Medicare Supplement Rates
Every month clients and referrals call and ask if they can get a Medicare Supplement quote. The reason they ask us for a Medicare Supplement quote is that coverage for a Plan F with Mutual of Omaha is the same Plan F coverage with any other carrier. This makes Medicare supplements a commodity and a very is product for people to get quotes on. However in this article, we are going to briefly describe the three ways these policies can be “priced” or “rated”.
How do the Medicare Supplement companies come up with their rates?
Well, numerous things go into the pricing of these policies. Administrative services (billing, customer service, and policy issue), claims (loss ratio for different areas), commissions, premium taxes, and profits are all items that are taken into consideration when figuring Medicare Supplement rates.
Some Medicare Supplement companies may have higher rates in certain areas due to a very unhealthy block of business. For example: if an insurance company has the lowest rate in a certain city, everyone who is guaranteed issue enrolling in a plan will try to go for the carrier with the low rate. This company tends to attract a lot of unhealthy business usually because their rates are so low. Once the claims start to pour in the department of insurance allows them to raise their rates to cover the claims. This is a good example why you should not always choose the lowest priced Medicare Supplement companies and why rate increases occur.