Comp Q: Med Supps Vs. Med Advantage

[jbage007]

I hope this question makes sense. I'm sure there is already a thread relating to it also, but hey, I'm lazy (I'm an insurance guy, ok?).


Seems like more and more experienced agents are on the Med Supps Rule (over MA plans) bandwagon.

One of the reasons seems to be compensation. But here's what I don't get.

In many cases, it seems as though you actually are better compensated by MA plans than by Med Supps.

Caveat: This seems to vary by state.

Some states have hideous commissions available for Med Supps. Sometimes the first year is pitiful (Florida??) and sometimes the renewals are way off, by like half.

The typical arrangement for Med Supps seems to be something like 18% first year, and 18% renewals for 6 years. There is a lot of variation, but let's just roll with that example, please.

Assuming a T-65 buys a new Plan F at a monthly premium of $125, the commissions at 18% equate to $265 first year.

If the same client "bought" a $0 premium MA plan, it would pay about $400 first year, and in some states it would pay about $500 (e.g., California).

On renewals, both plans would pay roughly the same as I understand it (based on 18% renewals for the Med Supp plan). But maybe I have misunderstood something.

Stated another way, it would take an annual premium of $2800 ($233/month) for one Med Supp policy to generate $504 in annual commissions. How many Med Supps are THAT expensive??

So what's the lure of Med Supps anyway? I mean, where viable MA plans ARE available (i.e., major metro areas, etc.).

Thanks in advance for your comments.
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Plan F premiums quoted are for San Diego California underwritten by Gerber Life. The author realizes that the premiums for plan F can vary substantially by carrier, zip, age, etc.

 

[thall]

The biggest concern with the difference in mas ver. supps. is I don't believe the mas we have will be the same as we know them today five years from now, or next year for that matter. If your biggest concern is the commission, then I don't know that anybody could explain the slow push to the supplement end of medicare to you.

 

[GreenSky]

You are correct about commissions. In many instances I make the same or more using an MA.

Recently I've been writing business in a coastal county about 2 1/2 hours north of L.A. Anthem has the lowest priced Med Supp along with the only MA PPO plan. The commission on the supplement is 13% for all years based upon the new premium while the MA is $500/250

I certainly make more selling the MA plan but each client is an individual. I review both options and generally my prospects would prefer a zero premium with a $3,300 OOP instead of paying $2,000-2,500 for a supplement plus a drug plan.

Rick

 

[jbage007]

Yeah, exactly Rick. This confirms my suspicions - especially in CA where the MA pays 20% more than most other states.

Seems to me like if you're working a big metro area with 1 or more viable MA plans, you just have to come prepared - show them everything and recommend what is in their best interest.

As for what the market will look like in 5 years - if it's all med supps then, fine.

But on another thread, someone is claiming to be making $60k+ during the 6 week open enrollment.

That's what got me to thinking - what the hell was I not thinking this year? Should have been gearing up for this since Obamacare hit the press last spring.

It's a constantly changing market these days. Gotta be adaptable - like the Borg!

 

[GreenSky]

But on another thread, someone is claiming to be making $60k+ during the 6 week open enrollment.

At an average commission of $250, that would be 40 new customers each week, including during Thanksgiving and Xmas. I call bullshit on that number.

As for me, I hereby claim that I'm making $72K during AEP because in CA (as you pointed out), we make 20% more.

Rick

 

[YouGotMyMoney]

At an average commission of $250, that would be 40 new customers each week, including during Thanksgiving and Xmas. I call bullshit on that number.

As for me, I hereby claim that I'm making $72K during AEP because in CA (as you pointed out), we make 20% more.

Rick

You ROCK Rick!

However, Cali has higher taxes than let's say Florida, so isn't it a wash?

 

[GreenSky]

You ROCK Rick!

However, Cali has higher taxes than let's say Florida, so isn't it a wash?

You (accidently) bring up a very good point. It's not what you make, it's what you keep.

Too many agents forget that it's the NET you earn, not the GROSS.

Spending $40K to earn $50K means you're in the wrong business. I can't count on MA plans to remain on the books for more than a year or two. And as far as taxes, $10K net puts you in the zero tax bracket.

I hope to write 50-60 plans during AEP. I'm at 32 right now with half of them new to MA. Fortunately, I'm in a position where I don't have to spend a ton of money to write business nor do I want or need to work that hard. I wrote a large number all during 2010 and once Val sets up the "Look at me, I'm better than you" forum, I'll post the numbers.

If others can write hundreds of plans (or say they can) during 6 weeks, good for them. It doesn't impress me nor should it impress anyone else.

Rick

 

[YouGotMyMoney]

I can't count on MA plans to remain on the books for more than a year or two.

So what happens, after let's say two years, are they cancelling the MA plan and not calling you to get something else?

 

[GreenSky]

So what happens, after let's say two years, are they cancelling the MA plan and not calling you to get something else?

I'm guessing that 75% of my clients are duals. There are no alternatives to an MA plan.

Rick

 

[0b1kanobee]

Rick
What does duals mean?