Baby Boomers and agents, you are about to get what many of you wished for — health-care reform.
This so-called reform is affecting these two groups tremendously, and not in good ways. Premiums are going up, and commissions are going down.
If you are a Baby Boomer aged 50 to 64 and are lucky enough to have group or individual health coverage, you are already aware of how costs have escalated over that last few years. As the new health-care reform comes into play, I do not see any relief to this situation. Insurance companies will be required to offer more benefits with lower profit margins. To accomplish this, insurers are trying to diminish the role of the insurance agent and reducing our commissions.
If consumers are forced to buy health coverage without the help of an agent, they could find themselves with policies that are not what they thought they purchased. Fraudulent health insurance companies are preying on people. Health insurance can be very confusing to the average consumer. This is where insurance agents come in — to help and educate the consumer.
The Florida consumer currently has limited choices for individual or group health insurance. Over the last few years, the number of health insurance carriers has diminished because of acquisitions or carriers leaving the market.
Group policies are guaranteed issue and are therefore more expensive, but usually offer richer benefits. Currently, individual rates are based on age and are medically underwritten. These plans can be rated up, conditions can be ridered out or even declined, and Boomers are paying the highest rates. Under the reform, by 2014 all individual plans will be guaranteed issue similar to the group plans. By then, the rates will have increased tremendously because of mandated changes. What good is guaranteed insurance if no one can afford to buy it?
In an article in Senior Living, Sharon O'Brien referenced a report from The Commonwealth Fund that revealed that over 60 percent of adults who are working (or have a working spouse) have been diagnosed with at least one chronic health condition such as high cholesterol, high blood pressure, cancer, or heart disease. The report also stated that one-fifth of older workers and their spouses — approximately 7 million Americans — have no health coverage at all. If these Americans cannot afford to pay for their health coverage now, how are they going to pay for it after the reform? The answer from our government is they are not going to have to pay for it; the rest of us will.
Boomer Choices
Starting January 2011, a record number of Baby Boomers will start turning 65, approximately one every 10 seconds.
As Boomers become Medicare-eligible, their health coverage choices are numerous: Medicare Advantage Prescription Drug Plans (MAPD), Medicare Supplements, and group health. MAPD plans offer PPO, POS, or HMO products.These plans usually include prescription coverage along with some vision and dental benefits; some even offer a gym membership. The MAPD plans have a fixed doctor and hospital network as opposed to Medicare Supplements, which allow members to see any participating doctor or hospital. These MAPD plans usually have either a very low or no monthly premium. However, out-of-pocket co-pays can be high. In some plans, hospital stay co-pays are unlimited.
As Medicare starts cutting reimbursements to hospitals and doctors, out-of-pocket costs will get higher. I believe massive changes are coming in the Medicare Advantage plans, one more reason why the agent is so important in helping Medicare-eligible clients choose the correct plan.
Supplements and Donuts
Those 65 and older who are still working and are in group plans with less than ten enrolled employees can remain on those plans and use them as Medicare supplements. The premium decreases considerably compared to the 60-64 age bracket. In groups of ten or more, employees 65 and older can remain on their group plans and use them as supplements, but their premiums will not change. For employees taking numerous prescriptions, however, remaining on group coverage might be a better choice because it would eliminate the prescription "donut hole."
Medicare Boomers also can select from the alphabet-soup of Medicare Supplement plans: A, B, C, D, F, HDF, G, K, L, M, and N. In June 2010, plans M and N were introduced. These are federally standardized plans that cover the hospital and doctor costs that Medicare does not. They offer the most freedom, with no provider or hospital networks as long as the doctors participate in Medicare.
Medicare Supplements charge a premium that varies by age and ZIP code. Many clients select the high-deductible F plan or the new plan N because of the premium cost savings. Clients who select a Medicare Supplement plan also have to purchase a Part D prescription plan or they will be penalized. These Part D plans offer co-pays for prescriptions, until the donut hole. During the donut hole, participants will pay 100 percent of the cost of the prescription. Once out of the donut hole, there are co-pays for drugs.
I would be remiss if I also did not touch on Boomers and long-term care insurance, which can be purchased as individual or group policies. While this can be fairly expensive insurance, it has become a necessity for Boomers healthy enough to buy it. Do not think that the health-care reform will take care of the needs of home health care, assisted living, or nursing home care.
As agents, we have a responsibility to educate our Boomer clients and make sure that they have sufficient long-term care insurance to cover their future needs — and the right health plan now to cover their current ones.
Richard Schwartz is president of the Insurance Center of South Florida in Coral Springs. He may be reached at 954-255-1000 ext. 22 or rschwartz@insurancesfl.com; www.insurancesfl.com.
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