MSAs Poised for Popularity? -- Lasso focused article

I sold MSA plans 8-10 years ago. Clients loved them. The "risk" at that time was in the mid $2,000 range, not the much higher mid $4,000 range that I have seen suggested for my market this time around. That's going to be a tougher sell to risk-adverse senior citizens. Another thing, the way MA plans have been handling skilled nursing facilities has caused some seniors to come back to traditional supplement plans; not sure if this will impact MSA plans, as I can no longer honestly tell people that MA plans provide the same benefits that Medicare does, just packaged a little different.

I would love to know if MSA plans will be using the MA model to deny benefits. (Medicare itself is an almost automatic approval of a skilled nursing facility following a hospital stay, easily in the 90% approval range; MA plans are quick to deny coverage, using virtually any excuse on the planet).

Risk aversion is tough. One way to think about it is to consider a 2 year time horizon. Assume 10% of the members spend through deductible (costs $4,000) and 90% spend=deposit (cost $0).

Here is the % chance of going through the deductible over 2 years:

0 times inpatient: 81% chance you spend $0
1 time inpatient: 18% chance you spend $4,000
2 times inpatient: 1% chance you spend $8,000

Assuming your alternative is to buy a plan F for $2,000/year, there is a 100% chance you will spend $4,000. So, compared to a Plan F, here are the outcomes:

81% chance $4,000 better off
18% chance same outcome
1% chance $4,000 worse off

This is kind of a simple way to look at it since there are tons of possible outcomes, but maybe this helps. . .
 
I sold MSA plans 8-10 years ago. Clients loved them. The "risk" at that time was in the mid $2,000 range, not the much higher mid $4,000 range that I have seen suggested for my market this time around. That's going to be a tougher sell to risk-adverse senior citizens. Another thing, the way MA plans have been handling skilled nursing facilities has caused some seniors to come back to traditional supplement plans; not sure if this will impact MSA plans, as I can no longer honestly tell people that MA plans provide the same benefits that Medicare does, just packaged a little different.

I would love to know if MSA plans will be using the MA model to deny benefits. (Medicare itself is an almost automatic approval of a skilled nursing facility following a hospital stay, easily in the 90% approval range; MA plans are quick to deny coverage, using virtually any excuse on the planet).

SNF access for MSA plans is exactly like Original Medicare:
  1. No referral
  2. No prior authorization
  3. You do need to meet the same Original Medicare requirements of 3 day min medically necessary inpatient stay
 
I placed a number of clients with Lasso last AEP. Most were already in MAPD plans but losing them due to plans being withdrawn from the market. The rest were Medicare disabled and found the MSA more attractive than Medigap Plan A. I did have one enrollment for a client with a large HSA balance who could easily afford deductibles.
Only hitch was a couple of doctors offices not understanding they had to accept the plan or billing offices not sending claims directly to Medicare, just like in Original Medicare. These got resolved and things then settled down OK. None of my clients have yet to exhaust funds deposited into their accounts. Any unused funds are not lost but simply roll over to the next plan year.
My only "complaints" with the MSA are: A) You can only enroll MSA plans during AEP or an ICEP; there is no SEP enrollment in these plans; B) Beneficiary cannot also make contributions to the MSA; only deposits by the plan itself are allowed. If govt. allowed client contributions like an HSA, these would be the plan of choice for many more people!

Dave,

Thanks for the business! I agree with those structural issues with MSA. It's heavy AEP and then just aging in or new to Medicare. No OEP and no SEP is disappointing.

We were able to work through clinical access issues, but it took a little time. Thanks for your and your client's patience!

Congress has some bills in committee to allow MB's to contribute to either an HSA and/or to their MSA account, but there doesn't seem to be much motivation to pass that type of legislation at the moment! If allowed, that would allow MB's to fund the member responsibility with pre-tax dollars instead of after tax, which would be quite nice!
 
I sold MSA plans 8-10 years ago. Clients loved them. The "risk" at that time was in the mid $2,000 range, not the much higher mid $4,000 range that I have seen suggested for my market this time around. That's going to be a tougher sell to risk-adverse senior citizens. Another thing, the way MA plans have been handling skilled nursing facilities has caused some seniors to come back to traditional supplement plans; not sure if this will impact MSA plans, as I can no longer honestly tell people that MA plans provide the same benefits that Medicare does, just packaged a little different.

I would love to know if MSA plans will be using the MA model to deny benefits. (Medicare itself is an almost automatic approval of a skilled nursing facility following a hospital stay, easily in the 90% approval range; MA plans are quick to deny coverage, using virtually any excuse on the planet).

Option 2 for Risk Aversion objection would be a Hospital Indemnity plan. We have filed a lump sum HIP in all 2020 states except one. We are now at the mercy of the states for getting this out to consumers.

Example: client chooses a $4,000 lump sum HIP for a premium of $1,000 (about 1/2 of Med Supp premium). If hospitalized, the benefit along with the deposit, would cover the deductible (approximately). We are finding about 72% of the expected 10% or so of the members who hit the deductible also have at least one inpatient stay. MSA+HIP would give favorable outcomes to about 97.2% of situations at that point, if these early numbers hold. The HIP premium would reduce the potential to "make money" on the MSA since the vast majority of folks who buy a HIP won't use it in a given year, but it decreases the chance of "bad outcome" from 10% to 2.8%.

Consumer reduces risk and agent gets 3 commissions instead of 2 or 1: MSA/PDP/HIP versus Med Supp/PDP versus just MAPD.
 
Option 2 for Risk Aversion objection would be a Hospital Indemnity plan. We have filed a lump sum HIP in all 2020 states except one. We are now at the mercy of the states for getting this out to consumers.

Example: client chooses a $4,000 lump sum HIP for a premium of $1,000 (about 1/2 of Med Supp premium). If hospitalized, the benefit along with the deposit, would cover the deductible (approximately). We are finding about 72% of the expected 10% or so of the members who hit the deductible also have at least one inpatient stay. MSA+HIP would give favorable outcomes to about 97.2% of situations at that point, if these early numbers hold. The HIP premium would reduce the potential to "make money" on the MSA since the vast majority of folks who buy a HIP won't use it in a given year, but it decreases the chance of "bad outcome" from 10% to 2.8%.

Consumer reduces risk and agent gets 3 commissions instead of 2 or 1: MSA/PDP/HIP versus Med Supp/PDP versus just MAPD.

Quick FY/renewal commission example (Assuming $1,500 Plan G premium and $750 HIP premium and new to Medicare, all states except CA/CT/DC/NJ/PA):

MSA/HIP/PDP = $863/$369 (Lifetime renewal)
MAPD = $510/$255 (Lifetime renewal)
Med Supp/PDP = $378/$339 (6 year renewal, generally)

I know agents don't sell on commission, but this is requires more explaining, so at least you get compensated for it!
 
Craig R wrote:
"Option 2 for Risk Aversion objection would be a Hospital Indemnity plan. We have filed a lump sum HIP in all 2020 states except one. We are now at the mercy of the states for getting this out to consumers."
I like idea of re-directing premium otherwise spent on Medigap to helping protect against other risk exposures. Hospital Indemnity is one, but I'm a fan of Recovery Care for nursing and home care expense and/or Critical Illness-Cancer plans where the potential dollar payoff for client is high. You can get a big bang for your buck with $2,000 a year not spent on Medigap. I think if you sell MSA plans you have an obligation to present these other coverages.
 
Quick FY/renewal commission example (Assuming $1,500 Plan G premium and $750 HIP premium and new to Medicare, all states except CA/CT/DC/NJ/PA):

MSA/HIP/PDP = $863/$369 (Lifetime renewal)
MAPD = $510/$255 (Lifetime renewal)
Med Supp/PDP = $378/$339 (6 year renewal, generally)

I know agents don't sell on commission, but this is requires more explaining, so at least you get compensated for it!

@craig_ritter can they use the MSA funds to pay for their PDP?
 
Lasso Healthcare

From the Agent FAQ, middle of second row on documents screen (bolding in quoted item 33 is mine)

33. If someone is enrolled into the MSA and a standalone PDP, can they use their deposit, tax‐free, to pay for the Part D deductible and copays or coinsurance? Does it qualify toward their Lasso plan deductible? Per the IRS, they are able to use the MSA funds on a tax‐free basis to pay for their Part D deductible, copays and/or coinsurance. However, the funds used to pay for these expenses will not count toward the Lasso plan deductible. Only Medicare Part A & Part B qualified expenses count toward the Lasso plan deductible. The member may not pay the PREMIUM on the PDP plan with the MSA funds on a tax‐free basis (taxes and penalties would apply) and this, of course, would also not count toward the Lasso plan deductible.
 
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