Of these four options, you tell me---what would you sell?
Here is where the problems arise. For example, if you are a “dual eligible” (on both Medicaid and Medicare), you should stick with Original Medicare because Medicaid will pay your deductibles and co-pays. Of course, the majority of agents will blow right by that fact and try to sell a dual eligible a Medicare Advantage policy they don’t need.
A second problem occurs when a senior has significant on-going medical expenses. This person in most cases should consider obtaining a Medigap policy to cover all of their deductibles and co-pays they are going to encounter with Original Medicare. Remember, however, that the agent’s company may not even offer a Medigap policy, or if they do, the commission is usually greater on a Medicare Advantage product (HMO/PPO). Thus, often times they are directed away from the Gap policy when this product would best meet their needs.
Referring back to the independent agents, they are going to market whatever company’s product provides them the greatest remuneration, plus they are not really knowledgeable in any one company’s offerings. Going further, some in house agents work for companies that offer a multitude of different policies, and since they often are not totally knowledgeable in all, they push the one that is easiest to understand.
Realize that an AGENT’S PRIMARY GOAL IS TO OBTAIN A HOME VISIT because these are the highest in closing rates. If they get you one on one, their odds increase dramatically to make a sale. However, do not despair, as we will tell you how to manage these visits.
When having agents come to my home, the first thing I always request is to see their provider list to determine whether my family doctor is a provider in their HMO or PPO. He usually is not on their lists and to a person (and I have had a multitude of visits), the agents attempted to convince me to drop my personal physician and go with one of the doctors in their network. Of course the primary care physicians in their network are always the best and I would be totally content if I switched to one of them. Sorry, I don’t agree.
We will soon go into a little more depth on how to handle agents in various settings. Realize, however, that there are agents out there that realize if they put your interests first, they will make more sales in the long run, and we will assist you in finding one.
While you would believe that insurance company and agent agendas would be identical, they actually do vary significantly and we will now take a look at what the true intentions are of both groups.
AGENT & COMPANY AGENDAS
COMPANY AGENDAS
AGENT AGENDAS
The goal of insurance companies when selling a Supplemental (Medigap) policy to you is to a set a competitive premium whereby they can cover your deductibles and co-pays associated with Original Medicare, and do so at a profit. Recall that Medigap policies are standardized by the government and the only variable is price. Medigap policies receive no federal subsidies and thus the higher cost.
In relation to the sale of Prescription Drug coverage policies (Part D), the object is also to establish a competitive premium that allows coverage of the cost of your prescription drugs, and as with Medigap, they receive no government compensation.
Since a premium of $39/month is the national average, they are not getting rich with this prescription drug product if they sell it only as an add on to your Original Medicare. Thus, they incorporate these plans into a Medicare Advantage policy (HMO or PPO) as an inducement to promote these more lucrative policies.
When being marketed to by print advertising, direct mail, or agents, you will soon notice that most are not actively publicizing Medigap policies and if they are discussing Prescription Drug plans, it is almost always in relation to convincing you to purchase a Medicare Advantage plan. The reason for this is simple, in most cases they make more money selling you a Medicare Advantage policy than Medigap or Part D coverage.
Thus, the main goal of the majority of Medicare insurance companies is to convince you to purchase a Medicare Advantage policy, usually in the form of an HMO. Remember, the government pays these companies $750 to $900/month to take over your health care and the one (and only) goal is to service your health needs for less than this amount. Unfortunately, ALL TOO OFTEN THE ONLY WAY TO ACHIEVE THIS GOAL IS TO DENY YOU HEALTH CARE YOU DESPERATELY REQUIRE.
In a quote from the Sarasota Herald (a major Florida newspaper 6/10/09), Dr. Fred Harvey states, “Insurance companies are not advocates for the health interests of their clients, although they would try to convince the consumer otherwise. Nor are they allies of health care professionals in the provision of medical services. Insurance companies are only interested in the profits of their shareholders and the bonuses for top executives.”
In support of this comment, Dr. Michael Sedrish, coordinator for the Medisys Health Network in NYC, stated in an AP story (8/30/09), “EVERY DECISION IS BASED ON NOT WHAT’S RIGHT FOR THE PATIENT BUT WHAT’S RIGHT FOR THE BOTTOM LINE.”
The key here is not to get all warm and fuzzy believing that these firms' main concern is optimum health care for your body. If you believe this, then you are probably that balding 68 year old guy with a beer belly who goes to Vegas and when approached by a sweet young thing in her 20’s, assumes it is because you are so sexually appealing. If you truly are this guy, I don’t think I can help you.
In your defense, however, when talking with my daughter’s friends, I am convinced they are trying to decide if I remind them of Clint Eastwood or Sean Connery. Possibly this is why my wife continually leaves the Yellow Pages open to the section “Homes for the Mentally Challenged.”
In all seriousness, just because these firms put their profits before your health, (if you owned such a company, you would do the same thing—it’s the American way), there are Medicare Advantage policies well worth having. The key is selecting a firm that is astute enough to realize that keeping you healthy is truly in their best interest and we will tell you how to find one.
In addition to cutting costs by rationing your health care, most firms utilize the services of independent agents who represent several plans. Since the majority of policies are sold during the enrollment periods of November 15 to December 31, and to a lesser extent January 1 to March 31, it is expensive to maintain a trained sales force throughout the year. Thus, independent agents allow payroll costs to be managed, and thus more profitability.
Problems arise when these independent agents are utilized, primarily because they have not received the extensive training the company agent has been given. Therefore, they simply are not as knowledgeable about the various policies a company has to offer.
As proof of this statement, a study by the Oklahoma Insurance Department revealed a major Medicare Advantage company provided 120 hours of training for in house agents as opposed to 16 hours for independent agents (California Health Advocates/Medicare Rights Center—The Reluctant Regulator). The moral of the story—STICK WITH IN-HOUSE AGENTS!
Since we have just taken a somewhat disparaging view concerning insurance company motives, what about those people out in the field representing them? You’ve heard of “location, location, location,” just substitute the words “commission, commission, commission.” As Tom Cruise said, “Show me the money!”
In fairness to agents, we cannot blame them for gravitating toward marketing policies that are the most lucrative (they have to feed their family too). UNFORTUNATELY, THE POLICY THAT MAKES THE MOST MONEY FOR THE AGENT IS NOT ALWAYS THE BEST OPTION FOR YOU.
To enable you to understand how these commissions work, and believe me there is very little information available on the subject, you need to know the magnitude of this compensation.
• Second, Medigap commissions are generally less than those for Medicare
Advantage plans, so now you understand why most agents do not promote
their company’s Medigap plan as opposed to the HMO and PPO plans.
• Third, Prescription Drug plans usually earn the agent $50 for the first year
and $25/year for each of the next 5 years---not going to get rich this way.
• Fourth, a Medicare Advantage plan generally pays a commission around
$400 initially and $200/year for 5 years.
• First, an agent receives no payment telling you how to enroll in
Original Medicare, so obviously they will tell you that this product
will not adequately cover your health care needs.
I literally have dealt with over 100 different agents and while some are highly professional and realize that the best profits are achieved when they put your interests first, others have the same ethical make up as Bernie Madoff.
The primary focus of this website is to assist you in making Medicare insurance decisions. However, let’s digress for a paragraph and provide a few tips to agents on how to effectively market to us.
• Always furnish potential clients a provider list.
We do not trust agents or companies that do not
supply this information first thing because it
appears they have something to hide. Furthermore,
we like to look up our doctors ourselves as many
seniors are somewhat embarrassed how many
doctors they see on a regular basis.
• Don’t talk to us like we are little kids. Time and again agents who run
community meetings, and even in some home visits, talk to the group
like they are 5th graders. Most of the people in attendance are quite
lucid and intelligent, and they are genuinely offended when you talk
down to them.
• Do not imply that we are older than dirt. Most 65 year olds plan on 30
more good years and you should market your product with this in mind.
Try to find your client the best plan for them so they can put this
decision behind them and enjoy their lives.
• If a potential client looks no more than 65, or possibly less, comment
that they don’t look old enough to be eligible. I’ve waited all year for
someone to say this to me, but for some reason it just has not happened
(maybe I should look in the mirror). Anyway, if an agent had said that
to me I would have said, “WHERE DO I SIGN UP AND ABOUT
THAT $500/ MONTH PREMIUM - NO PROBLEM!”
Now that MedicarePhD.com has enlightened you on the true motives of both companies and agents, let’s proceed to educate you on the various forms of marketing abuse that you are sure to encounter.
MEMO TO AGENTS
• 95% of agents will not follow this final suggestion, but you should truly
try to determine what is the best type of policy for the specific individual
with whom you are dealing. One shoe does not fit all and pleased
clients are worth their weight in gold for their referrals. Think how my
agent felt when she found out I chose her when composing this website.
For example, I had an agent from a smaller plan do a home visit and he informed me that his company referred to those of us turning 65 as “Agers.” I told him we call agents like you “Fat & Stupid.” Not really, but I should have.
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MedicarePHD.com is for informational purposes only and does not render legal advice.
If you have specific legal questions, please contact your attorney
