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Understanding Medicare Supplements: The Basics of Medigap

Medicare covers many health essentials for citizens sixty-five and older but it does not cover everything. Particularly for those with more complex medical histories (or futures), Original Medicare (Parts A and B) is often not enough as they move into their golden years of retirement. This is where understanding Medicare Supplements, or Medigap insurance policies come into play.

What is it?

Medigap is essentially extra insurance. Beneficiaries can buy extra insurance policies from private carriers to help pay their share of the out-of-pocket expenses that come with Original Medicare. Original Medicare is funded by the federal government.   The federal government also contracts with private carriers to ensure that their Medigap policies are safe, uniform, and sufficient. Beneficiaries must have Original Medicare in order to buy a Medigap policy. This means they must sign up for Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) to be eligible to purchase Medigap.

As previously mentioned, the insurance carriers that provide Medigap policies are contracted with the United States government. This means that the carriers must meet certain guidelines in order to keep their contract each year and continue to sell these policies. All Medigap policies are standardized, meaning that they all cover the same basic health benefits regardless of which company they were purchased from or which state the beneficiary lives in. There are ten different types of Medigap policy, and they are distinguished by letters (A, B, C, etc.). Price is the only difference between carriers’ plans of the same letter. This means that plans with the same letter offer the same coverage regardless of carrier. It is important to note, however, that in Massachusetts, Minnesota, and Wisconsin, the plans are standardized in a different way. Despite this, every Medigap policy must follow state and federal laws to protect their beneficiaries.

What does it cover?

The benefits of each Medigap plan differ (again, usually by letter, or tier), but they are all designed to do one thing: help cover the beneficiary’s share of costs from Medicare Parts A and B. This means Medigap policies can help cover co-payments, coinsurance, and deductibles. Some Medigap policies can cover services that Original Medicare doesn’t cover, like emergency medical care outside of the United States.

What’s not covered?

Medigap can’t cover everything that Medicare Parts A and B doesn’t. Some of the services that are not covered under Medigap policies are long-term care, vision or dental care, hearing aids, eyeglasses, and private nursing. Medigap plans that were sold after 2005 do not include prescription drug coverage, and beneficiaries can opt in to Medicare Part D for that kind of coverage.

Understanding Medicare Supplements – Agent Resources

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Prescription Drug Help in Connecticut

Prescription drugs are often life-saving, essential aspects of comprehensive health care. However, they can be cost prohibitive, particularly if the patient is expected to use them long-term, and not every health insurance plan provides coverage for them. Here are six ways that Connecticut residents can get help with their prescription drug costs:

Medicaid (Husky Health)

The state of Connecticut has a Medicaid program called Husky Health Insurance that provides prescription expense assistance for those who qualify. Typically, those people are low-income adults and children, as well as pregnant women. There is a portal to visit to qualify for prescription drug assistance, known as Husky Pharmacy Assistance, and most enrollment for Husky Health can be done through AccessHealthCT.

Medicare Part D

Also known as Medicare Rx, Medicare Part D is the part of Medicare that provides prescription drug and pharmacy coverage to its beneficiaries. It is offered through private companies, but those carriers must partner with the federal government and meet their requirements for plans every year to be allowed to provide Medicare Part D plans. The program is not required, but encouraged for those aged sixty-five and above. There is a penalty for people who do not have sufficient or comparable prescription drug coverage, as well, but decline Medicare Part D. More information can be found at Medicare’s government website.

Low Income Subsidy (LIS) for Medicare Part D

Because Medicare Part D is provided by private carriers, the premiums deductibles, and copays can vary with the type of plan selected. Beneficiaries with limited income may be eligible for further assistance called the Low Income Subsidy. This is a subsidy that pays part of or all of the expenses associated with Medicare Part D premiums. Only those with limited assets or low fixed income will qualify for this subsidy.

Free or Low Cost Prescription Programs

These programs are also known as patient assistance programs. To qualify for these programs, beneficiaries must have no insurance, have low income, and not be eligible for a government assistance program like Medicaid, which would otherwise pay for part or all of the prescription drug costs. One of these programs is called the Partnership for Prescription Assistance. More programs can be found here.

Discount Prescription Programs

Some bigger box stores, such as grocery stores, that have pharmacies offer lower cost prescription drugs because they can procure them at discount prices, particularly the generic versions of popular prescriptions. Not all generics are covered, but some stores that do this include Big Y, CVS, and Walmart. Some hospitals also offer these generics discounts, such as Saint Raphael in New Haven or Saint Vincent Medical Center.

Online or Mail Order Prescription Programs

The popular medical advice website WebMD offers information on how to obtain prescription drugs through the internet or mail services.

In Connecticut, there are many ways that residents can access assistance with their prescription drug costs. Help is available for premiums, copays, deductibles, or simply the cost of the medication itself.

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Short-Term Medical Insurance

Short-term medical insurance is not available nationwide. It is, however, available in Connecticut, but on very limited terms. Health insurance coverage that lasts less than twelve consecutive months is Short-term medical  insurance. Individuals can extend and renew for up to thirty-six months. Connecticut is also one of the few states in which it is illegal to deny a person coverage due to a preexisting condition.  Unfortunately, no insurance carriers offer such terms for short-term coverage. Therefore, individuals obtain short-term medical insurance three main ways in this state.

Affordable Care Act Plans (ACA)

Through what is known as Obamacare, people can sign up for a health insurance plan using Connecticut’s Health Insurance Marketplace (AccessHealthCT). The carriers that offer plans through this marketplace are Anthem Blue Cross Blue Shield and Connecticare Benefits, Inc. There are five levels of coverage.  Four are named after metals: bronze, silver, gold, platinum, and then catastrophic coverage. Each level covers a different percentage of essential health services.

Generally speaking, bronze will cover 60%, silver will cover 70%, gold will cover 80%, and platinum 90%. Catastrophic coverage has a low monthly premium but offers the lowest amount of coverage. Tax credits based on income are applied to the health insurance plan premium to help cover the cost, and there is special enrollment, which means that major life events qualify residents for enrolling outside of the normal enrollment period. Some qualifying events are a marriage or divorce, birthing or adopting a child, and job change.

COBRA

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. This act  offers coverage to those who leave a job with employer-offered coverage.  Individuals no longer employed buy that plan. That being said, the premiums are likely to go up considerably because the employer is no longer subsidizing them. Former employees are only disqualified from COBRA if they are fired for something egregious, or gross misconduct. The former employer must be notified if the former employee wants to use COBRA to continue in their health insurance plan and that plan can be extended for up to thirty-six months from the job change or termination.

Medicaid – Short-Term Medical Insurance

Medicaid is a state program that is available to pay for health insurance for residents who cannot pay for it themselves. There are a variety of reasons that someone would qualify for Medicaid.

• Adults ages 19-64 who are low-income and not eligible for Medicare

• Pregnant women and infants

• Children up to age 18

• Parents and caretaker relatives

Applicants can apply through their Department of Social Services or through AccessHealthCT.

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Sell Medicare All Year

What Happens After AEP? Learn to sell Medicare all year.

The AEP, or Annual Enrollment Period, is one of the busiest times of the year for Medicare insurance agents and agencies. It can be draining and exciting all at once. Annual Enrollment Period is the period of time when beneficiaries are eligible to sign up for Medicare insurance, and it runs from October 15 to December 7 each year. The new coverage choices that people make during the AEP go into effect on January 1 of the following year. Choices made in the AEP of this year, 2023, will be effective on January 1 2024.   Learn to sell Medicare all year.

As a single agent or broker or as part of an agency, it is important to do three things after making it through another annual enrollment period.

Celebrate Accomplishments

Look at what worked out in favor of the agency/agent this year. Enrollments, for example: How many were successful? Of those, which strategies worked well in getting beneficiaries to enroll in an insurance plan that fit their needs? Being as specific as possible about what worked well and what did not can help make the process more seamless and bring in more revenue in the following year.

Other things to consider are leads: where did the bulk of the leads that resulted in enrollments come from this year? Was it a new channel or was it with previously-known contacts?

Look at Opportunities for Improvement

No matter how well an agent or team did over AEP, there is always room for improvement. Two very common areas that agents report wanting to improve in are time management and carrier options.

Time management can be difficult over such a busy time like the annual enrollment period. If an agent takes meetings all day, things like marketing, returning emails and calls, and paperwork can be neglected and vice versa. One way to streamline the process of enrollment for busy periods is to identify which activities are taking up the majority of the time in the office. Then, agents can redistribute resources to ensure that time is more equitably spent across several activities rather than one.

Having access to multiple carrier options can be vital for closing deals during the annual enrollment period. After all, the purpose of selling Medicare insurance is to connect beneficiaries with the best plan for their individual needs. After AEP is over is an excellent time to determine whether or not the agency or agent wants access to further insurance carrier options next time around.

Regroup for Next Enrollment Period

The lull between enrollment periods can be a great time to regroup for the next round. Many agencies like to consider this as an opportunity to work on weaknesses, begin following up with clients, create new or improved marketing strategies, and re-educate themselves on Medicare Advantage compliance rules.

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Medicare AHIP Training

The AHIP Exam, or America’s Health Insurance Plan Exam, is the most widely-recognized Medicare training certification in the health insurance industry. Over 100,000 brokers and agents take this exam every year. The exam covers Medicare, details of how the industry works, and the Fraud, Waste, and Abuse training. Together, all of this information is referred to as MFWA Training.

The Medicare side of this exam will cover the following:

• Basics of Medicare

• Eligibility and coverage

• Anti-discrimination training

• Marketing and enrollment strategies

The Fraud, Waste, and Abuse side, on the other hand, will include:

• Identifying fraud, waste, and abuse

• Some of the industry efforts to detect fraud

• How legal tools can combat fraud, waste, and abuse

• The human and financial costs of fraud, waste, and abuse

• Compliance requirements for brokers and agents

• How to report fraud, waste, and abuse

• Loopholes and obligations

The AHIP exam itself consists of 50 questions, all of which are taken randomly from the five different portions of the training in order to cover all the topics. Each participant has three chances to score a 90% or higher. While agents have reported that they can get through the exam in an hour or less, the time limit for taking the final exam is two hours per attempt.

Here are some tips for taking the AHIP exam successfully:

1. Use Google Chrome as the browser.

Since this is an online exam, some agents have reported errors with submission when they used different browsers. To be on the safe side, Google Chrome is typically a good bet.

2. Study the review questions.

It is not unusual for the final exam to include between 30 and 40 questions taken directly from the exam study guides. Module quizzes are helpful for practicing and readily available online.

3. Be able to apply the knowledge from the training.

It is not enough to memorize facts for this exam. The test will ask participants to apply that knowledge to real-life situations, like examples of which plan would be best suited for a fictional beneficiary.

4. Set a sustainable pace.

With 50 questions and two hours to complete the test, the participants should allot about two minutes per question on the exam in order to finish in a reasonable timeframe.

Taking time to study, practice, and apply the knowledge learned in the training modules will set agents up for success when they become some of the 100,000 who take the AHIP Exam each year.

Click here to take AHIP at a discounted rate. 

Medicare Marketing

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Tips For Selling Medicare Over The Phone

The vast majority of Medicare beneficiaries will have their first conversations with an agent either over email or over the phone. Particularly since the pandemic, many people are more prepared to discuss, choose, and even purchase their plans over the phone rather than in person, in an office. With this in mind, here are some basic tips for successfully marketing and selling Medicare insurance plans over the phone.

How to Get Prospects to Call

In general, the nature of Medicare insurance plans means that outgoing calls or cold calls are not the most successful way to sell Medicare. Agents can call pre existing contacts, of course, and beneficiaries ready for re-enrollment, but in general, it is best to let potential clients come to you.

One marketing tip is to get involved in the local and wider community. An agent having a presence in their community means that, when people are ready for Medicare insurance enrollment, that agent will be the one they think of and are most likely to call. Some of the ways agents can do this is by writing newsletters in local papers, giving free seminars at local libraries, and getting involved with local business groups to network with local business owners. Community is where sales come from and opportunities as well. If the agent develops a reputation as an expert in their community, that will drive members of the community to them as needed.

How to Make Outbound Calls

There are many rules about making outbound calls as a Medicare insurance agent. They are rather strict, and the following is a list of what an agent can do:

• Call current enrollees, including those in non-Medicare plans, to discuss plans

• Return phone calls and messages to those who contact them

• Call with permission.  Examples include an online phone call or contact request or a business requesting a return call from the agency

These rules exist to protect beneficiaries, and are related to the ethics of selling Medicare insurance plans. The following are some of the things that agents cannot do:

• Make unsolicited phone calls to prospective beneficiaries and clients

• Call about other business and then switch topics to Medicare

• Agents cannot call about referrals – the referred person must call the agent

• Call someone who attended a sales event – the only exception to this rule is if the agent has express permission for this phone call from that sales event.  Proof of permission must be documented.

• Agents cannot call about whether or not prospective clients received something in the mail

With those rules in place, the most ethical and easiest way to generate business for a Medicare insurance agent is by getting people to call them; not the other way around.

Licensed agents – Selling Medicare Over the Phone

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Medicare Supplement OEP

The best time to buy a Medicare Supplement policy is during your Medicare Supplement Open Enrollment Period.  After this period, your options to buy a Med Supp (Medigap) policy may be limited and the policy may cost more. Many people are not even aware of what the Medicare Supplement OEP is.

The Medicare Supplement Open Enrollment Period is an opportunity for individuals enrolled in both Medicare Part A & Part B to enroll in a Medicare Supplement (Medigap) plan without facing medical underwriting or higher premiums based on their health conditions.  This means, insurance companies cannot deny you coverage or charge you higher premiums based on either  your health status or pre-existing conditions. This is very important for individuals with pre-existing health conditions, as they can secure coverage at a reasonable cost without facing medical underwriting or risk being denied a policy.

To see the benefits of each Medicare supplement plan side by side; click here

When is the Medicare Supplement OEP:

The Medicare Supplement Open Enrollment Period begins the first day of the month their Medicare Part B is in effect.  For many people, this is the first day of the month they turn 65.

This is a 6-month period that starts the first day of the month you’re 65 or older and signed up for Part B.  Once this time passes, there are fewer options to buy a Med Supp (Medigap) policy and the policy could cost more.

For example:  If Medicare Part B coverage begins on June 1st. then, the Medicare Supplement OEP starts on June 1st and continues for six months.  This means, it will end December 31st.

Those who delay enrollment in Medicare Part B due to creditable coverage through their large employer group plan will have their Medicare Supplement Open Enrollment Period when they lose group coverage and enroll in Medicare Part B.

Learn about your Medicare Supplement GI Issue rights

In some situations, there is a second opportunity for an OEP:

1.  If you are under 65 and have Medicare coverage due to a disability, there are 2 Medicare Supplement OEPs available to you.  The first is when your Part B coverage starts before you turn 65.  The next one starts when you turn 65.
2. Some individuals enroll in Medicare Part B and then choose to go back to work and receive employer coverage so they stope their Part B at that time.  Once they decide to retire again, they will re-enroll in Part B and therefore you start a new OEP.

Important:

You can enroll in a Medicare Supplement plan outside your OEP however, answering questions about your health history and medications is a regular practice. Your answers to these questions will determine if you the carrier accepts you into the plan or not.   This means, the key to enrolling in a Med Supp plan is; passing underwriting.

To avoid underwriting altogether, it is  best to apply for Medigap coverage during your Medicare Supplement OEP.

Watch out YouTube video on Medicare commission details

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Starting a Medicare Insurance Agency

If you enjoy helping others and  want to start your own business, starting a Medicare insurance agency could be a good fit for you.

The first thing you need to have is a solid understanding of Medicare:

You should familiarize yourself with the Centers for Medicare & Medicaid services (CMS) and their rules and regulations.  It is very important that you understand the various types of Medicare plans available and what they provide.

It is also a good idea to have Medicare sales experience. This will help you understand what it takes to be successful in the field and give you invaluable information to train your downline agents. Although there are some large Medicare agencies with owners that do not sell, they employ key people who do have sales experience that help ensure the success of the agency.

Some ideas to get you started:

1.  It is necessary to develop a business plan to help you get started
2.  Make sure you obtain all the necessary licenses and certifications to be complaint with all regulations.
3.  Establish a legal structure such as; sole proprietorship, partnership, limited liability company (LLC) or Corporation.  It is best to consult an attorney of advisor to help with this.
4.  Obtain all the insurance coverage you need including E&O, liability and in some cases, workers compensation.
5.  Develop a marketing strategy to promote your agency and gain public visibility. Create a website, social media platforms, print media and networking events.
6.  Decide what staff you need to run a business and make sure they are trained and ready to go.

Agency Contract levels:

The amount each contract level receives is regulated by CMS.  Each year, CMS puts a cap on the amount of commission paid for each sale.  This amount varies by state.

The different levels of contracts include:

1.  Street level – carriers pay the compensation directly to the sub agent with the override paid to the agency.  The amount of the override depends on the agency level.
2.  General agency or GA is the first agency level.  Agents at this level receive compensation above street level as well as overrides on any business written by downline agents.
3.  Master General Agency or MGA.  This level is achieved by meeting carrier requirements beyond that of the GA level for sales and downline agents.
4.  Senior General Agency or SGA.  There are even more sales requirements as well as a higher number of downline agents needed to achieve this level.

Please keep in mind, the number of subagents and sales that each carrier requires to reach the different contracting levels is determined independently by carrier.

If you have either a GA, MGA or SGA contract, your sub agents can still receive street level compensation with your agency receiving the override compensation.  Most carriers pay the street level  compensation directly to the sub agent while the agency receives the override payment.

More information about starting a Medicare Insurance agency:

Some agencies work with LOA (licensed only agents).  This means, the insurance carrier pays all compensation to the agency.  The agency then pays a agreed upon amount to the agent.  This model is commonly used by agencies who provide either low or no cost leads to their agents.  When this is the case, compensation levels can vary greatly, depending on what type of leads are offered.  Some agents receive compensation well below street when this is the model used.  With this set up, agencies generally own the book of business and may or may not pay out renewals.

Other agencies offer their agents street level contracts.  If this is the case, the agents receive compensation directly from the carrier as well as referrals.  In this instance the agent owns their own book of business.  Agent who are aware of the street level compensation amounts will rarely decide to work LOA under an agency.

You need agents to make up your agency::

To bring in new agents, you need to have something to offer them.  Provide them with leads or a lead program.  Make sure you offer training to them as well as be available to answer any questions they may have.

It is also a good idea to provide free tools that can help make writing business easier for them. Like online quoting and enrollment tools.

Click here to learn more about what to offer your downline agent

A proven training program helps your new producers build the confidence to get up and running. Training also helps low producing agents increase sales.  Many agents complain about uplines that do not provide the guidance they need to make sales.  Many agents are just looking for the support they need to become successful.

Most agencies use several strategies to recruit new agents.  Before you bring in anyone, decide if you are looking for agents who are already licensed and experienced or you want to bring on someone with no experience so you can train them from the ground up.  Whatever you decide, be sure you bring in someone who has the potential to help your agency grow.

How do I build the agency’s book of business:

The most important part of a Medicare business is finding qualified prospects and enrolling them in policies.  That is where finding a good source for leads is very important and finding the best way to work them.  Some agents do well on the phone while others may be great at presentations.  Maybe you like mailers.  This is something that you need to figure out.  Leads do not come with a guarantee.  Weather you make those sales or not depends on your ability.

The best lead source is word of mouth.  When you take good care of your clients, they tend to tell their friends and relatives.  This is free lead source and are invaluable.  That is why we cannot stress enough;  know your stuff!  Learn the plans and the enrollment periods.  Be aware of the marketing rules and everything in between.  This way you can ensure your clients get the best possible coverage and will stay on your books.

Learn about our T-65 Medicare Seminar Sales Program

Watch our YouTube video on best practices to build a Medicare agency

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How Do Medicare Commissions Work?

What attracts many agents to Medicare sales is often two-fold. One, they enjoy helping people.  And want to work with Medicare beneficiaries to assist them finding the coverage that is right for them and their family. Two, the commissions that can be earned through Medicare insurance sales.

Agents are paid commissions when they sell a Medicare insurance policy to a beneficiary, and often a smaller commission again if that beneficiary re-enrolls next year. Agents are paid directly from the insurance carriers, meaning that, although they are independent and often broker a wide variety of companies and policies, they are being paid for selling a company’s product. This is one of the reasons why transparency is so important for building trust with beneficiaries.

How Much Can I Make?

One of the most common questions asked by new agents is, “how much can I make on commissions?” And the answer is: that depends! Their compensation for Medicare Advantage, Medicare Part D (prescription drug coverage), and Medigap or Supplemental insurance is directly tied to the amount of enrollments and client retention they achieve. The Centers for Medicare and Medicaid Services (CMS) sets the maximum commissions annually. Within those maximum amounts set by CMS, insurers determine what they will pay agents for commissions, which can be different based on which product or contract they are selling.

CMS sets the maximums on a national scale, but they can also differ based on cost-of-living locally and other factors. For example, in 2022, CMS set the national maximum for a first time enrollment as $573 per beneficiary. But in California, where cost of living is significantly higher than in most other parts of the country, the maximum first time commission was $715 per beneficiary. For stand-alone prescription drug coverage plans, or Part D plans, the commission does not vary. The first time enrollment commission is $87 regardless of location.

For renewals, CMS does set their values for commission lower than for first-time enrollment. The same for what are known as switches, which is when beneficiaries choose different plans within the same insurance carrier. For Medigap, or Medicare Supplement plans, the commission amounts are not set by CMS. Rather, they are a percentage of the annual premium of the plan. Often, that percentage is close to 20% of the annual premium of the plan.

While commissions are not the only motivation for an ethical agent, they can certainly help increase an agent’s income with hard work.

Agent Resources

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How To Become A Medicare Agent

Although there are many facets to becoming a licensed Medicare agent, the job description at a glance is rather simple. You are marketing Medicare insurance to two groups of people: those who are 65 years or older and eligible for Medicare benefits, and those who are under 65 years old, disabled, and also eligible for Medicare benefits.

Here are seven simple steps:

Get your health insurance license

It goes without saying that agents should be well-versed, experts even, in all things Medicare. Some of the most common topics to study are deductibles, compliance, health care laws in your area, claims, and the general ins and outs of how Original Medicare works, as well as Medicare Advantage. There are courses that offer Medicare training, which must be state-specific. For most states, the prospective agent must take a course to study for the health insurance license. The course is led by an instructor, lasts about a week, and has an exam that must be passed at the end of the course. The other option is self-studying to take the same exam.

Some courses also offer life insurance certifications simultaneously – many agents choose to take advantage of this opportunity as the marketing group for Medicare and life insurance is often very similar.

Complete the AHIP Medicare training

Once licensed, the next requirement is passing (with a 90% minimum) the annual Medicare training and certification through America’s Health Insurance Program (AHIP). The Center for Medicare and Medicaid Services (CMS) is the agency that regulates Medicare plans, the agents who sell them, and the insurance carriers and brokers. AHIP certification typically starts in June and certifies those who pass for selling the following year. The exam is currently a cost of $175.   Our agents take AHIP at the discounted rate of $125.   Click here for details. 

Errors and Omissions Insurance

Even with the best of intentions, every agent will make a mistake eventually. This coverage, known as Errors and Omissions Insurance (E&O), will help in the event that a client decides to take legal action against you. If they feel that you gave misleading or incorrect information and decide to litigate, these policies can cover between one and three million dollars in coverage. Their cost however, is only $300 to $500 a year. Most carriers will not work with agents who do not have Errors and Omissions Insurance.  Purchase E&O here.

Contract with a Medicare Field Marketing Organization (FMO)

A Field Marketing Organization is a company that distributes health insurance plans to agents and agencies on behalf of the insurance carriers. Once contracted with an FMO, that organization will be able to help you get contracted to sell with multiple insurance companies, which increases both your clientele options and potential income. Some FMOs provide E&O insurance, as well as other benefits.

Get contracted with multiple Medicare companies

Each insurance carrier requires its own individual contract to sell their products. Most carriers require the following criteria be met before contracting with an agent:

• A copy of the agent’s health insurance license
• Proof of an E&O policy
• Legal questionnaire written by the carrier
• A background check
• Some carriers require their own specific annual certifications that pertain to their plans.

Complete annual certifications

Depending on the state, you may be required to complete additional continuing education training and certifications annually. These are essential to keeping your license active in your area. Some of the most common ones are hours of Ethics and Anti-Money Laundering Training and hours in your area of concentration as an agent, whatever that may be.

Maintain continuing education when required

Your FMO will provide additional information as to what is required to maintain your contract with them.  Most states have individual continuing education requirements. 

Through these relatively simple steps and some effort on your part, a career in Medicare sales as a licensed Medicare Insurance Agent is well within your reach.

Licensed agents

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