Guaranteed Issue Killing Medicare Supplements
All states have guaranteed issue opportunities on Medicare supplements for reasons such as being new to Medicare or losing employer coverage. When I say “guaranteed issue killing Medicare Supplements”, I am referring to states offering GI on a year-round basis. Technically the 4 states offering all time GI are NY, CT, VT and MA. Of those 4, NY and CT are the ones that have no stipulations. Members can move from Medicare Supplement to Medicare Supplement or from a Medicare Advantage to Medicare Supplement through any election method and never be subjected to underwriting. It is for exactly this reason the Medicare Supplement market is falling apart in CT and NY.
More on all time GI vs. GI in most states
As stated above, Medicare supplements are guaranteed issue in all states for certain situations. All states must give members a GI opportunity to enroll in a Medicare supplement when they are first eligible for Medicare. Those who delay part B enrollment have a GI opportunity when they enroll in Medicare part B. There are other GI periods in all states such as losing group/employer insurance, Medicare Advantage Trial right, moving to another state and some others. However, once someone is enrolled in Medicare and have gone past their Trial Right period, they cannot move to a Medicare supplement without underwriting in most cases. There are states that have annual opportunities to move on a GI basis through birthday rules and anniversary rules.
How are states with all time guaranteed issue killing Medicare supplements?
The problem with all time guaranteed issue Medicare Supplement states is the adverse selection they create. It is very common for someone in NY or CT to enroll in a Medicare Advantage plan when they are first enrolled in Medicare. The member will stay on the advantage plan while they are healthy and then move to a Medicare Supplement when they start to have health conditions and are paying substantial annual amounts in copays. As a result, the Medicare supplement plans in NY and CT are more often than not taking on members that have multiple health conditions and are utilizing high amounts of care. In many cases, the people moving to Medicare supplements have severe health conditions generating substantial cost for the Medicare Supplement plan. This level of adverse selection has led to very high prices for Medicare supplements in both states.
Rate comparison in all time GI states vs. states that allow underwriting
A plan G Medicare supplement in Putnam County, NY cost $266.50 a month. A plan G in CT is cost $226 a month. How does that compare to states that allow underwriting on Medicare supplements? Some examples: A plan G for someone turning 65 in Ardmore PA cost $125 a month, Washington, DC is $116 a month, Dallas Texas is $109 a month. Look up rates in any underwritten state and they will be substantially lower than NY and CT
Guaranteed Issue Killing Medicare Supplements: What is the end result?
The rates in both CT and NY will continue to climb. Insurance carriers will stop offering them in NY and CT and and/or stop paying agents commission to sell them. There are only a few major carriers in lower NY and one of them stopped offering Medicare supplements in July of 2023. Inevitably, carriers will stop paying agents’ commissions to sell Medicare supplements. This is already happening in upstate NY with most plans being non commissionable. Carriers have also started to reduce and will ultimately eliminate them in the entire state. Connecticut will not be far behind. The other states offering most time guaranteed issue (VT and MA) will trend towards the same outcome.
The solution
The fix is very simple. NY and CT should allow underwriting on Medicare supplements outside of the normal GI situations. It would resolve the issue very quickly. New carriers would come into the state and rates would go down over time. The unfortunate reality is this will likely never happen. All time guaranteed issue will stay in place and Medicare supplements will become unaffordable to most.