Busting the Top Five Medicare Myths

by Lance D. Reedy

I have been a member of the Society of Certified Senior Advisors for several years and receive their publications both in print and online. Their recent article, Busting the Top Five Medicare Myths, caught my attention. I have paraphrased these myths below and added pertinent comments as necessary to fit our five states of ID, MT, OR, WA, and WY. Please click here to review the article in its entirety.

Myth 1: I can enroll any time I want to.

One of the biggest misunderstandings about Medicare supplement (Medsupps) concerns the Annual Election Period (AEP-also known as Medicare open enrollment) that runs from October 15th through December 7th. For additional information, please refer to our companion article in this issue titled Have Your Medicare Supplements Rates Gone Up?

I have heard this statement over and over: “Oh, I thought you can change your Medsupp during open enrollment (meaning the AEP).”  The AEP is all about changing your Part D prescription plan (PDP) or your Medicare advantage (MA) plan. It has very little to do with Medsupps.

In general, once you are past 65 and a half, changing your Medsupp from one plan to another requires medical qualification. There are some exceptions. Washington allows you to change your plan virtually any time without medical qualification.  Oregon allows you to do the same during the month of your birthday. The other eleven months you can change your Medsupp subject to qualifying medically

In Idaho, Montana, and Wyoming, you can change your Medsupp any month of the year subject to medical qualification.

There is another twist to this. If you have been on a plan that disenrolls you, such as an MA plan, then you can use the guarantee issue rules to sign up for Medsupp plans A,B,C,F,K, and L with NO medical qualification. Guarantee issue, means just that, your acceptance is guaranteed, even if you have a substantial health issue such as a recent heart attack.


Myth 2: Medicare pays for long-term care.

Medicare covers 20 days at 100% for skilled nursing facility care after a medical event such as a stroke or hip replacement. Medicare will cover another 80 days, subject to fairly strict qualifications. There is also a $164.50 per day coinsurance (in 2017) which most Medsupp and MA plans cover.


Myth 3: Medicare covers all my health expenses.

Congress passed the Medicare legislation into law in 1965 to keep seniors from being financially wiped out due to high medical costs. That was the purpose for the original legislation.  Over time, more things have been added such as preventative procedures and home health care.

Medicare was never intended to cover dental, routine vision care, cosmetic surgery, and custodial care in a nursing home.


Myth 4: Medicare is free.

Most native-born people receive Medicare Part A hospitalization at no cost. Part B, medical, has a premium in 2017 for new enrollees of $134 per month. People in higher income brackets have higher Part B premiums.


Myth 5: I don’t need to enroll in Medicare.

There is no one pointing a gun at your head saying that you MUST enroll in Medicare Part B or else. However, it’s a smart idea to do so. The CSA website article gives some tips for those that are on an employer plan.

However, the CSA article has a glaring error that none of their proofreaders caught regarding the late enrollment penalty (LEP) for not signing up for Medicare Part B. Here is the erroneous text:

That penalty means premiums can go up almost 10 percent for every month you are eligible for Medicare but not enrolled.

The 10 percent late enrollment penalty should read “can go up almost 10 percent for every year (not month) you are eligible….”

Conclusion: The error in Myth #5 is a good example of how a single word mistake can cause misinformation.  Sadly, this is all too prevalent in much of what you hear on the street, from the senior center, the news media, and even from supposedly knowledgeable people such as the Council on Aging.

Where do you go to obtain accurate information? Medicare.gov is an excellent source. Additionally, AARP also has lots of good info about Medicare.

Finally, your pro agents, meaning us, endeavor to be a trustworthy source of information, and admittedly, we’re still in the learning process.  If you have a question where we don’t have the answer, we’ll research it and get back to you with the most accurate and reliable information we can find. End

Causes of Medicare Supplement Premium Increases

by Lance and Isaac Reedy

In our Have Your Medicare Supplements Rates Gone Up? article we discuss what you can do if your rates have gone up.  In this companion article, we talk about the two main causes of these increases. Think of them like two rivers that come together to form a larger one.

Cause #1: This one is the attained-age pricing that most states allow for their Medsupp plans. Here’s how it works. Company X has a rate, let’s say of $100 per month for a Plan G at age 65. Their rate chart says “Attained -age.” Company X takes its first attained-age increase at age 66. From there it increases at the rate of 3.5% per year. Their rate chart would look like this:

Attained-age Plan G

  • Age 65: $100.00
  • Age 66: $103.50
  • Age 67: $107.12
  • Age 68: $110.87
  • Age 69: $114.75
  • Age 70: $119.06

In this case, your premium increases 3.5% beginning at age 66 and every year thereafter. Some companies end their attained-age increases at age 80, and others go to age 99.

There are some variances for attained-age pricing. Company Y takes its first attained-age increase at age 68, again with a rate increase of 3.5% per year. Their rate chart would look like this:

  • Age 65: $100.00
  • Age 66: $100.00
  • Age 67: $100.00
  • Age 68: $103.50
  • Age 69: $107.12
  • Age 70: $110.87

Everything else being equal, I would choose Company Y over Company X for someone signing up at 65.

Just because a state’s insurance department allows attained-age pricing, doesn’t necessarily mean that all companies use it. A company at its own prerogative may choose issue-age pricing instead. Issue-age pricing means that if you sign up for a Medsupp at 65, let’s say with Company Z, you are always in the 65 year-old rate category. Since you are issued at age 65, your premium does NOT increase just because you advance in age.

Company Z’s rate chart may look like this.

Issue-age Plan G

  • Age 65: $120.00
  • Age 66: $120.00
  • Age 67: $120.00
  • Age 68: $124.80
  • Age 69: $129.79
  • Age 70: $134.98

If you come in at age 69, for example, your premium will be $129.79 per month, and then you will always be in the 69 year-old group.

Here’s the breakdown of how attained age pricing (if allowed) works in the five states we work in.

Idaho: An Issue-age state. Does not allow attained-age priced policies. The premiums typically start around $20 per month higher compared to attained-age pricing.

Montana: An attained-age state. Virtually all companies use attained-age pricing. Many of you have a company that is the exception and uses issue-age pricing.

Oregon: An attained-age state. All companies that I know of use attained-age pricing.

Washington: A community rated or flat-rate state. Each companies’ Medsupp plan letter has its own flat rate. It doesn’t make any difference for smoker or non-smoker, your age, or male vs. female. The rate is flat, period. Plan G’s might run around $180 per month.

Wyoming: An attained-age state. All companies that I know of use attained-age pricing.

Here’s the bottom line. Many people in Montana (but not all), Oregon, and Wyoming will have attained-age rate increases. Idaho, Washington, and those in Montana with an issue-age policy do not. However, the trade-off is that premiums usually start higher.

Note: One company in ID, MT, OR, and WY has its own unique pricing structure, which functions similar to attained-age pricing.

Cause #2: All Medsupps eventually increase in premium due to the claims experience that any given company incurs. Let’s say Company W offers Medsupp plans F, G, and N.

As far as claims and premiums go, the people on Plan F are in one bucket, the people on Plan G are in their own bucket, and the Plan N folks have their own bucket. Premiums are money going into the bucket, and claims experiences (losses) and administrative expenses are money going out of the bucket.

Let’s say that the policyholders in Company W’s Plan F bucket as a group, begin to have more medical procedures. For example, John Doe has an unexpected open-heart surgery and Jane Doe starts a chemo therapy regimen after a mastectomy.

Those two cases will incur substantial claims for the company and cause more money to flow out of the bucket. Let’s say that there are also other Company W policyholders that increase their medical utilization of their Medsupp plan. The losses mount.

Finally, it gets to the point where Company W goes to the State Insurance Department, documents their increased losses, and files for a rate increase. If it’s 6%, for example, then everyone in Company W’s Plan F bucket goes up 6%. It makes no differences whether a policyholder has huge bills and another has had no claims at all. If the premium increase is 6%, then everyone goes up 6%.

As the people in any company’s block of business begin to age (I hate to put it that way, but it’s the truth), the claims experience inevitably increases. The older standardized plans purchased prior to June 1, 2010 are all closed blocks of business and have increasingly greater rates of claims experience. That has put more pressure on rates.

More claims experience = more losses = premium increases.

There is another tributary to the Claims Experience River, the North Fork. When Medsupps were initially offered, beginning in 1966, most plans covered the Hospital Part A deductible, just as most plans do today. In 1966 the Medicare Part A deductible was only $40. It wasn’t too long ago that it crossed over $1,000. In 2016 it was $1,284, and in 2017 it’s $1,316. It likely will be pushing $1,350 in 2018.

Each year, as a policyholder is hospitalized, Company W has to pay out more money in claims. Even if the rate of hospitalizations is the same on a per 1,000-policyholder basis, the insurance company continually has to pay out more money.

Other Medicare deductibles and co-insurances also increase. As the Medsupp company continues to pay its own share of the costs, it has to pay out more and more every year coinciding with the increased obligations from Medicare. In fact, the companies usually send their policyholders a notice in the fall stating that they will automatically cover Medicare’s increases.

To sum up: As the company’s block of business ages, you have increasing medical utilization as well as gradually increasing deductibles and co-insurances from Medicare. Both of these flow together causing more losses for the insurance company, and unfortunately, this ultimately leads to claims experience rate increases.

Conclusion: Both attained-age increases (OR, MT, and WY) along with increased claims experience (losses) will cause your Medsupp premiums to go up. The increases in ID and WA are due to claims experience only. While that’s nice for those two states, keep in mind that their rates start higher from the get-go.

What can I do to find lower rates?

Please refer to our companion article, Have Your Medicare Supplements Rates Gone Up? In addition to shopping for lower rates in general, sometimes switching from a Plan F to Plan G or Plan G to Plan N can be a smart more. If you have an older plan that has had substantial rate hikes and your health is stable, the chances are good that we can qualify you for lower rates.

Please contact us, and we’ll start shopping for you. End

Have Your Medicare Supplement’s Rates Gone Up?

by Lance and Isaac Reedy

Note: We have updated this article from a year ago. Unfortunately, Medicare supplement rates continue to increase. The good news is that if your health is stable, you may be able to qualify for a lower cost plan.

One of the most annoying things that happens in life, especially if you are on a fixed income, is some expense that has a rate increase. Unfortunately, health costs continue to rise including Medicare supplement (Medsupp) premiums. For a more detailed explanation about the causes of these increases, please read our companion article, Causes of Medicare Supplement Premium Increases.

During the past year most companies have had rate increases of some extent or another and some more so than others. What can be done about these rate increases? The solution, of course, is to have us shop on your behalf for lower rates. Remember, you can change your Medsupp plan any month of the year, providing that you medically quality. More about medical qualification shortly.

If you have Plan F with Company X, a good solution is to switch to Plan G or even Plan N. Again, this is assuming that your health is stable and that you can qualify for another plan.

For those people with declinable health issues the solution to this situation may be to switch to a Medicare advantage plan during the fall Annual Election Period (AEP also known as Medicare open enrollment) that runs from October 15th through December 7th. We will have more information forthcoming about the AEP in the next issue of Northwest Senior News and also via a paper newsletter for those do not have email access.

Why is it much easier to switch to a Medicare advantage (MA) plan?

The only health question on an MA application is kidney failure. You could have had a recent stroke, been treated for cancer in the past two years, or have multiple sclerosis, and you can still qualify for an MA plan. Those conditions would generally cause a decline on a Medsupp company’s application.

However, switching to an MA plan may not be feasible for many people, especially if you live in a county that has no available MA plan. The following are some examples.

  1. Idaho: Clearwater, Idaho, Lewis, Benewah, and Shoshone counties in northern Idaho are prime examples of counties with no MA plans.
  2. Montana: Counties such as Park, Glacier, Toole, Hill, Blaine and others have no MA plans.
  3. Wyoming: Most counties have no MA plans.
  4. Washington: Some of the smaller or more rural counties have no MA plans available.
  5. Oregon: Please contact us.

While there are some distinct advantages of MA plans, there are also some negatives. Here are some of them.

  • You have copays for most of your medical services.
  • Your medical providers generally need to be in the plan’s network.
  • The specialty clinics such as Mayo, Virginia Mason, and Fred Hutchinson generally do not take MA plans.
  • You will have higher out-of-network copays (often as high as 50%) if you are out of the plan’s service area or network.
  • More recently there is the hassle of getting prior authorization for major Medical services.

How do I qualify for a new Medicare Supplement plan?

To qualify for a new Medsupp plan, you will need “No” answers to the following health questions. The language for each company’s application will be a little different, but in general, here are the most common ones.

1) In the last two years have you had or been treated for circulatory or heart disease including a heart attack, heart bypass surgery, stent placement or pacemaker implantation?

2) Have you been treated for internal cancer or melanoma in the last two years? (Does not include most skin cancers.)

3) Have you had a stroke or mini-stroke in the past two years?

4) Have you been diagnosed or treated for COPD, emphysema, or chronic bronchitis in the past two years?

5) Have you been hospitalized more than two times in the last two years?

6) Have you been diagnosed with any type of dementia, Alzheimer’s, or Parkinson’s disease? Note: One of our companies will take people with these conditions providing that there are no other major issues.

7) Do you have any planned surgeries such as joint replacement surgery of cataracts recommended to be completed in the next twelve months?

8) Do you have any auto-immune disease such as AIDs, HIV, multiple sclerosis, rheumatoid arthritis etc? (Other diseases may be included depending on the company.)

These are the major categories. A company may request additional information.

Routine prescriptions such as blood pressure, cholesterol, and type 2 diabetes meds are usually okay. Most companies have a drug decline list. Examples of what could be on such a list are opioids and many cancer related drugs. Most companies require that you list all prescription meds on your application. Certain combinations of drugs such as ones used to treat diabetes (particularly insulin) and hypertension may be a problem.

Why do we pre-qualify before applying?

If you have a medical condition that is iffy, we can shop for the company that is most likely to accept your application. For example, if we know that Company X will decline your application due to a medical condition or drug on their decline list, then applying to that company would be a waste of your time. We’ll look for a different company. Through the years, we have learned that a health issue that may not fly with one company can go through with another. For example, there is one company that does not decline Alzheimer’s disease, Parkinson’s disease, rheumatoid arthritis, or multiple sclerosis.

Contacting You

We are rapidly getting into our crazy time of the year as we have to go through our annual recertification process for MA and Part D prescription plans. However, we will endeavor to contact as many of you as possible by phone. Please feel free to move to the front of the line by contacting us at (208) 746-6283 or (888) 746-6285, or by email at lance@nwsimail.com.. If you have a health situation that you believe may be an issue, contact us anyway, and we’ll see what we can do. End

Benefits of a Medicare Supplement Plan


The following table lists all of the possible benefits of a Medicare supplement plan. Plan F is the only plan that contains all of these benefits.

Basic Benefits

  1. Part A coinsurance. The Medicare supplement will pay the $315 per day coinsurance for days 61-90 of a hospital stay. The Medicare supplement will pay the $630 per day coinsurance for the 60 lifetime reserve days. The Medicare supplement will pay for 365 additional days of hospitalization after Medicare hospitalization benefits are exhausted.
  2. Medical expenses Part B: The Part B coinsurance is generally 20% of Medicare approved expenses. This includes the coinsurance for outpatient services and surgery. Plans K, L, and N require the Medicare beneficiary to pay a portion for the Part B coinsurance. ***Details below.
  3. Blood: The first three pints of blood.
  4. Hospice: The Medicare supplement pays the hospice coinsurance.


Skilled Nursing Facility coinsurance

  1. Medicare pays 100% for the first 20 days for an approved stay for skilled nursing facility care.
  2. For days 21-100 Medicare will pay for an approved stay. There is a $157.50 per day coinsurance that the Medicare supplement pays. ***See below for Plans K and L.


Part “A” Deductible

  1. For 2015 the Medicare Part “A” deductible is $1,260 per hospital benefit period. The benefit period is for 60 days and begins after one’s discharge. The Medicare supplement could pay this benefit more than one time per year. .***See below for Plans K and L


Part “B” Deductible

  1. 1. The Medicare Part “B” deductible is an annual $147 in 2015.


Part “B” Excess (100%)

  1. 1. In general, if a Medicare Part “B” provider charges an excess above the Medicare approved amount, this benefit will pay that amount. Physicians may charge a maximum of 115% of the Medicare approved amount. These are known as non-participating physicians or physicians that do not accept Medicare assignment.


Foreign Travel Emergency

  1. In general, Medicare does not pay in foreign countries. One will pay the first $250 for Medical services. After that, the Medicare supplement will pay 80%, and the insured will have a 20% coinsurance. Usually one must pay his/her bill upfront and then bring the bills back to submit a claim.


Out-of-pocket limit

  1. 1. For Plan K there is a maximum annual out-of-pocket limit of $4,940. The Medicare supplement will pay 100% after that limit is reached.
  2. 2. For Plan L there is a maximum annual out-of-pocket limit of $2,470. The Medicare supplement will pay 100% after that limit is reached.


High-deductible Plan F

  1. High-deductible Plan F pays the same benefits as Plan F after one has paid a calendar year deductible of $2,180. This deductible is for what the Medicare supplement would have paid. Medicare still pays its part when one has high-deductible Plan F. After one has met the deductible, then the plan pays just like a regular Plan F.


***Details for Plans K, L, and N

  1. Plan K: Hospitalization and preventative care paid at 100%. Other basic benefits are paid at 50%. Pays 50% of the skilled nursing coinsurance. Pays 50% of the Part A deductible.
  2. Plan L: Hospitalization and preventative care paid at 100%. Other basic benefits are paid at 75%. Pays 75% of the skilled nursing coinsurance. Pays 75% of the Part A deductible.
  3. Plan N: The insured pays a maximum $20 copay for a doctor’s office visit and a maximum $50 copay for an emergency room visit.

Quiz: Your shopping type

Emotions and Sentiments or Knowledge and Understanding.

Pick whether you believe the statements listed below are primarily based on Emotions and Sentiments or Knowledge and Understanding.

The agent said to get Plan F so you don’t have to pay anything.

Correct! Wrong!

You have to pay a higher premium for Plan F compared to Plan G. Depending on your state, the Plan G may be a better value so you will pay less compared to Plan F.

The Council of Aging people told me that this national organization’s Medicare supplement was better, so I should go with that one.

Correct! Wrong!

Bless their hearts, but unfortunately the CoA volunteers have made plenty of gaffs. This is another one. The benefits for the Medicare supplement plans are standardized. If the CoA volunteers are recommending a large, name brand Medicare supplement that is more expensive than a smaller company’s plan, aren’t they actually doing a disservice for their audience?

My neighbor said that this (Brand X) is a good one.

Correct! Wrong!

It’s good based on what? This is invariably based on opinions that are based on feelings.

Do they pay?

Correct! Wrong!

They all pay! Any thinking or suggestions that any given company doesn’t pay is flat out wrong.

I’ve never heard of that company (Brand Y) before (with a worried tone implying that it may not pay).

Correct! Wrong!

It doesn’t make any difference if you have heard of the company or not. They all pay!

But, can they drop me?

Correct! Wrong!

As long as you pay your premium the company cannot drop you, no matter how many claims you have had. Every Medicare supplement policy says this in its policy language.

That company is only in a dozen states (fearing that the company is too small and may not pay its claims).

Correct! Wrong!

They all pay their claims. They also pay claims in all 50 states, even if they do not write business in a given state. Additionally, the smaller companies can have stronger financials compared to the larger ones.

They treated me really good.

Correct! Wrong!

The company did not single you out to “treat” you well after they paid a claim of yours. They simply performed their end of the bargain… You pay your premium, and they pay your claims if and when they occur. It’s simply a business obligation on their part.

My husband has this one, so I might as well get the same one.

Correct! Wrong!

What if your husband's plan is overpriced now? Why overpay if you don't have to?

I’ll call an 800 number because I want to cut out the middle man.

Correct! Wrong!

I heard this one from a gentleman that was misled by the Council on Aging. There is no “middle man”. The rates are all filed with the state insurance department, and it makes no difference whatsoever, as far as the premium goes, if you purchase your plan from an agent or through a company’s 800 number. When you sign up via an 800 number, you pay a commission to an agent that you will undoubtedly never see. In addition, you usually pay more than you need to, because the 800 number order takers aren’t looking out for your best interests. They don’t explain to you other lower cost options.

I don’t want to change.

Correct! Wrong!

This is a fairly common sentiment. It basically boils down to this: The devil I know is better than the one I don’t know. Knowledge of the Ten Mistakes, especially number one and two, can help overcome this fear. A new, lower cost company will pay its claims just as well as your old company.

I want to get the most bang for my buck.

Correct! Wrong!

Usually these people want to listen to the facts and get the best buy. They understand the basis for going with a particular plan. They quickly grasp recommendations to help them get the best buys. They tend to be less swayed by hype.

I don’t care about a more competitive price; I just want to make sure they pay.

Correct! Wrong!

Again, this statement is based on the fear that a particular company may not pay its claims.

I wan my plan to cover everything that Medicare doesn’t.

Correct! Wrong!

No plan covers non-Medicare covered expenses. It’s correct to say the following: My Plan F covers both deductibles and the co-insurances not covered by Medicare. This is true with any Plan F.

I’ll go through all of this (meaning the stuff in the mail), and when I figure it out, I’ll call you.

Correct! Wrong!

This is more of a brush-off. This person won’t figure everything out because relying on what comes in the mail is like playing poker or pinochle with nine cards missing from the deck.

I don’t want to have to pay any deductibles or copays.

Correct! Wrong!

See number one. A higher premium for Plan F in many cases incurs more out-of-pocket costs compared to Plan G. People, and agents, conveniently forget that your premium is also an out-of-pocket cost. Now, if you say that you are perfectly willing to pay, let’s say $300 to buy a $182 benefit (in 2017) benefit, then you could argue for Knowledge and Understanding.

I trust the Council on Aging folks.

Correct! Wrong!

Why and based on what? While Council on Aging people do have a minimal training session, they are not insurance licensed. Unlike insurance agents, they aren't required to take Continuing Education courses. Lastly they don't have to annual re-certify for Medicare Advantage or Part D plans as insurance agents are required to do.

I like the one I have.

Correct! Wrong!

People tend to like what they own. For example, most owners like their car. This common sentiment also crosses over to intangibles such as insurance products. Now, do you like paying $0.50 to $1.00 more per gallon for gasoline than you need to? Probably not. So why do people persist in paying more for a Medicare supplement than they need to? I believe that it comes back to the fear of change or fear that another company won’t pay. For others it’s a pride thing. People don’t want to admit to themselves that they made a bad buy.

I know I don’t understand all of this, so I want you (an insurance professional) to help me.

Correct! Wrong!

These people know their limitations, and they know they need help. It’s also been my experience that these types of people are some of the best and easiest ones to work with. The only caution I have for these folks is they don’t allow themselves to get led astray by a bad agent.

Shopper Type Quiz
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Share your Results:

What Kind of Shopper are You?

There are two types of mental actions that we primarily use when making decisions about most anything we do or buy. In general they are one of the two following ways: Either we use emotions and sentiments (E&S’s) or knowledge and understanding (K&U). Which one do you think the advertisers rely on almost exclusively when seeking to get you to make a buying decision for a particular product?

Just think of the advertising for soft drinks. “Pepsi hits the spot” and “the Pepsi generation” are old slogans you likely recognize. The TV ads showed attractive young adults playing volleyball at the beach. The association with the good times, youth, and vitality was very powerful. Never mind the fact that the consumption of soft drinks, especially colas, can lead to all sorts of adverse health effects. For more details about the latter, please refer to my archived Newsletter #9 and Newsletter #13.

There’s little controversy left concerning the fact that smoking is a really bad thing for one’s health. That should be obvious, as sucking smoke containing dozens of carcinogens into one’s lungs year after year inevitably leads to all sorts of health problems. However, despite what would appear to be common sense, the macho Marlboro man and the feminist Virginia Slims woman sold billions of dollars’ worth of cigarettes.

In light of the fact that buying and drinking soft drinks is literally peeing one’s money down the drain and smoking is literally burning up one’s cash, how do advertisers convince people to make these purchases? It’s real simple; they appeal to one’s emotions and sentiments. In spite of all the logical reasons for declining such purchases, people continue buy them anyway. The truth is, emotions and sentiments are a far more powerful motivator than knowledge and understanding. This is so much the case that people’s E&S’s often override any common sense whatsoever. The ad designers, schooled in the art of advertising psychology, are well aware of this and are experts at manipulating people’s emotions in order to get them to think and act a certain way.

Just walk down the grocery store aisle containing laundry detergents. There are enough exotic designs and swirls to dazzle anyone’s imagination. A plain white box that says, “Tide Laundry Detergent” in black, block letters does not have the sensory stimulation as does Proctor & Gamble’s real thing. This sensory stimulation is part of the appeal to one’s emotions and sentiments. The product designers know this, and where appropriate, they take full advantage of this technique.

The case is just as true when it comes to the promotion of Medigap insurance or Medicare supplements. However, a different set of emotions and sentiments is targeted. Obviously, the advertisers are not pushing the Pepsi generation or the Marlboro man, so what E&S’s do you think they hit on?

Let’s see, seniors want to have the confidence that their Medicare supplement company is solid, trustworthy, and will pay its claims. One national organization uses this approach in their TV ads for their Medicare supplements. Speaking somewhat melodramatically, their voice-over commentator makes this emotional appeal to you the viewer: “You have your Medicare health insurance card and our I.D. card; you are now set!” From the standpoint of an appeal to a person’s E&S’s, these ads are powerful and extraordinarily well done. You’ll notice in this example there is no mention at all of being competitive or getting the best buy.

In print advertising, including mailers, some insurance companies make an implicit claim that their product is somehow superior to others. They extol their benefits as if somehow, their plan is uniquely better. Their graphics, color schemes, and advertising copy are carefully orchestrated to give you the reader, the impression that these are the people you can trust.

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During the appointment the agent doesn’t mention the card at all. But if you do inquire about the “under $50” product, he says, “Well really, that’s (meaning the high-deductible Plan F) not that popular of a plan. Most people want more benefits and get Plan F.” If you haven’t guessed it already, this technique is called bait and switch.Some mailers definitely push the envelope on ethics. Here’s a piece I picked up from a home a couple years ago. Hmm, a Medicare supplement for less than $50? The promoter of this oversized postcard wanted to appeal to a person’s sense of “getting a good deal”. Don’t we all love bargains! This company ostensibly promoted their high-deductible Plan F, which statistically, zero percent of the Medicare supplement shoppers buy. So yes, the real objective of this card was to get people to ring their 800 number and to get their agent in front of people.

I should add that whenever a mailer mentions a Medicare supplement rate, most all states’ insurance departments require the company to specifically state the exact rate and which plan that rate references. There can be no ambiguity allowed whatsoever, as there must be full disclosure. The state where this first card originated is an exception to the general rule.

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This second specimen is an example of a full-disclosure postcard. You’ll notice that the plan letters and rates are clearly displayed. The fine print at the bottom of the card discloses the legal form numbers for each plan mentioned (red arrow). As it states just the facts, this card is straightforward in its use of K&U. There is no appeal to one’s E&S’s. It exemplifies a fully compliant advertising piece. The agent that mailed this card is simply saying, “Here is a company I represent, here’s their rate, and here’s my contact number.

As an aside, there is something else very instructive to learn here. Notice that the difference at age 65 between their Plan F rate, $139 per month, and their Plan G rate, $111 per month, is $28 per month. $28 times 12 months equals an annual $336 more to buy their Plan F. All you are getting for $336 is a $147 (in 2015) Part B deductible benefit. Do your E&S’s tell you that you have to get Plan F, or does your knowledge and understanding suggest that Plan G, in this situation, is a better buy?

In another mailer the advertiser makes an interesting assertion: “Helping you with the High Costs of Medical Care”. Their appeal to your E&S’s is to get you to think that they are on your side. The brochure is well done as far as the copy and printing goes. The only problem with this piece, however, is they are making things worse because they attempt to sell you their high priced Medicare supplement. I wrote about this company in my document, Ten Dishonest Tricks of Unethical Agents.

How do they entice people to pay for their non-competitive Medicare supplement products? Simple. They train their agents to push people’s emotional buttons. They’re experts at pandering and manipulating. Unfortunately, there are enough gullible people who fall for their hype, as this company is still around. Once you expose their agents for who they are and what they do, they run like scared cockroaches.

To assist people in combatting this promotional nonsense, I wrote the Ten Medicare Supplement Shopping Mistakes. To listen to this fifteen minute audio presentation, please click here. In Mistake #1 we learn that the plans are standardized. Therefore, any company’s Plan F will have identical Medicare benefits to any other Plan F. So, if Brand X claims the virtues of their plans, you can substitute Brand Y or Z, instead. You can rest assured that the benefits are identical. The only exception is that a couple of companies may offer a dental & vision or a health club benefit, but at a higher premium.

Not only do companies push people’s emotions and sentiments button, but people do it to themselves. How many times have I heard people say, “Do they pay?” Initially, that’s a good question, especially if a person has heard about the war stories of some under-65 health insurance company not paying their fair share of their claims.

That’s why I wrote Mistake #2, which is thinking that a company will not pay its claims. They all pay their claims, even the ones that use questionable marketing ethics. They are mandated by the state insurance departments to do so. Even after I have put this information in people’s hands, some have still persisted with their doubts and fears (E&S’s) about a particular company not paying its claims. If still in doubt, they can contact the consumer affairs office at their state insurance department regarding the complaint history of any company. There may be an infrequent billing error, but rest assured; the companies, all of them, pay their claims!

All of my Ten Mistakes are based on knowledge and understanding. This is to assist you, the shopper, to make the best buy for your situation. A good working knowledge of these Ten Mistakes will help steer you to the use of your K&U faculties rather than relying on E&S’s. Unfortunately, there are those people, even when the facts are dropped in their laps, who still persist in spending sometimes hundreds of dollars more per year than they need to.

Why does this occur? I think it’s mainly due to the fact that some people let their emotions and sentiments drive most of their decisions. These tend to be the people who are willing to spend a dollar on gas driving across town to save a dime on a bag of sugar! It is also my observation that these are the types of people who are buffaloed by the slick-talking agent that is fully aware of this situation and uses emotions and sentiments to pander to them.

Much more could be said about this aspect of human psychology, but that is beyond the scope of this article.

Take a Quiz

To assist you in determining your shopping type, I have developed the following quiz. The following are statements that I have heard people say over and over. Mark “A” if you believe the statement is based on emotions and sentiments, and mark “B” if you believe the statement to be based on knowledge and understanding.

Quiz Time!

Characteristics of a Pro-Agent

What to look for when shopping for an agent:

  • Look for one that is knowledgeable about his subject. You can ascertain this by looking at the contents of his website, his newsletters, his seminar information, and any information he provides to you.
  • Choose an agent that works with a large number of Medicare supplement companies. Usually, the more the better.
  • Look for an agent that is patient with you and is willing to take the time to explain things to you in an understandable manner.
  • Look for the agent that is willing to put everything on the table, including any downsides to any plan that he is discussing.
  • Go with an agent that you feel comfortable with and demonstrates ethics in his practice.
  • Look for an agent that you perceive cares about you, your situation, and will be there year after year to continue to guide you through the Medicare maze.
  • Look for the agent that makes it easy for you to get in contact with him.
  • Go with an agent that gives you sound reason or basis for making a particular decision.
  • As always, testimonials or references never hurt.


Avoid these kinds of people:

  • Agents that disparage another company, especially by making any hint or innuendo that they may not pay their claims or will go out of business. Those agents don’t have that particular company in their briefcase, so they attempt to drive a wedge between you and that particular company. They suggest that you pay a higher premium for no reason at all other than for them to make the sale. Agents like these also tend to badmouth other agents.
  • Agents that are single company agents or SCA’s. For more background, please refer to my online document, Dishonest Tricks of Unethical agents #6.
  • There are exceptions, but usually it’s best to avoid agents in big box stores. Too many people have gotten bad advice or made hasty decisions only to regret it later. A good agent will offer to meet with you later in a quiet place. He will not be in a hurry!
  • Agents that pander to you.
  • Avoid property and casualty insurance agents. Their specialty is auto and home coverage, crop insurance, or commercial lines, but they do not specialize with Medicare products. They may carry a company or two, but usually that’s about it. Do you see your urologist when you have a heart problem? Probably not. Unless you want to pay more than you need to, don’t fall for their “let’s get it all under one roof” company line.
  • When pressed, agents that can give no reason or basis for a particular recommendation other than to say, “I think it’s a good idea, or this is a good one”.
  • The commission chasers. This is very common. Agents will pass up showing you a more competitive plan because it doesn’t pay as much commission compared to a more expensive one. Please refer to Dishonest Tricks of Unethical agents #1 and 2 for more information.
  • Agents that appear to be uninformed, make off-the-wall statements, or make erroneous assertions. Likewise, be very wary of agents that make vague or unsubstantiated statements.

In conclusion, finding a professional agent helps you to not only avoid Major Mistake #3, but also to avoid the first two Major Mistakes.

Selecting a new policy or changing to a different one doesn’t have to be a scary process. A good agent will hold your hand and walk you through the entire process step by step. The result will be that you will have the confidence that you made the right decision and ended up with the right policy or plan. If you are replacing your existing Medicare supplement, you will have the peace of mind that your new plan is every bit as much as the one you have, but you will be paying less money.

Major Mistake #3

The third major mistake is shopping for a plan, when you should be shopping for an agent.

There are some shoppers that have figured this out on their own and have intuitively avoided making these three mistakes. They know they are confused by the brochures that jam their mailboxes, so they toss them as fast as they arrive. They don’t want to talk to someone in Kalamazoo, so they seek to find an agent to help guide them through the Medicare maze.

However, the majority of shoppers are still mistakenly shopping for a plan rather than a good agent.

If you are approaching 65 and will soon be on Medicare, it is logical to think that you want some sort of a Medicare plan. You look at the brochures that arrive in your mailbox and maybe even call some of the 800 numbers. On more careful consideration, this is like getting the law books out when you have a legal matter instead of shopping for a good attorney.

There are those shoppers that believe that if they go through enough agents, they will magically find the perfect plan. The irony about those types of folks is this: They are usually the ones that fall victim to the fast-talking, pandering agent. They often don’t recognize good advice when they hear it.

Finding a qualified insurance professional saves you much grief in another way. Countless Medicare supplement shoppers have gone to a friend, the senior center, the Council on Aging, calling 800 numbers, and who knows what else, only to get the wrong and often contradictory information. Working with a pro-agent from the get-go saves you all of that frustration.

I was an educator for 22 years. From the standpoint of instructional technology, the way that this Medicare maze is being presented to Medicare recipients is worse than abysmal!

In a classroom setting, good teaching technique says that the teacher should present one concept at a time to his or her students. When they master that step, the teacher presents the next step and so forth. For example, in teaching geography, the teacher will present the concept of “latitude” first to her students. When they have mastered that, she continues with “longitude”. Good teaching progresses one step at a time.

Bad teaching throws multiple concepts into the very first lesson. Imagine trying to learn about latitude, longitude, parallels, meridians, date lines, equator, Tropic of Cancer, Capricorn, etc, etc, all at one time. It likely will turn into one big mish-mash, with the result that many students will be totally confused and passionately hate geography lessons.

As your 65th birthday approaches, you will be inundated with a tidal wave of information. There are Medicare supplements, Medicare Advantage, Part D prescription plans, Medicare Advantage plans with built in Part D benefits, and a dizzying number of choices in each category to choose from. A good agent can explain each concept one at a time and help you understand which option best suits your needs.

Going through that Stack of Stuff can or will put most people on mental overload! You don’t have to do it, as there is a much better way.

Isn’t your objective to simply understand the Medicare maze so that you can make a smart decision that you are comfortable with? Assuming that’s a YES, here’s what to do.


Be Smart and be Clever

Make yourself a SPAM Box. It could look like this:

The majority of you are now hooked up to the internet and have email. Most all email servers have SPAM filters. You want to read the emails from your kids and grandkids and see their pictures and not waste time going through the SPAM. Just as email servers have their criteria for what emails get dumped into your SPAM Box, you do likewise with your Stack of Stuff. Once you have made your final selections and are happy with them, then you can empty your SPAM Box without any reservations.


Candidates for your SPAM Box:
(Keep in mind that you can always go back and retrieve these items.)

• Just about all company mailings.

• Pieces from pharmacy chains.

• Agent pieces that mention a particular insurance company or its rates. Note: As soon as that company goes up 15%, those agents are onboard with the next lowball company.

• Seminar invitations if that is not your thing.

• An agent mailer that appears to be poorly done.



• An insurance company that has an affinity relationship with your fraternal order, union, club, religious group, or association.


These go in your Inbox:

• Your “Medicare and You” booklet.

• The envelope from CMS that has your Medicare card and related information. Very helpful is the 31 page red, white, and blue Welcome to Medicare Booklet. It offers good, basic information to help you get started.  Click image below to view.

• Other mailings from CMS which might include a survey for Medicare recipients.

• Any other piece with a government return address. It could be very important.

• A quality postcard or other piece from an independent insurance professional if you are shopping for a good agent.

• Seminar invitations, if that is your thing.


Okay, so you’re now convinced that you should be shopping for an agent. Here is what to look for.

Major Mistake #2

The second major mistake is contacting numerous companies via their 800 numbers.

Recently I spoke with a gentleman, Sam, who was looking for a Medicare supplement. He then mentioned that he was also interested in a Part D prescription plan. He told me that he had received a brochure from company Z and called them for information.

I ran his meds on Medicare.gov, and sure enough, another company was a substantially better buy. The customer service rep (CSR) for Company Z could only promote her company and explain how their copays worked. As far as the rep goes in this situation, it’s like someone trying to sell you a shoe that doesn’t fit. If the shoe is too tight or hurts your foot, you know that right off the bat. In the case of a Part D prescription plan, you won’t know that until you run your meds on Medicare.gov. For Sam, calling the 800 number was a needless diversion and a waste of time.

In another situation I met with Linda. She explained to me that because she was in a hurry, she had called an 800 number from a brochure she received in the mail to sign up for their Medicare supplement. Linda continued by telling me that one of the first questions the operator from Company Y asked her was, “Do you smoke?” She admitted to having an occasional smoke, so the rep signed her up for the tobacco rate Plan G.

Unwittingly, Linda had made at least three mistakes that I covered in the Ten Medicare Supplement Shopping Mistakes. She wasn’t taking advantage of open enrollment discounts for tobacco users, she called an 800 number, and she was going to pay a 25% higher premium than need be. And here is the saddest part.

There are millions of Americans on fixed incomes and tight budgets. Many of them are making a financial sacrifice to purchase their Medicare supplement. Some have considered the usually lower premium Medicare advantage plans, but they are concerned about the various copays. This was the case in Linda’s situation. She wanted the peace of mind and financial protection that the Medicare supplement plan affords. So ask yourself, are the people on the other end of the 800 number really concerned about you and your budget, or are they just interested in selling you their company plan?

As I sit down face to face with prospective clients, I well understand the pain and frustration that many of them are going through. There are times when I wish I could discount the premium, but regulations prohibit that. The least I can do for them is to show them how to navigate through the Medicare maze as affordably as possible. Folks, that doesn’t happen when you call the 800 numbers.

There are other ways that a good agent can show people how to save money. For example, on several occasions I have shown people how to save four months of premium for their Part D prescription plans. For those taking no meds, they can wait until the seventh month of their Initial Enrollment Period (IEP) to sign up for their plan. That saves them four month’s premium or generally $60 to $120. The 800 number people are instructed to get you signed up as soon as possible.

Here is another story of a bad experience caused by responding to a company mailer and calling their 800 number. I signed up Shirley for a Medicare supplement, and a few months later she mentioned to me the burial life insurance policies that she bought for both her and her husband. She described to me the very affordable premium and what she thought was a permanent policy. As soon as she mentioned the actual premium, I knew exactly what she had purchased. It sure wasn’t what she thought it was!

I explained to her, “Oh, I know what you have. It’s actually a form of term insurance with a premium that stair steps up every five years. If you live a long time, you will likely be unable to continue paying their escalating premium. People get those policies only to drop them when they can no longer afford the ballooning rates. In other words, it puts you in the position of hoping you will die before dropping the policy so your beneficiary can collect the death benefit.

I continued by telling her, “I want you to verify everything I’ve said. Call the insurance company tomorrow and ask them how it works.” Shirley did exactly as I suggested, and was not happy when the rep confirmed everything I outlined to her. She was disgusted by the misrepresentation and immediately cancelled both policies.

Here is what happened in another situation. Becky received an elaborate brochure with an impressively embossed plastic wallet card attached. Her name was on it, of course, and the card read in shiny gold letters, “PREFERRED MEDICARE REVIEW. She called their 800 number and left a message. Within 30 seconds a call came back to her. In the end she signed up over the phone for a high-deductible Plan F. She paid 22% more than she needed to.

This company is essentially a boiler room operation that uses “flim-flam” marketing. Their rep also led Becky to believe that their plan would have the same rate for four years. When I explained to Becky that no company has a four year rate lock, she said, “I’m going to call my agent.” Moral to this story: The more flim-flammy the marketing, the more flim-flammy are their reps.

There are many, many more examples that I could cite. Calling a company’s 800 number can lead to costly mistakes. Even if an 800 number company is competitive, a good independent agent will most likely carry that company’s products anyway, so you don’t have to go the 800 number route.

A related mistake that people make when calling a company’s 800 number, is thinking that somehow it will be a better deal (price) compared to working with an agent. Usually, the opposite is true. The Medicare supplement rates are all filed with your respective state insurance department. These rates are the same whether you buy your Medicare supplement direct from the company, an independent agent, or even Santa Claus. Even after hearing this, some people continue to ignore the facts and press onward in their blind ignorance and stupidity.

When you buy via the 800 line, you are paying a commission to an agent that in the majority cases, you will never meet or speak with again. If you have a question, a problem, or a claims issue, most generally you will speak with a different rep every time you call that company.

There are a myriad of other ways that a caring agent brings plenty of value to the table for the people he meets. For sure, one of the ways is advising them to avoid garbage financial products and insurance scams.


This leads to the third major mistake.