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It’s Medicare Open Enrollment Period. As I wrote earlier, Open Enrollment this year is unusually important because of significant changes in Medicare Advantage and Part D prescription drug plans.
Medicare is complicated, and most people have numerous options. The big changes this year make it especially important to seek help in evaluating the choices.
I recommend using a local insurance agent or broker who specializes in Medicare and works with and evaluates multiple plans available in your area. Use more than one agent or broker if you can’t find one who covers most of the market.
Or use your state’s State Health Insurance Assistance Program. SHIP provides independent counseling and advice to anyone at no cost.
The choice of broker, agent, or other advisor is key, as documented in an important study. The researchers held a series of focus groups with a variety of agents and brokers who specialized in Medicare insurance products.
The study found that Medicare Advantage plans pay higher commissions than the Medicare supplement and Part D policies sold to those who opt for original Medicare. Brokers and agents aren’t required to disclose their commissions.
One broker said an Advantage plan paid a commission three times that of Medicare supplement plans. Advantage plans also offer additional ways for agents to make money, such as by preparing beneficiary health risk assessments.
Most of the brokers said the commissions for Medicare supplement and Part D policies were so low that reviewing all the plans was not worth their time. They also said low commissions mean there’s no incentive to help clients re-evaluate their Part D policies each year.
Since commissions are a percentage of the premiums, there is an incentive to sell plans with higher premiums. Among Medicare supplement plans, Plan G policies have the most comprehensive coverage and also the highest premiums and commissions.
The agents said most clients rarely are told they could pay lower premiums with a high-deductible version of Plan G. As a tradeoff, the client would pay more out of pocket in years when they use more medical services.
Brokers and agents also said they tended to favor insurers who are easy to work with and answer their questions quickly.
The brokers said typically they sold higher income clients Medigap and Part D policies to be used in conjunction with original Medicare.
Medicare Advantage plans most often were sold to other clients.
That’s largely because Medicare Advantage plans initially tend to have lower out of pocket costs. But an Advantage plan member who needs regular medical services will pay more out of pocket during the year and be restricted to the plan’s network of providers.
The brokers confirmed that it often is difficult for beneficiaries to switch from Medicare Advantage to original Medicare, because issuers of Medicare supplement policies review medical records when determining whether to accept an applicant and how much of a premium to charge.
Most of the agents and brokers said they would choose original Medicare with Medicare supplement and Part D policies for themselves. They favor the ability to choose any medical provider and easier approval for treatment and care.
Before choosing an agent or broker, ask how many of the plans available in your area they reviewed, how many insurers they work with, and if they favor Advantage plans over original Medicare with Medicare supplement and Part D policies.
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