Medicare Advantage Plans are sold by insurance agents. Medicare supplement plans (aka Medigap) are also sold by insurance agents. As I’ve posted elsewhere insurance agents typically make much more in commission the first year you sign up for an Advantage plans than they do supplements. That being the case many agents really push Advantage plans with their clients.
So my question is once an insurance agent turns 65 and ages into Medicare what do they choose? Let me tell you a story….
I was recently at a meeting organized by one of the major insurance carriers. The big topic was open enrollment. Open enrollment happens each fall between October 15th and December 7th. It is during this period of time that people can change Medicare Advantage Plans or Part D plans. Many people don’t realize that this open enrollment period does not apply to Medicare Supplements. Supplements can be applied for all year long.
There’s more profit in Medicare Advantage Plans
Open enrollment is the opportunity that these insurance companies froth over every year. The goal is to get us excited about selling their specific Advantage plans. They talked to us about how much money the company made when they sold Medicare Advantage. The regional manager talked about how much more money she made when Medicare Advantage plans are sold. Finally, they talked about how much money we agents make when we sell Medicare Advantage plans.
Medicare Advantage plans are subsidized by the government and very profitable for the insurance companies. In fact, the sicker you are the more money they make! So they spread those extra dollars around to their sales force as much as they can. Most companies that sell Advantage Plans also sell Medicare Supplements, but their emphasis is on those Advantage plans.
At some point in the presentation this company was giving they finally had a break. The regional manager got up and there was about 15 of us agents sitting there talking. Of those 15 agents 12 were already over the age of 65 and were in the Medicare system. How many of those 12 agents had the Advantage plans that the insurance company wanted us to sell so badly?
Exactly, zero. Nada. Not one. Nobody. So before you sign up for Medicare Advantage plans ask yourself and your agent a few questions. How much money do they make off of Advantage plans vs supplements in commission? If they were in the Medicare system which one would they go with? See if they blink.