Health Reform and Med Supps

[Jack C...]

Medicare Supplements already have mandated loss ratios and I see nothing about that changing, did I miss something?

Yes, the loss ratio is currently at 65%, it will be going to 85%, that means the maximum profits is going from 35% to 15% of the collected premium., So only 15% of the collected premium can be kept over after paying claims, that leaves 15% to divide between the Insurance Company at the Agent, meaning commissions will be going down to 3% to 5%.total.

 

[Russ]

I found this, that's public record, from the FL. DOI concerning MoO's filing for the modernized med-supp plans.....

"19. MINIMUM REQUIRED LOSS RATIO
The minimum required loss ratio is 70.3%, as defined in Rule 4-156.011.
20. ANTICIPATED LOSS RATIO
The anticipated lifetime loss ratio 74.0% for policies issued on or after
06/01/2010, calculated as the present value of past and future incurred claims
divided by present value of past and future earned premiums. These will be
weighted based on distribution of business.
The expected durational loss ratios for Plans A, C, and F for policies issued on or
after 06/01/2010 on a policy year basis are as follows:

ACTUARIAL JUSTIFICATION OF PREMIUM RATES
MUTUAL OF OMAHA INSURANCE COMPANY
Medicare Supplement Standardized Plans A, C, D, and F

Year Loss Ratio Year Loss Ratio Year Loss Ratio
1 49.2% 17 91.8% 33 107.9%
2 61.2% 18 92.7% 34 109.0%
3 71.9% 19 93.7% 35 110.0%
4 77.3% 20 94.6%
5 78.9% 21 95.6%
6 80.4% 22 96.5%
7 82.0% 23 97.5%
8 83.5% 24 98.6%
9 84.6% 25 99.5%
10 85.1% 26 100.5%
11 86.3% 27 101.5%
12 87.2% 28 102.6%
13 88.1% 29 103.6%
14 89.0% 30 104.6%
15 89.9% 31 105.7%
16 90.8% 32 106.7%"



If it goes to 85%, an agent may get 10%, if he or she is lucky and the stars align the right way and the state of Florida(for Florida agents), approves the modernized plans this decade.

 

[G.Gordon]

But they exceed the min. in year three so they'd file for a rate increase therefore lowering the loss ratio.

 

[Jack C...]

I found this, that's public record, from the FL. DOI concerning MoO's filing for the modernized med-supp plans.....

"19. MINIMUM REQUIRED LOSS RATIO
The minimum required loss ratio is 70.3%, as defined in Rule 4-156.011.
20. ANTICIPATED LOSS RATIO
The anticipated lifetime loss ratio 74.0% for policies issued on or after
06/01/2010, calculated as the present value of past and future incurred claims
divided by present value of past and future earned premiums. These will be
weighted based on distribution of business.
The expected durational loss ratios for Plans A, C, and F for policies issued on or
after 06/01/2010 on a policy year basis are as follows:

ACTUARIAL JUSTIFICATION OF PREMIUM RATES
MUTUAL OF OMAHA INSURANCE COMPANY
Medicare Supplement Standardized Plans A, C, D, and F

Year Loss Ratio Year Loss Ratio Year Loss Ratio
1 49.2% 17 91.8% 33 107.9%
2 61.2% 18 92.7% 34 109.0%
3 71.9% 19 93.7% 35 110.0%
4 77.3% 20 94.6%
5 78.9% 21 95.6%
6 80.4% 22 96.5%
7 82.0% 23 97.5%
8 83.5% 24 98.6%
9 84.6% 25 99.5%
10 85.1% 26 100.5%
11 86.3% 27 101.5%
12 87.2% 28 102.6%
13 88.1% 29 103.6%
14 89.0% 30 104.6%
15 89.9% 31 105.7%
16 90.8% 32 106.7%"



If it goes to 85%, an agent may get 10%, if he or she is lucky and the stars align the right way and the state of Florida(for Florida agents), approves the modernized plans this decade.

Russ,
It is going to 85%, it is the new law, the only question is how soon.
And the wording is that "85% of the collected premium must be paid back in actual claims".
So if only 15% of the collected premium can be kept as profit (which is the new law) do you honestly think the insurance company will pass 2/3 of that to the Agent.? The answer is NO!

I repeat, You can look to be getting 5% at the most, Which will be 1/3 of the profits.

 

[moonlightandmargaritas]

So if only 15% of the collected premium can be kept as profit (which is the new law) do you honestly think the insurance company will pass 2/3 of that to the Agent.? The answer is NO!

I repeat, You can look to be getting 5% at the most, Which will be 1/3 of the profits.

Just to clarify a little here, the 15% is not "profit", it is "gross profit". Out of it, they have to pay their selling (comp/mktg) and administrative expenses. Anything after that is "net profit", which historically has run between 2-3% for the large health insurers...

Comp will generally trend down, it's just way too early to say how much.

 

[Jack C...]

Just to clarify a little here, the 15% is not "profit", it is "gross profit". Out of it, they have to pay their selling (comp/mktg) and administrative expenses. Anything after that is "net profit", which historically has run between 2-3% for the large health insurers...

Comp will generally trend down, it's just way too early to say how much.

You are 100% correct.

That is why at best the agents cut will be around 5%, but could eventually go as low as 3% for the first few years of your commission contract, then it would drop down to 1%

As I wrote earlier, it does not look good.

 

[G.Gordon]

Ok Jack... we know where you stand. Posting the same information and re-stating your belief does not make it any more or less true.

There is nothing in writing. Not too long ago from the "higher ups" medicare supplements were going to be a thing of the past.

 

[Jack C...]

Ok Jack... we know where you stand. Posting the same information and re-stating your belief does not make it any more or less true.

There is nothing in writing. Not too long ago from the "higher ups" medicare supplements were going to be a thing of the past.

The "85 % must be paid in claims" is not my belief, it is the new law.

 

[G.Gordon]

The "85 % must be paid in claims" is not my belief, it is the new law.

Have you seen it in writing?

Didn't think so...

 

[J.R.]

Where is it written that the MLR has to be 85% for Medicare Supplements? I read information that stipulates 80% for IFP, 85% for group, as well as 85% for MA, but no mention of Supplements. Are supplements included in the individual market because I thought that would be separate.

Does anybody know where to find information (calculations, models, etc.) on how the carriers normally calculate the MLR? Are we talking about the life of a policy or 1st year claims,etc.?

J.R.