Medicare Answers: The Future of Medicare Supplement Insurance in the Wake of the Obama Win

  • Originally published November 27, 2012 , last updated December 23, 2014
  • Medicare
Medicare Answers: The Future of Medicare Supplement Insurance in the Wake of the Obama Win

If you have a Medicare question you’d like answered, email it to AskRoger@SeniorMarketSales.com.

This weeks questions deals with the future of Medicare Supplement insurance in the wake of the Obama win in the recent election.

Dave asks,

What is your take on what will become of Medicare Supplement insurance in the wake of the Obama win in the recent election? What is going to happen with commissions earned now and promised for the next 6+ years? Any sources of information would be greatly appreciated. I want to sell this insurance but am afraid of wasting my time and energy on a product that will not pay enough to be worth my while or will be gone all together.

First of all, your Medicare Supplement opportunities will exist well into the future. Commissions will remain level for 6 years in most states. The level commission structure was enacted by state legislation back in 1992, and I really do not see it going away. Hopefully I can dispel some of the myths that are in circulation out there by politicians, consumers and agents concerning the Affordable Care Act and Medicare.

The PPACA (Patient Protection and Affordable Care Act) rules apply mostly to individual and group health insurance policies for Americans under 65 and who are not yet eligible for Medicare.

Dave, your questions are the same as many. Here are some of the questions I have been getting ever since Congress passed the PPACA.

Myth #1 — The Medicare Part B premium is going up to $247/month in 2014
I have covered this myth recently but the emails continue to fly. PPACA (Patient Protection and Affordable Care Act) does not determine Medicare Part B premiums. CMS (Centers for Medicare and Medicaid Services) uses a formula that has been in place for years to determine the new Part B premium for the coming year.

Myth #2 — The Part D “Donut Hole” is going away
The “Donut Hole” between now and the year 2020 will continue to close. What your clients should brace for is Part D premiums. With greater benefits, you will see premiums go up to compensate for benefits. What’s important to remember about the donut hole is that only a tiny fraction of seniors are actually affected by it. 94 percent of seniors either have commercial prescription-drug coverage (39%), or are eligible for low-income subsidies (30%), or never reached the donut hole (25%).

Myth #3 — Due to the $716 billion estimate, some will lose benefits with a Medicare Advantage Plan
Let’s review the numbers starting with the $716 billion estimate. PPACA’s net cuts to Medicare over the next ten years will come from the most recent projections from the Congressional Budget Office, dated July 24, 2012. Page 14 of that document notes that the ACA will increase net spending on Medicare Part D — the prescription-drug program — by $48 billion over the same period. That $48 billion is counted toward the $716 billion. The rest of the cuts are the increased cost for funding Medicare Advantage. These cuts have been set in motion and each year will disappear on the reimbursement that the MA carriers get for each new policyholder. This could affect the premiums but remember the Medicare Advantage has to be equal to or better than original Medicare.