Guide to Understanding and Selling Medicare Supplements

October 22, 2018
seniors lining up to run a half marathon race

Looking to grow your insurance book of business? Have you ever considered selling Medicare Supplements? Maybe you already sell Med Supps, but you’re looking for some new ideas on how to sell them better.

In this article, we’re going to dig into all those angles for this very lucrative insurance product.

Selling Medicare Supplements: An Opportunity Outside of Open Enrollment

Lots of insurance agents sell Medicare Advantage plans to drive more sales during Open Enrollment. Yet, by adding Medicare Supplements into your insurance product offerings, you can sell to a steady stream of health insurance and Medicare leads year round.

Medicare Supplements (also known as Med Supps or Medigap) are a little different than Medicare Advantage (also known as Medicare Part C), but taking the time to learn about them and working them into your product portfolio is well worth the effort. Here’s what you should know about Medicare Supplements and how to sell them to your own Medicare-eligible customer base.

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What Are Med Supps?

Medicare Supplements are often referred to as Medigap plans because they fill in the gaps in coverage that beneficiaries of the Original Medicare (Medicare Parts A and B) are left with. The federal Medicare health insurance program covers a lot of health care costs for beneficiaries who are 65 or older or younger and with certain disabilities, but it doesn’t cover everything.

Medicare beneficiaries can choose a Medicare Supplement plan during the same enrollment window that they become eligible for Original Medicare. Those that go with Medicare Advantage (Part C) are ineligible for a Medigap plan unless they switch to Medicare Parts A and B. Folks who have signed up for Medicare and a Med Supp plan can also switch to a new Med Supp plan either during the annual enrollment window and even throughout the year in some cases.

There are currently 10 Med Supp plans available to eligible Medicare enrollees. These plans help cover coinsurance, copays, and deductibles for Medicare recipients, and some also cover other costs, such as hospice care or foreign travel health care expenses and others offer an out-of-pocket limit to help Medicare beneficiaries save on costs.

A Little More Medicare History

Medicare paid out its first benefits to seniors in 1965. Fifty years of legislation has made this program very complicated, which is why you’re an important resource of knowledge for Medicare-eligible customers. The learning curve can be steep for both beneficiaries and agents, but hopefully, this guide will make you the best adviser in your area.

To become the undisputed authority, a title and honor that is sure to win you clients, it’s important to do your homework. The Medicare.gov website is the go-to source on the law and program benefits and The AARP has also authored a nice guide geared toward helping beneficiaries understand Medicare.

In Quick Summary, Here is the A to Z of Medicare

Here’s our abbreviated recap of the current state of the Medicare program. This government-run health insurance program is available primarily to Americans aged 65 and older, as well as certain other folks with specific disabilities or diseases.

When seniors become eligible for Medicare, they are first presented with two options. They can opt for the “original Medicare” — now further divided into Medicare Part A and Medicare Part B — or they opt for a Medicare Advantage plan (also called Medicare Part C). Then, there’s Medicare Part D. Confused yet? Most seniors are by this point. Let me break this down.

Original Medicare

If a client chooses this route, they will sign up for Medicare Part A. It’s provided free of charge to seniors who paid Medicare taxes during their working years. Part A covers inpatient care and some nursing facility expenses.

Seniors who enroll in Part A will also enroll in Part B. Beneficiaries will pay a monthly premium for Part B, not unlike other kinds of insurance. The rates are regulated by the government and generally increase from year to year. For 2017, the standard premium was set at $134 per month. High earners will have a higher premium, up to $428.60 for 2017. Part B covers what Part A doesn’t, namely outpatient care, preventative services, and health care provider service fees.

Medicare Advantage

For seniors who want another option, there’s Medicare Part C (Medicare Advantage). This plan is run by a private insurer, much like the typical PPO or HMO plan. Note: when a senior chooses a Part C plan, they cannot also sign up for a Medicare supplement plan. However, it’s possible for Part C beneficiaries to move to an original Medicare plan and then apply for supplement coverage.

Medicare Part D

Part D coverage provides drug coverage benefits for Medicare beneficiaries. This is a separate plan that seniors will purchase if they have Part A and Part B coverage. Many but not all Medicare Advantage beneficiary plans will include Part D as a part of that coverage.

Why Should You be Selling Medicare Supplements?

There are a lot of reasons to sell Medicare Supplement insurance. It’s a larger market than Medicare Advantage plans, it can be sold all year round, you can earn commissions on some renewals, and it’s just a better fit for many of your clients and prospects.

Med Supps remain a much larger market than Medicare Advantage, by about a two-to-one margin. Click to Tweet

Med Supps remain a much larger market than Medicare Advantage, by about a two-to-one margin. Only 33% of Medicare beneficiaries are enrolled in Medicare Advantage, the other 67% have or could have a Medicare Supplement plan. While the trend is moving in the direction of Medicare Advantage, there are still a lot of people for whom a Med Supp plan is just a better fit. And with our population aging and living longer, enrollment is only going to get bigger.

Additionally, many insurance agents appreciate that most beneficiaries can enroll in plans year round. This means you can plan for year-round business on your terms, rather than a rush to meet the market demand and intense competition during a limited open enrollment period.

Targeting Medicare beneficiaries that are aging into their six-month initial enrollment window are a great business opportunity. However, so are established Medicare recipients, who want to change plans and, in certain cases, are healthy enough to pass underwriting.

Many agents choose to sell Med Supp plans because of the potential commissions. All Med Supp plans will pay a commission for new policies, however, many carriers also pay commissions for renewals. Depending on the carrier, this could last for as much as six years, or even the whole life of the policy if your client maintains their coverage for longer.

Finally, if you’re looking at best serving your clientele’s needs, Med Supps can often make more sense than a Medicare Advantage plan. Med Supps are often a better fit for seniors who travel, enjoy their hobbies, and are well situated financially, as coverage usually doesn’t come with limited service areas or provider lists.

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The U.S. Market for Medicare Leads

When you’re fully educated about the Medicare program itself, you’ll need to get comfortable with the sales market. Medicare supplement coverage is regulated at the state level, and so this means insurance agents often target leads within a particular state or a few states.

Now there are several strategies of how best to do this. You may prefer to target leads within a particular region, such as your own, which may give you an advantage with discerning seniors looking for a local connection. However, it’s also possible to target other states for other reasons. Many agents look to states with the right mix of aging demographics and higher population. This can set you up for a large lead pool of prospective clients.

Like other insurance products, agents need to be properly certified to sell Medicare supplement plans. This is a fairly easy process for supplement agents working in most states, where a state health insurance license will suffice for you to begin calling leads. North Carolina is a bit more work, in that you’ll need to obtain a separate Medicare supplement certification license. For more information on a particular state’s laws, visit the National Insurance Producer Registry.

How Do You Add Them to Your Business?

Adding Medicare Supplement insurance to your existing insurance agency business is easy. You already will have acquired the needed health insurance licenses and errors and omissions (E&O) insurance. From here you’ll need to get appointed to sell one or more carriers’ products. If you have already contracted with that carrier to sell another type of product you may not have to complete new contracting. However, it just depends on the carrier.

Even if you’re new to the insurance business, getting set up to sell Med Supps is still pretty easy. You’ll just need to get your licensing and E&O and be appointed with your chosen carriers.

How Do You Sell Med Supps?

When it comes to sales strategy for selling Medicare Supplements, a fully diversified portfolio of product offerings is considered the gold standard. This will be more work for you to set up initially because it involves scoping out a lot of different Med Supp products and getting appointed to multiple carriers. But it will pay off in the end when you have “something for everyone.” This is really the key to Med Supps, because you will have healthy clients, sick clients, affluent clients, and not-so-affluent clients who all need a Med Supp plan to suit, and monthly premiums, household discounts, underwriting requirements, plan features, and special benefits can all vary quite a bit between plans.

In terms of timing, you have options. You can work with Annual Enrollment leads and turn your Medicare Supplement business into a market-driven opportunity. You can also work with seniors who are aging into Medicare as they turn 65, which allows you to sell year round. And you can also prospect with existing Medicare leads that are interested in switching to a new plan.

In terms of lead generation, I highly suggest purchasing quality Medicare Supplement leads such as those from our own Aged Lead Store. It’s the most affordable way to stock your database, whether you are working with Initial Enrollment, Annual Enrollment, or year-round leads. With a diverse variety of products, you should be able to meet any of these potential prospect’s needs.

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Sharing Medicare News and Insights

One of the best ways to open more conversations with Medicare leads is to be the best source of news and information.

One of the best ways to open more conversations with Medicare leads is to be the best source of… Click to Tweet

Agents who understand the complexity of the system and use that understanding to help leads in their database better understand Medicare, the gaps that may exist, and how Medicare insurance supplements might help are definitely going to be ahead of the competition and sell more.

By starting with a base of aged leads and building a lead nurturing cycle focused on education, your new prospects will be thrilled with each contact you make with them. They will feel better informed, more confident in what you’re selling, and much less like a helpless target.

For illustration purposes, here are just a few recent news items on the topic of Medicare and you might share this information and your insights with your Medicare leads.

New Healthcare Proposal and a New Medigap Data Report

Recently, I came across two news items that caught my eye. If I were an agent working Medicare leads today, I’d be sure to pass them along to my list.

Here’s what I found.

First up, news of a new government healthcare proposal called the Choose Medicare Act. Healthcare reform remains a concern for everyday Americans, but it’s been difficult for politicians on either side of the issue to make much headway. Still, BenefitsPro reports that a new Democrat-led proposal would allow those covered by the Affordable Care Act (ACA) or by employer plans to instead choose a new Medicare-based insurance plan.

The bill does maintain the status quo for private insurance but offers another step toward a single-payer system. For Medicare-eligible seniors, the new bill would offer the benefit of an out-of-pocket spending cap. And while the coverage is primarily targeted at working-age folks, your senior clients are likely to hear and ask about it —  the legislation is called the Choose Medicare Act, and, if it were to pass, the plan would create a new Medicare Part E.

Another news item that caught my eye recently is a new Medigap data report published in ThinkAdvisor. Retirety, an insurance technology startup, has developed and deployed an automated retirement advice website. Now the firm has issued a report on some interesting findings from user data.

The report noted only a modest need (13%) among the site’s user-base for Medigap or Medicare supplement insurance. The automated advice service reportedly recommended Medicare Advantage to three-fourths of those users, Medicare Part D drug coverage for just over half (56%), and Medicare Part A and B coverage from about 28%. The findings also noted that older insurance customers preferred to keep costs low for any new coverage plan, 77% said it needed to be under $125 per month.

The news item also mentioned that a fifth of retirees would prefer a choice of health coverage that worked in multiple locations, a preference that would make Medicare Supplements a consideration. These are the “snowbirds” and other travelers who spend a large amount of time traveling.

How to Talk to Your Leads About the News

Being a good Medicare supplement agent is as much about what you say as to how you say it.

Realize that your prospects and even past clients are probably not very knowledgeable about insurance. They certainly don’t live and breathe it every day. That means you’re going to have to break it down.

Realize that your prospects and even past clients are probably not very knowledgeable about… Click to Tweet

When you report current events, new legislation, or studies to your leads and clients, think first about your audience. They will often need to know the background as well as the new developments. They will want to know how this information affects them and their health care and insurance coverage directly. Most importantly they should know that you are happy to answer any questions on the news you shared or anything else they see elsewhere. You want to become the go-to resource.

It’s also really important to share news in a simple and bite-sized way.

If I were to share the above news items with my leads, I’d share each as a simple, concise email message. I’d greet my leads with a brief re-introduction, quickly summarize the key bullet points, offer a context of how it affects Medicare users like themselves, and close with a prominent CTA to click or call to discuss their specific coverage needs.

Why You Should Use Education for Lead Nurturing

There are a number of reasons little nurturing touches like these are worth the time and effort.

First, it helps keep your name and brand in the mind of your leads. It often takes five or more times hearing your name to remember you. Second, it helps build that long-term client relationship and trust. Your leads will start to realize that you’re thinking of them and reaching out when it’s important they know something is changing that might impact them personally.

Finally, when a Medicare lead is ready to buy, they will want to work with an agent who’s knowledgeable and been keeping them informed. Being seen as a product and industry expert is easy when you’re educating your leads as you see things – these little touches can add up to a lot of very loyal customers and a very solid book of business.

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Optimizing Your Medicare Sales Pipeline

Sales pipeline management will play an important role in your Medicare supplement business. While millions of Americans will be turning 65 in 2018, they won’t all be eligible to enroll on January 1. However, that’s not to say it’s not a good time to start bringing up enrollment with your leads. There are a couple of reasons for this.

Open Enrollment

A six-month open enrollment window for supplement coverage begins when a 65-or-older senior enroll in Medicare Part B. During this open enrollment period is the best time for seniors to buy supplement coverage — policies are guaranteed issue and policies are not subject to underwriting, meaning applicants won’t be hit with higher premiums for pre-existing conditions.

After Open Enrollment

Seniors will still be able to apply for Medicare supplement coverage after this six-month window, however, it could mean they will pay a higher premium for coverage, or if they have serious medical issues, they could be turned down for coverage. Thus, for seniors looking for affordable and reliable benefits, earlier is better.

Exceptions

There’s one notable loophole to these rules, and that is for folks who are on Part C (a Medicare Advantage plan) or their own private health plan, and decide to switch to Part A and Part B. In this case, these seniors could be approved for a guaranteed-issue supplement policy after their enrollment window has passed.

Because of the generally limited enrollment window, it’s a good idea to begin targeting your supplement leads early. Start with those folks who haven’t turned 65 yet but will during the year. They’ll need to begin thinking about what kind of Medicare coverage they need, and many will be grateful if they can talk to a knowledgeable and professional agent about their questions and concerns.

Medicare supplement clients offer a new opportunity for your business. By forming a relationship now, you could have them as clients for years to come. But a word of caution: do read up on the insurance laws in your area. Generally, agents aren’t allowed ask for payment over the phone, pitch an annuity or other life insurance product during Medicare plan call or meeting, or offer gifts worth more than $15. Other restrictions may apply.

How to Close More Medicare Leads

Medicare-eligible Americas are one of the largest generations in history and probably make up a significant portion of your current book of insurance business.

By paying attention to this portion of your book and expanding your product portfolio to accommodate this demographic you are certain to grow your business and commissions. But, it takes more than a great product. You have to understand how to sell to and close these clients.

Ironically, many insurance agents make all the wrong assumptions about this aging demographic. Bad assumptions that cost them sales. Here is a brief run through of some of the common misconceptions I see when training agents on this client demographic and some typical personas you will run into.

Tech-Savvy Seniors

Most of your Medicare leads had a cellphone before today’s high schoolers were even born. Some may have been texting since they were under 50. Twitter, Facebook, and iPhones came out more than ten years ago. This is one way that today’s Medicare customers are different from past customers.

Most of your Medicare leads had a cellphone before today's high schoolers were even born. Don't… Click to Tweet

When it comes to working with and closing these aged leads, don’t be afraid of technology. Your prospect is probably almost as comfortable with tech as you are. Think about how you can use technology to take your lead further into your sales funnel and your lead nurturing process.

You may want to bring along a tablet as a visual aid when you do your sales presentation meetings. It’s small enough not to get in the way or be a hassle but helps your leads remember the important points of your presentation. You may also want to use online tools to remind your prospects about their upcoming sales appointment, share information about products and services, and follow up and nurture your leads to keep their Medicare decision top of mind.

Well-Informed Buyers

Today’s Medicare leads also aren’t afraid of reading the fine print, with their reading glasses, of course, and asking you pointed questions. These consumers like to make well-informed buying decisions.

For a lot of 65-year-olds, buying Medicare supplement insurance will be influenced by how their own parents’ Medicare insurance decisions and investment choices turned out. Fewer issues mean they probably won’t have as many questions. However, others will have questions and sales objections that come from their direct personal experience with their parents’ experiences.

If you are well-prepared for this sales dynamic, you can do well at closing. So prepare ahead of time. Answer frequently asked questions with your printed materials. Don’t skimp on the explanations, either. These prospects want full answers that make it clear how to avoid their parents’ own mistakes with Medicare.

Hard-Sell Skeptics

A couple of decades ago, it was expected that salespeople were going to work hard to sell their prospects on their products and services. But things have changed, and hard-sell tactics don’t work with today’s Medicare leads. These consumers have become less responsive to traditional sales techniques and telemarketing strategies, so trying too hard to close is going to backfire.

However, these same skeptics have become much more open-minded when it comes to more modern insurance sales techniques. Since most Medicare prospects are comfortable with computers and technology, many are receptive to internet sales and even mobile marketing.

These leads can do well with SMS lead nurturing, email drip marketing, and more.

You’ll also want to ensure you don’t drop the ball with today’s Medicare leads. These folks tend to have high expectations for service, especially in terms of speed and quality. So make sure you are very accessible after you’ve made your pitch and sent out information packets.

Aging Optimists

Finally, another thing to keep in mind is that today’s Baby Boomers are not only the largest generation, they’re also the longest-living. People today are living longer and healthier. Many people now turning 65 are optimistic about their future golden years. It’s important to keep this in mind when working with older prospects. Otherwise, you could offend them.

If you have a family member in this age group (or even older), you know what I mean. There’s no faster way to draw their ire than talking as if they have one foot in the grave. Today’s healthy seniors anticipate staying independent and active longer than their predecessors. You’ll want to adopt this outlook in your sales presentations and printed materials, otherwise, you’ll have fewer opportunities to close sales with them.

Final Thoughts on Selling to Medicare Leads

An astounding 10,000 people are turning 65 in this country every day, and that’s set to continue for years. This is now one of the best opportunities to close Medicare leads, particularly if you’re quality and affordable lead source, like our own Aged Lead Store to fill up your database with well-qualified insurance and Medicare leads.

There’s a tremendous opportunity for these insurance prospects, but sales agents have to remember that today’s Medicare leads are different. They’re more tech-savvy, they’re looking for real answers to sales objections, they’re not fans of hard-selling, and they’re optimistic about the future. Keep these points in mind, and your closing rate for Medicare leads is going to go up and up.

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What Are the Next Steps for Selling Med Supps?

If you’re interested in adding Medicare Supplements to your line of business, now is the time to seek out more in-depth resources. One place to start is the government’s CMS.gov portal for agents and brokers. You’ll also want to visit the National Association of Insurance Commissioners (NAIC) website and the National Insurance Producer Registry (NIPR) website for information relevant to your state insurance regulations.

These resources will help you get started with licensing and education relevant to plans and compliance. You’ll want to understand how to be compliant as you work your Med Supp leads, particularly because these leads are excellent opportunities for cross-selling and referrals, as long as you follow all the rules.

When you’re ready to begin selling to Medicare Supplement leads, it pays to fill up your pipeline with high-quality leads such as those from The Aged Lead Store. Visit our Medicare Supplement Leads page to learn more about our leads and inventory. Aged leads have a superior ROI to real-time leads, giving you a fast, easy, and cost-effective way to fill up your pipeline.

Ready to get started with aged leads? Fill your pipeline with a fresh supply of high-quality leads from The Aged Lead Store. You’ll find thousands of sortable aged leads, ready to boost your sales, whether your business is auto, life, final expense, health, Medicare supplement or homeowners insurance, annuities, auto warranty coverage, or mortgage refinance.

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About Troy Wilson