Guaranteed Issue States
Every state in the US has opportunities for individuals to receive guaranteed issue of their Medicare Supplement coverage, whether it be for their ICEP or loss of employer coverage. However, when considering the so called "slow death of the Medicare Supplement market", I am speaking for states that allow GI's year round, not just for the two particular situations described above. There are four states that allow GI year round, New York, Connecticut, Vermont & Massachusetts. These states allow movement to a Medicare Supplement using any election method and not be subject to any medical underwriting. Below we will dive into why this is crushing the Medicare Supplement market.
The Problem With All-Time Guaranteed Issue
In these GI states, it is very common for an individual to enroll in a Medicare Advantage plan during their ICEP upon first turning 65. As their health deteriorates and they start to have more and more health complications, adding to the costs they will accumulate with copays on an Advantage plan. So, they will switch to a Medicare Supplement plan without medical underwriting in order to receive more coverage for their health care. This means that the supplement plan and carrier will be required to pay more for the individual's health needs, no questions asked. This mere fact has led to higher supplement premium costs in GI states.
Premium Rate Comparisons GI vs Non-GI
For example, a Plan G in Putnam, County New York prices out to $226.50, while a Plan G in non-GI Duval County Florida prices out to $163.30 on the low end. This trend continues across GI states vs non-GI states.
What Will Be The End Result?
The premium rates will continue to climb in GI states and most carriers will stop offering them to beneficiaries while discontinuing the commissionable aspect of these plans for Medicare agents. Right now, we are already seeing carriers remove commissions for these plans, and they are trending towards elimating them entirely. New York & Connecticut will be the first to do this, with Vermont and Massachussetts to follow suit in due time.
The Solution
The only solution is for medical underwriting to occur in GI states, this would resolve the issue very quickly as rates would be adjusted accordingly for the potential supplement beneficiary. New carriers would enter the state and overall rates would decline over time as well. Unfortunately, this will never happen and Medicare Supplements will continue to become unafforable for most in these GI states.
