Medicare Supplement Rate Actions – 2024 Q2 Update

[GailL1]

  FYI

  TELOS Actuarial - Medicare Supplement Rate Actions – 2024 Q2 Update

These are open booked plans not closed booked.

[RussellP197074]

What are the Year over Year rate increases by percentage?

Starting in August of 2023, we paid a total of $464.34/month for Male turning 73 on 8/10/23 and Female turning 70 on 8/28/53. No change through May 2024.

June 2024 it split and increased to $245.50/$279.25 for my wife and I. Total $524.75 a 13% increase from 8/23

July 2024 it increased to $245.50/$290.50 for my wife and I. Total $536.00 a 15.4% increase from 8/23

August 2024 it increased to $256.75/$290.50 for my wife and I.  Total $547.25 a 17.8% increase from 8/23

Does the percentage increase in your link indicate quarter over previous quarter or total for the year?

Our new Plan F with CIGNA will cost us ~$360/month total for both of us  ($547 - $360) x 12 equals  a savings of $2244/year if the rates stay the same.  Plan F should have similar data to what you have in your link.

[Tonster521]

@RussellP197074 As you know, every insurance company develops their own rates/premiums. An important factor is the amount of claims paid. First and foremost, the premium needs to cover the cost of claims and their corresponding administrative costs. Otherwise, an insurance company is on the road to becoming insolvent. There are reserve requirements established by the States as well.to ensure an insurance company has money/assets to pay claims if something negative happens.  To keep it simple, I am providing a link to information collected by the National Association of Insurance Commissioners (NAIC) wherein data regarding aggregate premiums and aggregate claims are recorded for certain years. Many insurance companies use around 80% of the aggregate premium to pay claims. The leaves around a 20% margin which is not very good. For comparison, Apple has an operating margin of 29.56% as of June 2024. And, McDonalds has an operating margin of 33.3% as of June 2024.

Every State Department of Insurance reviews and approves premiums for all insured products an insurance company offers in their jurisdiction. They use their best analysis/practices to ensure that an insurance company has a sufficient amount of premiums to pay claims as well as administrative costs which include customer service. Your switch to Cigna Plan F may have initially included discounts for you and spouse (bundled approach), internet enrollment (no broker) and automatic payments (debits to bank account). In other words, they are buying your business. Hopefully, the premium stays reasonable, customer service is good, and your doctors accept Cigna.

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://content.naic.org/sites/default/files/publication-med-bb-medicare-loss-report.pdf  The report is a chrome extension. Hopefully, it loaded correctly. If not, simply search for it via your search engine (i.e., google, etc.). It is a lengthy report. However, data that starts on pages 46 and 89 may be informative. 

[GailL1]

@Tonster521 wrote- 

. . . . Hopefully, the premium stays reasonable, customer service is good, and your doctors accept Cigna.

============================

We also should not forget that Medigap or a Medicare Supplemental policy isn’t really health insurance - it is more closely related to a financial protection insurance policy - like GAP insurance.

A Medigap insurer makes NO decision about a claim other than what type of Medigap plan you may have so they pay accordingly AND IF and WHAT Medicare paid for the service.  If Traditional Medicare does not pay for a health service or provider, then the Medigap plan doesn’t pay either.

Providers just have to agree to accept Medicare in one of two methods.  As a:

1.  participatig provider or one that accepts Medicare assignment OR

2.  a “non-participating” provider where they will bill Medicare for what they will pay for a covered service but then are allowed to collect more from the beneficiary -up to 15% more as the “limiting charge”.

https://www.medicare.gov/basics/costs/medicare-costs/provider-accept-Medicare 

If they are a non-participating provider - Medicare doesn’t pay and neither would any Medigap plan.

But I would imagine that the insurers method of setting premiums for a Medigap plan is similar to what you described UNLESS they are a closed book plan then if so, these premiums are figured a bit differently since closing the book makes these plans rather unique and expensive.

Some Medicare insurers are notorious for closing book on their policies. It is kind of hard to explain but in general it happens when rates go up on a Medigap plan like maybe it was originally a lower premium cost policy and people were drawn to it for that reason.  Then premiums begin to rise and people leave it if they can according to their health condition (underwriting) or a state law that permits switching medigap plans.

When rates go up and customers leave a plan the insurer has two choices:
*keep it open knowing they are not competitive and bleeding $$$$

 OR 
*close it to new policy holders to limit the bleeding $$$$

The 2nd or “close it to new policy holders to limit the bleeding of $$$$ is called closing the book.

In a way, it seems to me, that any medigap plan that is closed by Medicare is a type of closing book.  Cause no new enrollees are permitted after a certain date and thus the closed plan (like Plan F) is just gonna get more expensive as time goes by and beneficiaries either leave it OR those that remain just keep getting sicker and older - with no new blood coming in to offset the process.

Since @RussellP197074 is in a state where he (and wife) can change medigap plans according to their law, he should be ok - 

The only concern I would have is if a {state authorized) change takes place then the choice to change in most states is to choose a plan that is equal to or less than the current plan - like leave Plan F for Plan G - but what happens IF the Part B deductible skyrockets or what if CMS decides to also discontinue Plan G.  They if a beneficiary is leaving a Plan F for a lesser plan, the longer one waits to pick up the lesser plan the more expensive it is gonna be in the deductible, the premium or it could be unavailable at all.  

[Tonster521]

@GailL1 Thanks for your positive reply. I agree with your analysis. Developing a premium (i.e., Medigap, MA, HMO, etc.) or the contribution toward the amount of the premium (i.e., Medicare Parts B and D) are complicated. There are detailed factors that most folks are not aware of (i.e., Medicare determined fees, reinsurance, drug subsidies, State subsidies, if applicable). Many folks are not aware that Parts B and D are subsidized approximately 75% by Medicare which is basically the taxpayers. The Trustees Annual Report provides the Actuary's analysis which is, at best, an educated projection for the next year. However, over time, the pluses and minuses balance out. I am sure that the insurance companies utilize some of those projections to develop their premium for the insured coverage (i.e., Medigap, MA, HMO, Drug Plans, etc.). 

With regard to Medigap coverage, there may be situations wherein the insurance company no longer coordinates with Medicare Part A - Hospital Insurance. Although not common, there are folks that never reinstate their benefit period for hospital coverage (60 day provision) and exhaust their total hospital days including reserve days. Their Medigap coverage becomes primary since Medicare no longer will pay due to depleting the hospital days under Part A . I have seen this happen for folks with recurrent admissions (less than 60 days apart) due to respiratory illnesses. Medicare hospital days will become available again when one satisfies the 60 day period. This is a huge cost for any Plan. I suspect that the Medigap plans do not have the volume with hospitals. So, discounts will not be as great as the managed care plans where hospital networks are utilized. This cost may be a contributing factor for Medigap Plans which result in greater premiums for the folks who elect such coverage.

[RussellP197074]

I seem to remember seeing a list of Medigap Plan types with the number of subscribers in each.  I think Plan F still has the greatest number, with Plan G next. There are probably more than either one that is in Medicare Advantage.  My guess is that a lot of those in MA will soon be trying to get into either Plan G or Plan F, if they started Medicare before 2020.  If they are able to, with or without underwriting, and they do qualify for F, I can see a lot of them going that way.  This might help to maintain the size of the group for a while longer.

[GailL1]

It’s all actuarial and I am not an actuary - I just posted the link so that people here could see that all plans are increasing - as always, some more than others.

Plan F (and other now discontinued plans) are outliers mainly because they are discontinued plans -

Think about it - a plan where NO younger and healthier people are being let in anymore to help balance out those that are getting older and most likely sicker.

 Discontinued plans always escalate in premium cost because of that condition.    Remember the ratings are done by the insurers by plans - 

I hope you have picked your plan well but if you stuck with staying with Plan F I believe you will continue to see your premiums go higher just because the plan is no longer available to new beneficiaries.  

[RussellP197074]

I checked for the difference between Plan F and Plan G. At most it was about $3 per month difference after factoring in the yearly deductible divided by 12.  I can always get Plan G when a birthday rolls around if the difference become great enough to make it worth dealing with the billing until the deductible is met.