Medigap Shopping: Closing the Book & Rate Increases

[teej1985]

Another good YouTube from Giardini about Medigap insurance changes in 2025.

He always makes good videos...

 

[Rianne]

I found an interesting forum that might help. I think the forum is for insurance agents to discuss practices. Go to page 1, I started on page 3.

Closing a book of business

Inquiring minds want to know? Why do Medicare Supplement companies close a book of business and then come out with a new plan? Can someone explain the logic in it to me? Accounting, finance, and financial reasons.

www.insurance-forums.com

 

[Gotadimple]

I found an interesting forum that might help. I think the forum is for insurance agents to discuss practices. Go to page 1, I started on page 3.

Closing a book of business

Inquiring minds want to know? Why do Medicare Supplement companies close a book of business and then come out with a new plan? Can someone explain the logic in it to me? Accounting, finance, and financial reasons.

www.insurance-forums.com

Well if insurance agents don't understand than that's a problem.

Companies close the book because the population is aging, claim costs are rising, they cannot change the benefits, the Feds won't approve a rate increase AND the Feds won't let them leave the beneficiaries without a place to go.

* Medigap benefits cannot be changed by the carriers. Those benefits are dictated by the federal government.
* If a plan is closed a beneficiary can stay in the plan, if they don't like the premium that means they need to apply for new coverage with their current or some other carrier, and risk that they will not pass medical underwriting. CMS, consumer advocates, and state insurance commissioners don't like to deal with situations where thousands of seniors are being inconvenienced.
* The carriers keep the program running but don't accept new members for financial reasons. They start a different plan when there is the likelihood they will attract both healthy and unwell beneficiaries, and the risk of paying out more in claims than in premiums is low.

Once the plan has only a few members then the carrier will consider closing the plan down - but they do that with prior approval from CMS and state insurance commissioners.

 

[RetMD21]

Well if insurance agents don't understand than that's a problem.

Companies close the book because the population is aging, claim costs are rising, they cannot change the benefits, the Feds won't approve a rate increase AND the Feds won't let them leave the beneficiaries without a place to go.

* Medigap benefits cannot be changed by the carriers. Those benefits are dictated by the federal government.
* If a plan is closed a beneficiary can stay in the plan, if they don't like the premium that means they need to apply for new coverage with their current or some other carrier, and risk that they will not pass medical underwriting. CMS, consumer advocates, and state insurance commissioners don't like to deal with situations where thousands of seniors are being inconvenienced.
* The carriers keep the program running but don't accept new members for financial reasons. They start a different plan when there is the likelihood they will attract both healthy and unwell beneficiaries, and the risk of paying out more in claims than in premiums is low.

Once the plan has only a few members then the carrier will consider closing the plan down - but they do that with prior approval from CMS and state insurance commissioners.

It could just happen like that by bad luck or a carrier might plan it. If they open a new plan at attractive rates and let the healthy people in the first plan transfer as well as attracting a mix of new customers. The less healthy folks are over represented in the old plan so costs are high and the regulators approve rate increases. IDK if you watched the video but there was one G plan in Michigan that was significantly less expensive than the others. I don't think the company has some genius plan to make more money in a low margin product. It seems more likely that they are trying to grow the business with unsustainably low premiums.

 

[Sangiovese]

It is good to see that IL fixed the Birthday Rule (as of 1/1/26) so that you can switch to an "affiliate" company of the same insurer, without underwriting, during the 45-day period after your birthday, up until age 75. (Coverage must be same or lesser to avoid underwriting.)

Previously, a company like MoO could close the book, open a new book with a new name, and then deny applicants trying to move to the new book via the Birthday Rule. They would claim that the new book was a new Company and therefore the move did not qualify for a Birthday Rule switch.

As of 1/1/26, companies in IL can no longer employ this tactic because all "affiliates" of the company count as the same company for Birthday Rule purposes.

 

[badatmath]

It is good to see that IL fixed the Birthday Rule (as of 1/1/26) so that you can switch to an "affiliate" company of the same insurer, without underwriting, during the 45-day period after your birthday, up until age 75. (Coverage must be same or lesser to avoid underwriting.)

Previously, a company like MoO could close the book, open a new book with a new name, and then deny applicants trying to move to the new book via the Birthday Rule. They would claim that the new book was a new Company and therefore the move did not qualify for a Birthday Rule switch.

As of 1/1/26, companies in IL can no longer employ this tactic because all "affiliates" of the company count as the same company for Birthday Rule purposes.

Unfortunately not many states have that.

 

[CaptTom]

Unfortunately not many states have that.

This is a good point. When thinking about moving a few years ago, this would have been an important consideration, had I known back then that every state's laws are different, regarding Medicare plan changes.

I think going forward it's something to add to the advice we give to those considering relocating on retirement. It should be a bullet item on all those lists of "best places to retire to."

 

[FIREchief]

I've watched several of the Giardini videos. I've spent some time on the serff website. Thank you all for your useful inputs. At this point, I'm really not seeing any useful decision tools. I'm planning on G-HD and for several companies I've looked at in my state, the rate filings have indicated very low loss ratios and no requests to hike G-HD premiums. The opposite is true for F and G. I've also reviewed some ten year rate histories that have some years with 20% increases and some with zero. I'm guessing that it is more based upon loss ratio history than which company. IOW, there are no "bad" insurance companies, just "bad" pools of insured buyers. I have no way of knowing if the plan I sign up for is more or less likely to attract people with higher than average future health needs. Many don't know. Those who do likely gravitate towards the non-HD plans. Even if I were in bad health, it likely wouldn't be bad enough year after year to tilt the CBA towards a non-HD plan. So, at this point I've discovered what I already knew. Plan G-HD is an obvious choice. Beyond that? It's hard to say. I checked the major players like Aetna and Humana, and they each have less than 50 G-HD policies in force. G-HD is relatively new, and it appears that about 90% of folks shun any HD plan. If I had to decide today, I might flip a coin between Humana and Globe Life. Mutual of Omaha, Cigna and Aetna have their critics, but that may just be because they are larger and have made more customers mad with necessary rate increases. Since all players are equally regulated by the state, I can't see how they could abuse the system. Maybe I'm missing something. From watching the videos, it appears that the small companies who use TPAs are more likely to close and open pools, which may work to my detriment more than the large companies. I think we have our answer to this. Nobody knows!!!! LOL. I'll keep scratching my head.....

 

[Svensk Anga]

And the way you get bad pools is by closing the book on a plan. Those that remain experience rising medical costs as they age. Those that can pass underwriting (that is, the good risks) leave for a lower premium elsewhere. The loss experience of those who are left gets worse and worse. There would be no (relatively) young, healthy people entering your dead pool.

My impression is that if you are stuck in a dead pool, you can experience much greater than typical premium increases. It may not be much of a factor in the HD plans, since these tend to self-select for those with minimal health issues. If you do get stuck, you can escape via Medicare Advantage and get back to Traditional plus supplement via your once per lifetime trial right. If you have to do this, choose wisely since there is no do-over.

 

[Buckeye]

Thanks for this, and the other observations. I went with "N" because I'm betting the N buyers have, and will have lower utilization and that that will translate into lower price increases. But, disappointingly, AARP/UHC jacked up the price the same percentage on N an G on the last price hike.

The AARP/UHC rate increases for Plan N are what sent us shopping to move from Plan N to Plan G HD in May 2024. Started with United American and then switched to UHC when their new Plan G HD started. DH uses the UHC free gym benefit so it's about a $20 benefit per month. DH's Plan N was going to be $200 a month and his Plan G HD is $58. DH has had cataract surgery in both eyes (plus follow-up eye dr visits) and a screening colonoscopy (with polyp removal and associated costs). His total expense after meeting his deductible and subtracting out what would have been Plan N $20 copays, will be about $500. The significant Plan G HD premium savings will pay that back as of the April premium. Also, he didn't hit his Medicare deductible for 2024 until December so there was significant savings from his May 2024 - Dec 2024 Plan G HD premiums versus having Plan N. If you know you can cover the deductible, if necessary, the AARP/UHC Plan G HD is a great plan.

 

[ncbill]

I've watched several of the Giardini videos. I've spent some time on the serff website. Thank you all for your useful inputs. At this point, I'm really not seeing any useful decision tools. I'm planning on G-HD and for several companies I've looked at in my state, the rate filings have indicated very low loss ratios and no requests to hike G-HD premiums. The opposite is true for F and G. I've also reviewed some ten year rate histories that have some years with 20% increases and some with zero. I'm guessing that it is more based upon loss ratio history than which company. IOW, there are no "bad" insurance companies, just "bad" pools of insured buyers. I have no way of knowing if the plan I sign up for is more or less likely to attract people with higher than average future health needs. Many don't know. Those who do likely gravitate towards the non-HD plans. Even if I were in bad health, it likely wouldn't be bad enough year after year to tilt the CBA towards a non-HD plan. So, at this point I've discovered what I already knew. Plan G-HD is an obvious choice. Beyond that? It's hard to say. I checked the major players like Aetna and Humana, and they each have less than 50 G-HD policies in force. G-HD is relatively new, and it appears that about 90% of folks shun any HD plan. If I had to decide today, I might flip a coin between Humana and Globe Life. Mutual of Omaha, Cigna and Aetna have their critics, but that may just be because they are larger and have made more customers mad with necessary rate increases. Since all players are equally regulated by the state, I can't see how they could abuse the system. Maybe I'm missing something. From watching the videos, it appears that the small companies who use TPAs are more likely to close and open pools, which may work to my detriment more than the large companies. I think we have our answer to this. Nobody knows!!!! LOL. I'll keep scratching my head.....

IIRC, the expectation is that the deducible rises to reflect health care inflation but not the premiums.

 

[Buckeye]

The Plant G HD deductible increased 2.5% from 2024 to 2025. $2800 to $2870.

 

[FIREchief]

IIRC, the expectation is that the deducible rises to reflect health care inflation but not the premiums.

The premiums would have to increase as well, eventually. I've spent quite a bit of time on SERFF. The clear pattern among all companies in my state is that their loss ratios for the non-HD plans increase much faster, leading to larger, more frequent rate increases for those non-HD plans. I've also seen a handful of G-HD premium increases, but smaller and less frequent. That suggests only one thing. HD plans attract a lower risk pool of customers (i.e. those with better health and better health histories). That's the pool I'm jumping into, regardless of the fact that my health and expectations are not top 50%.

 

[teej1985]

IIRC, the expectation is that the deducible rises to reflect health care inflation but not the premiums.

I don't think that is a realistic expectation.

 

[mf15]

Had F-HD past 11 years,saved a lot of money. But,but,but. You have to do the billing yourself, hosp billing is a mess. Last EOB for pacemaker 28 pages,as you get older not so easy. Then you get my doc bills as opposed to hosp bills. Then they auto inroll you in online billing, which I switched to mail. The could be sending emails and texts to a dead person,and no one would know. LOL

 

[audreyh1]

Had F-HD past 11 years,saved a lot of money. But,but,but. You have to do the billing yourself, hosp billing is a mess. Last EOB for pacemaker 28 pages,as you get older not so easy. Then you get my doc bills as opposed to hosp bills. Then they auto inroll you in online billing, which I switched to mail. The could be sending emails and texts to a dead person,and no one would know. LOL

Yeah, because we don’t have the option of switching from G-HD to G as we get older and things get more complicated, we decided to avoid dealing with high deductible billing from the get go.

 

[FIREchief]

Had F-HD past 11 years,saved a lot of money. But,but,but. You have to do the billing yourself, hosp billing is a mess. Last EOB for pacemaker 28 pages,as you get older not so easy. Then you get my doc bills as opposed to hosp bills. Then they auto inroll you in online billing, which I switched to mail. The could be sending emails and texts to a dead person,and no one would know. LOL

I think you're exaggerating a bit here. Getting and paying a medical bill, after Medicare processed the claim and issued a statement showing what you owe, is no different than paying your electric bill. Medicare sends a statement showing all claims, status and how much you owe on each. I'm not currently on Medicare but take care of this as DPOA for an elderly person. Since Medicare reviews all the charges, you don't have to.

 

[mf15]

Nope. For instance 3 years ago they put me in collection for 30 bucks for a bill they never sent. Just got hosp bill today for wife,this is 2/18/25,procedure was 4/18/24.LOL

 

[walkinwood]

Nope. For instance 3 years ago they put me in collection for 30 bucks for a bill they never sent. Just got hosp bill today for wife,this is 2/18/25,procedure was 4/18/24.LOL

Wouldn't that have been the case irrespective of the plan you have? If they never sent the bill, medicare/medigap wouldn't have paid it and they would have come after you.

This "dealing with the billing" is so hard to quantify without having first hand or even second hand experience. What do those bills look like after they've been to medicare & your medigap provider? Can anyone share real bills (appropriately scrubbed of course) that they have to deal with - for say a hospital visit - either from medicare or the medigap provider? Or a site that shows these bills?

I can find images of these bills, but very little context.

Like many here, I'm leaning towards Plan G only because I don't have any idea about how complex it is to deal with the billing. I've had an PPO/HMO plan for the last 15+ years and billing has been easy. They tell me what to pay & I pay it. But - and this is a big but - neither of us have had any serious illness that needed surgery or hospitalization. The biggest, most complicated bill was for an urgent care visit that involved some scans & stitches.

 

[FIREchief]

Like many here, I'm leaning towards Plan G because I believe we can afford it and I don't want to deal with billing when we're old or have DW do it after I die.

If DW will have to pay the electric bill, cable bill, homeowners insurance bill and phone bill; then paying an occasional medical bill is the same thing. Medicare doesn't send bills. Medigap providers don't send bills. The healthcare provider sends a bill after the others have processed the claims and issued EOBs. Why people see this as an issue is beyond my understanding.

 

[MichaelB]

Medigap providers don't send bills. The healthcare provider sends a bill after the others have processed the claims and issued EOBs. Why people see this as an issue is beyond my understanding.

Providers often demand payment upfront and charge more than the amount the policyholder is liable for. Providers also send invoices before the EOB has been processed and charge amounts greater than the price Medicare allows. They are reluctant to reimburse incorrect charges and drag that process out.

The high deductible plans give them room and opportunity to do this. Like many other members here, I am the one who handles these matters and I would rather leave DW in a situation where this is minimized and she doesn’t have to face it. Once the deductible is met, the likelihood of an overcharge is substantially reduced.

That is why many members prefer lower deductible options.

 

[FIREchief]

Providers often demand payment upfront and charge more than the amount the policyholder is liable for. Providers also send invoices before the EOB has been processed and charge amounts greater than the price Medicare allows. They are reluctant to reimburse incorrect charges and drag that process out.

It sounds like you have some crappy providers. I've never encountered such problems.

 

[MichaelB]

It sounds like you have some crappy providers. I've never encountered such problems.

Based on the many threads I’ve read over the years I’d say it’s not at all uncommon. Congratulations to you for not having had to deal with it at all (so far).

I can’t imagine DW at age 85 having to learn Medicare billing regulations and practices, and then having to deal with health care providers that deliberately exploit them.

 

[FIREchief]

Based on the many threads I’ve read over the years I’d say it’s not at all uncommon. Congratulations to you for not having had to deal with it at all (so far).

I can’t imagine DW at age 85 having to learn Medicare billing regulations and practices, and then having to deal with health care providers that deliberately exploit them.

Your posts are helping to me to understand the inexplicable reasons that the vast majority of folks select G over G-HD. In my case/state, the math suggests that there is zero reason to do so for the vast majority of Medicare participants - yet here we are.

 

[RetMD21]

I went or the option that would be easier at 85, having helped a couple of 85 year olds with their bills