coverages?
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
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
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%
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
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
11.2M2013
10.6M2012
9.9M2011
9.7M
How does Medicare Advantage
work?
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.
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
How does Medigap work?
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
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
3Medicare Part B coinsurance or copayment
Medigap Plans
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%
Why Consider Selling Medigap?
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.
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.
© 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 VarneyHead of Marketing & Account Management, Portland
