Switching from Plan F to Plan G

[LostDollar]

I'm not an actuary, underwriter, etc...but wouldn't allowing folks to move "down" in coverage save them $$$?

I think the medigap premium goes to the carrier, so I don't think an F to G switch saves the carrier any money.

 

[agentjhc]

Most companies seem to charge well over the cost of Part B deductible, so maybe they don't. Charge $300 more to cover the $166 so you might be right.

 

[LostDollar]

Most companies seem to charge well over the cost of Part B deductible, so maybe they don't. Charge $300 more to cover the $166 so you might be right.

So, let's say the premium difference is $300 between F and G.
The F and G coverage are the same, except for the deductible. Lets call that $170.

Take 100 policies-for plan F, converted to plan G.
That is a $30,000 reduction in cash flow for the carrier. If everyone maxed deductibles, then the carrier would gain $17,000 in cash flow from the conversion. That would be a net cash flow loss of $13,000 to the carrier.

However 100% of the G participants are not going to max their deductible.
Say the average use of deductible over a large group is only 40%.
40% x $17,000 = approx $7,000 payout saved.
So the carrier loses $23,000 per 100 F policies switched to G policies.

The carrier can pay the agent a higher commission to say F is the best policy and still come out ahead cash wise.

(If I've thought that through properly.)

 

[agentjhc]

Makes sense...............