Ask The Medicare Specialist

Question from Jay: I'm with one of the Supplement companies you listed in the Aaron's Advice article on your Facebook group last week who are getting a big premium increase this summer. Can you explain why this is happening? I don't recall any higher than 5% in the past. What are my options? Do I need to wait until the next Annual Enrollment Period in October to change plans?

Answer: Let me first let everyone know what companies have announced higher-than-normal rate increases. AARP/United Healthcare and Aetna Supplements will go up 15% to 18% effective June 1st on Plans N and G, while All State just under 20% starting August 1st. Those on All State and Aetna won't see their rates increase until their policy anniversary date. For example, if your original Supplement effective date was in November of any prior year, you won't pay the higher rate until this November, not in June. If your original effective date was March, your rate won't go up until March of 2026.

It's a bit more complicated for those with AARP Supplements because they have two different books of business. Those on the newer AARP plans are with United Healthcare Insurance Company of America (UHICA) and have lower rates. The older book of AARP Supplements is United Healthcare (UHC) and those premiums were quite a bit more expensive at inception. Those with UHC policies will pay more in June regardless of what their policy anniversary date is. I recommend those who have any UHC Supplement plan reach out to us right away. You were already paying too much before this rate increase.

The Health Insurance Store has over 1,000 clients with these three carriers and the increases represent the highest we've seen in 15 years from companies we've recommended. We're concerned to say the least, both in the short and long term.

There are factors which are causing less premium stability and predictability than we've seen in the past. Although I still love the benefits of Supplements, the best of which are very low out of pocket costs, nationwide access to doctors and hospitals, and no need for prior authorization on medical services, it does appear that moving forward, they're going to be more expensive as companies get approved for higher rate increases as profits shrink or losses occur. FYI, Supplement companies can't raise premiums at will because they want their stock prices to go up or the CEO desires a big raise or bonus. They must apply for premium increases and prove they're necessary to the Pennsylvania (or other state) Insurance Commission before they can apply them to consumers.

Let me explain what I've discovered to be contributing to these significant premium hikes. During COVID, many people put off getting outpatient surgeries such as knee and hip replacements, rotator cuff and meniscus tears, among others. After the scare of COVID subsided, people scheduled them in 2023 and 2024, and many companies had bad years financially. It also appears that people are simply utilizing more health care services than in the past.

There are two other concerns. One I've recently been paying attention to are accusations that some hospitals and health care systems are "claim stacking," as I heard it referred to, or billing Medicare for as many different codes as possible during a hospital stay or procedure, some that weren't necessary and others that may not have actually been performed or provided. Because patients don't have any additional costs regardless of the number of claim codes filed for a hospital admission, they rarely review or question what is billed.

The combination of Original Medicare and a Supplement provide such comprehensive coverage with little or no out of pocket costs for CT scans, MRIs, surgeries, X-rays, infusion or injection therapy, etc., those on Supplements can sometimes be seen as a blank check so to speak.

In the articles I've read on the subject, it's been mentioned that health care systems and hospitals are pressured to find every possible charge because reimbursement rates from Medicare, as well as Advantage Plan companies, can be low. It's not a secret that many hospitals are struggling financially. Although sources reporting on this topic didn't name specific health care providers, I believe it could certainly be occurring and have met clients who had concerns it happened to them.

The other trend that's causing rate increases and started a few years ago is the substantial amount of people enrolling in Advantage Plans when they turn 65 or go on Medicare Part B for the first time as agents push them extremely hard because they pay much higher commissions than Supplements. These agents only recommend Supplements to people who they know are going to need expensive services such as chemo or other infusions, injection therapy, or dialysis that are very costly for those on Advantage Plans but no charge with Original Medicare and Supplement Plans C, G, F, or N. The result is Supplement companies are getting too high a ratio of sick enrollees versus those who don't frequent the doctor or hospital. For Supplements to be profitable and keep rates reasonable long term, they must have lots of healthy members which many companies aren't getting enough of an influx. Far too many agents aren't recommending or even giving healthy people the option of a Supplement. I estimate that 75% or more of the people we meet who enrolled in an Advantage Plan through another agent or agency weren't given that choice. Many, if not most, would have enrolled in a Supplement had the pros and cons of both types of plans been explained correctly. As I've written about in past columns, agents who don't do this are derelict in their duties, either dishonest or untrained.

As far as options, what we recommend to those who can pass medical underwriting is to consider a move to a lower priced Supplement company and/or letter plan. We will soon be sending out a notice to all our clients affected by these high rate increases that will include a list of medical underwriting questions that one of the lowest priced carriers asks applicants. Those who can answer "no" to all of them are very likely to be approved and get lower premiums.

The savings for those who have been on a Supplement for four years or more, especially those on Plan letters C, F, and G, can be thousands of dollars annually. It's important for me to remind everyone that changing companies or letter plan will not affect what is covered and you can't be billed thousands more dollars for the same services based on what carrier you have. Supplements also don't have networks. All companies are accepted anywhere Medicare is taken. Therefore, what doctors and hospitals are accessible remain identical.

If you would like to discuss any concerns, have questions, or would like a copy of the underwriting questions and a quote, reach out to us at the office or email me. [email protected].

The other option, but one many can't take until AEP that starts in October, is transitioning to an Advantage Plan HMO or PPO. I estimate that 50% or more of those currently on Supplements can't pass underwriting to move to another company or letter plan, making a change to an Advantage Plan the only option to lower premiums. Those who have or qualify for PACENET, prescription assistance for Pennsylvanians 65 and older, can change from a Supplement to an Advantage Plan any time during the year. There are also select Advantage Plans that allow for year-round enrollments.

There is a point for nearly everyone on a Supplement where it becomes unaffordable or the overall value becomes diminished due continued premium increases. We're constantly evaluating and having discussions with clients on when the decision to move to an Advantage Plan might be wise or necessary. However, it's not as easy as saying once your Supplement gets to $200/month, $250, or $300 it's time for everyone to move to an Advantage Plan. Changing to an HMO or PPO can eliminate the possibility of returning to a Supplement in the future, and there are other considerations one must understand before making such an important, and possibly permanent decision.

Even if you're not able to change from a Supplement to an Advantage Plan until the next AEP, that doesn't mean we can't help you understand how they differ prior to October 15th. There's never a charge for consultation in person, over the phone, or via an online virtual meeting, and I recommend having this discussion so people can think things over and prepare for AEP.

Call us if you want to schedule an appointment, have questions or concerns about this column or any other Medicare-related topic. Again, I also welcome emails to me personally.