If you are a Medicare Supplement agent, then you’re probably already aware that Jan. 1, 2020 is the date designated for the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) to take effect. But what does that mean exactly, and how does it affect your clients and your business?
Let’s begin by drilling down a bit further. What is MACRA? President Obama signed MACRA into law, on Apr. 16, 2015 as a piece of bipartisan legislation. It covered the doc fix and new Medicare ID cards. In a compromise reached with the National Association of Insurance Commissioners (NAIC), the legislation targets first dollar coverage for Medicare Supplement for those aging into Medicare. It states that individuals who become newly eligible for Medicare as of Jan. 1, 2020 or after, will not have the option to purchase Medicare Supplement plans which cover the Part B deductible.
This spells significant change, not only for clients, but also for agents who sell Medicare Supplement policies as a part of their business. The availability of certain plans will change considerably, on the Jan. 1, 2020 date. Specifically, some of the current plans, which have been popular in the past, will no longer be available to new participants. These include Plans C, F, and High-Deductible F. States with their own Medicare Supplement plan designs like Massachusetts, Minnesota and Wisconsin are also affected. Other plan types will fill the void created by this change. These include Plans G, N, and the new High-Deductible Plan G.
How does MACRA affect clients enrolled in Medicare on or prior to Dec. 31, 2019? For these clients, in essence, there is no change. These clients will be eligible to keep their current plans. In addition, they will have the option to purchase any plan that covers the Part B deductible. In most cases, enrollment will be subject to underwriting and you could see some aggressively priced plans C and F.
The bigger question is, how does MACRA affect clients that become eligible for Medicare Jan. 1, 2020 and after? Those who do not become eligible for Medicare until this date or later will not be able to purchase a Medicare Supplement plan which covers the Part B deductible. However, they will have plan choices which include cost-share options. Plans D and G will be subject to guarantee issue as well as open enrollment, and pricing will need to take that into account.
What does this mean for the agent? In addition to focusing on the needs of your client, you will have to make a distinction between those clients eligible for Medicare prior to Jan. 1, 2020 and those who did not become eligible until on or after that date. That distinction is important because it will determine which products you will be able to sell to those clients. In addition, since your clients look to you for guidance, they will expect you to be able to explain to them why these plans are available to some, but not others. Many agents will sell plans D or G and N to those aging into Medicare. Many carriers will likely increase agent commissions on Plan N to encourage sales of this plan type. Any agent stating that “starting in 2020, plan F goes away” is not accurate and stating so is likely to be considered a scare tactic.
What does this mean for Medicare carriers? First of all, carriers have the responsibility of educating their agents on the ins and outs of MACRA. As a result, Agents should be seeing guides and webinars on this topic from proactive carriers as the Jan. 1, 2020 date grows nearer. Also, many carriers are developing communication programs directed to their existing policyholders to let them know that there will be no change to their coverage. In addition, many carriers are working towards being able to sell Plans G, N, and the new High-Deductible plan G by the Jan. 1, 2020 date.
As you can see, MACRA acts as a catalyst for change, but change isn’t necessarily a bad thing. Knowledge concerning this change is key to being successful in 2020 and beyond. Senior Market Sales (SMS) is there to help you in this regard. Do reach out to a marketing consultant at 1.800.786.5566 with any questions.