Medicare Supplement Insurance Now a Must-Have Voluntary Benefit for an Aging Workforce

In the U.S. today there are two factors at work--one demographic, one economic--that are making Medicare Supplement Insurance plans a must-have voluntary benefit.

First, with the Baby Boomers beginning to turn 65, HR departments are being challenged with an increasing number of aging employees. The Boomers, the generation born between 1946 and 1964, are in aggregate a phenomena with no historical precedence -- by 2030 there will 80 million Americans over the age of 65. To put that another way, 2.5 million people will blow out 162.5 million birthday candles this year and every 13 seconds for the next 20 years an American will turn 65 years old.

The second factor, the troubled economy, is causing more and more seniors to delay their retirement and continue working. A recent report (PDF) by the National Institute on Retirement Security puts it best:

“For decades, Americans had access to a strong “three-lane highway” to retirement--a traditional pension, Social Security and individual savings. As the first of some 78 million Baby Boomers begin to retire in 2011, they are speeding on a dangerous road full of potholes:

• “Fewer private sector employees have access to traditional pension plans. In 1975, a full 88 percent of private sector workers with a workplace retirement plan had pension coverage; by 2005, this number had dwindled to 33 percent.
• “What’s even more startling is that only 59 percent of Americans have access to any type of employer-sponsored retirement plan, and only 45 percent of employees participate in a retirement plan at all.
• “More than 80 percent of Americans believe that the recent economic downturn exposed the risks of America’s retirement system. Nearly three-quarters of Americans believe that stock market volatility makes it impossible for the average American to predict how much money they will have in their nest egg when they retire, underscoring the potential flaws of the current retirement system.”

While these problems may seem insurmountable, your employees can find solace in the Medicare Supplements and the extra coverage they provide. Right now seniors are scared. I know because over the past 27 years, my company has assisted hundreds of thousands of seniors through the Medicare maze and, in all that time,  I’ve never seen such anxiety amongst our customers.

Our customers are asking questions like, “Will Congress increase the age of eligibility for Medicare to 67?” Or, “Could new federal budget plans require beneficiaries to pay higher premiums?”

But they’re taking comfort when they find out that if they purchase the right Medicare Supplement Plan (AKA Medigap), they can receive up to 100 percent coverage on doctor and hospital charges for life without ever worrying about networks, co-pays or deductibles. This is because Medicare Supplement Insurance covers the gaps in traditional Medicare, with no provider networks or restrictions.

Furthermore, Medicare Supplement Insurance is guaranteed renewable for life, with federal regulations in place to ensure guaranteed enrollment.  This means it cannot be taken away from the customer as long as they continue to pay their premiums, regardless of the actions in Congress.

If you haven’t crossed paths with Medicare Supplement Insurance while managing voluntary benefits for your company, you should take a look at these products. According to the Centers for Medicare and Medicaid,

“A Medigap policy (also called “Medicare Supplement Insurance”) is private health insurance that is designed to supplement Original Medicare. This means it helps pay some of the health care costs (“gaps”) that Original Medicare doesn’t cover (like copayments, coinsurance, and deductibles). If you have Original Medicare and a Medigap policy, Medicare will pay its share of the Medicare approved amounts for covered health care costs. Then your Medigap policy pays its share. A Medigap policy is different from a Medicare Advantage Plan (like an HMO or PPO) because those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits.”

Beware of Medicare (Dis)Advantage Plans

As an HR professional, I’m certain you take pride in offering your employees voluntary benefits with the best quality/price ratio. If you like to be able to stand behind each product you make available, then you need to know the disadvantages of Medicare Advantage Plans.

Many misinformed or unscrupulous insurance agents are misleading seniors into believing that Medicare Advantage Plans, which contain co-pays, deductibles, co-insurance and provider networks, are the equivalent of traditional Medicare with a Medicare Supplement Plan.  

Buyer Beware. 

• Medicare Advantage plans restrict access to many providers or you will be liable for 100 percent of the costs.
• Medicare Advantage plans do not have lower premiums -- though some salespeople try to compare the Medicare Advantage Premium to that of Your Medicare Supplement, the benefits are only required to be equivalent to Medicare alone. Therefore you sacrifice coverage, options and often pay higher premiums than with traditional Medicare.
• If you are on Medicare Advantage, you no longer can legally buy a Medicare Supplement.  

Don’t be misled, traditional Medicare by itself is better than a Medicare Advantage Plan and it allows you to purchase up to 100 percent Medicare Supplemental coverage. This gives you complete access to the world’s best healthcare system here in America and with the future of Medicare uncertain, Medicare Supplements are still a safe haven.

About The Author

Brandon Todd is CEO of Insuraprise, Inc., DBA as Medigap360. Medigap360, a nationwide health insurance brokerage located in Austin, TX, serves Medicare recipients by providing online and agent-assisted shopping of multiple top-rated Medicare Supplement providers. Medigap360 is the only company that offers Medigap plans from the top insurance providers in all 50 states, with online pre-qualification and the ability to apply with or without the assistance of an agent. Medigap360 was recently named to the 2011 Inc. 500 list as the 190th fastest-growing private company in America. For more information, please visit www.medigap360.com.