Medicare sales can be quite vanilla. Based on our client’s medical needs and budget concerns, it really comes down to a choice between Original Medicare with a Supplement (plus Part D) or a Medicare Advantage plan. There are many ways you can inform your clients about the advantages/disadvantages of both to help them understand which coverage is going to serve them best, and the better we teach this the better we can sleep at night knowing we’ve done an exceptional job. With enough practice it quickly becomes second nature, to the point where each sale can seem too routine at times. Then, we’re presented a case that breaks the norm and forces us to dig deeper into the available options, plan benefits, stability of the carriers and future options that can throw our routine right out the window.
Turning 65? Retiring and losing group coverage? These are simple. Qualified for Medicare due to a disability? Pump the brakes.
According to recent numbers from CMS, approximately 16% of the Medicare population qualifies due to a disability and are under the age of 65. These clients pose some interesting challenges and will require a deeper attention to detail than our “vanilla” cases. There are many aspects to consider and each situation should be handled individually, but let’s break it down to the two most common types of disability clients and give you some tips on what to look for and how to handle each case.
Qualified due to End Stage Renal Disease (ESRD)
These clients should always consider a Medicare Supplement plan, period. That is, if they can afford it and if there are plans available. Depending on the state, there may or may not be options available to those under 65, and then there comes the sticker shock as these premiums can be anywhere from 2 to 6 times more expensive than the same coverage for a 65-year old. It’s also important to note that these folks do not qualify for a Medicare Advantage plan unless an ESRD Special Needs Plan exists in their county, but the availability of these plans are few and far between and usually do not pay commissions.
Here is a list of states that currently require carriers to offer plans to folks under the age of 65: CA, CO, DE, FL, GA, HI, IL, KS, KY, LA, MD, ME, MN, MO, MS, MT, NC, NH, NJ, NY, OK, OR, PA, SD, TN, TX, VT, WI. All states with the exception of Kentucky and Vermont will take an ESRD client within 6 months of their Part B enrollment, and NY will take them at any time as they do not allow carriers to underwrite their clients. Even with this list of states, there could be restrictions in regards to the plans offered or specific ages this applies to (for instance, New Jersey only offers Plan C for people between the ages of 50-64).
So, if you live in a state that has Medicare Supplement options available to your ESRD clients there are two main things you need to consider when investigating plans:
- How long will the client be on Medicare prior to turning age 65? Ideally the client will find a kidney donor and receive a transplant. They would then lose their Medicare benefits shortly after but hopefully they will be back in the work force and covered under group insurance until they reach age 65 and qualify for Medicare again. Unfortunately there are many individuals who will deal with ESRD for many years, even a decade or more, so we need to be conscious of how long they can expect to be on their Medicare Supplement plan paying those high premiums, since they will not be able to change plans due to underwriting restrictions.
- Did they sign up for the most competitive premium? Let this be a fair warning that the company that offers the lowest under age 65 premium won’t be the lowest under age 65 premium for long. And, if your client is in his/her mid 50’s with an expected length of coverage on their Medicare supplement plan of 10 years or more, you may want to pick the 3rd or 4th most competitive plan available. You see, the plan with the lowest premium is going insure the most folks under age 65, and those individuals are dealing with high medical costs due to their disability. We’ve seen it with numerous carriers in numerous states, where the most competitive plans increase their rates drastically to stop the influx of unhealthy business and deter any further entrants. You need to look past the attractive rate and pick a plan that will be stable for your clients for the long haul, and remember, when they turn 65 you can sign them up for any Medicare Supplement plan at the age 65 rates they want.
For ESRD clients that cannot afford a Medicare Supplement plan or don’t have one available to them, they will have to stick with original Medicare for now, but in 2021 they will be allowed to enroll in a regular Medicare Advantage plan thanks to the passing of the 21st Century Cures Act*. You can also read the handy Medicare Coverage of Kidney Dialysis and Kidney Transplant Services from Medicare.gov for more tips and resources.
Qualified due to receiving SSDI payments for 24 months
These are the most common individuals that qualify for Medicare under the age of 65. They qualified for Social Security Disability Income payments, have been receiving them for at least 24 months and are now eligible for Medicare benefits. These individuals have a choice when it comes to their coverage; they can stay on Original Medicare, pick up a Medicare Supplement if available, or join a Medicare Advantage plan. For these clients, it really comes down to doing the math associated with their healthcare needs and seeing where they can receive the best bang for their healthcare buck.
We know they are dealing with a medical condition, hence they are on Medicare due to a disability, but the severity of that condition and the medical needs will vary greatly from one client to the next. With such a wide scope of situations, the best gauge for choosing between a Medicare Supplement or a Medicare Advantage plan comes down to cost, and it’s not too difficult to plug in the numbers. Let’s run through a scenario I was helping an agent with this week and guide you through the conclusion we came up with.
52 year old man who was permanently disabled due to deterioration in his spine, he was an ex-bricklayer. The least expensive premium for him was $333 per month with the next carrier in line being $439 per month. Seeing as the difference in premium from #1 to #2 was over $1,200 per year, and we know he would be on the policy for over 10 years, we were comfortable making that recommendation even with the potential rate increases. Then, after running his medications through Medicare.gov and picking a competitive pharmacy, we came up with a drug plan that was $56 per month. Let’s recap:
$333 premium for Medicare Supplement + $56 premium for Part D = $389 per month, or $4,668 per year
Almost $4,700 per year for his healthcare seemed steep, so we dug into exactly what his medical needs were. He sees his primary about twice per year and his orthopedist every 6 months along with a fresh set of x-rays to see how things are going. So, we’re talking about relatively low utilization, and now that $4,700 seems quite ridiculous since we know that Medicare Supplement premium is going to rise each year. We then looked into the Medicare Advantage options available in his area and luckily we found one that covered his medications and had his doctor, specialist and even the local hospital in network. Now, minus the cost of his drugs, he was at:
$0 premium MAPD + 2 PCP visits at $15/visit + 2 specialist visits at $50/visit + 2 x-rays at $17/set =$164 annually.
We were able to find a good $0 MAPD plan that would give him the coverage he needs for around 3% of the cost of a Medicare Supplement and Part D plan. It was even quite surprising to see that the out of pocket maximum on the MAPD plan was less than the $4,668 we quoted him prior. After the agent explained all this to the client I’m glad to say they sent in an enrollment for the MAPD plan already.
This is just one scenario, and in this case it turned out better for the client to be on a Medicare Advantage plan. There are other situations, like folks receiving Part B covered injections, that would be better off with the coverage that a Supplement offers.
We can fall into a routine with our Medicare sales, but it’s cases like these that give us the chance to dig a little deeper to help our clients. And, the added effort to help folks on Medicare due to disability will create clients for life.
*McDermott Will & Emery “21st Century Cures: Congress Enacts Medicare Advantage and Small Business Insurance Market Reforms”