What's the deal with Farm Bureau Med Supp

[junkman]

I ran into a person that turned 65 in April and enrolled in a Farm Bureau Plan F. I wondered why the agent sold him an F when we all know that F goes away soon so no new people will be coming into the pool and G is usually priced low enough to make it a better deal. I just looked up FB rates. F is $110 and change and G is $90. Aetna G is $116 but current rates are almost level until age 70.

I can't get FB rates for higher ages easily but am wondering whether FB low balls turning 65 and quickly jumps up. I've generally not been impressed with FB agents as I've caught them either misspeaking or out right lying to clients of mine.

 

[Chazm]

Maybe other states are different in this regard but what does current rates at 70 have to do with a T65?

 

[junkman]

Carriers always run blocks of business to cover expected claims. They generally don't make experience public and looking at the rate schedulecan give an indication of what the actuaries are predicting. There is price compitition for newby enrollees and some carriers low ball the turning 65 rates and use insureds reluctance to change to keep them enrolled in the face of larger increases at age 67 or slightly older. Ignoring the schedule and selling only rates does your clients a disservice.

I remember that FB used to have BCBST administer their under 65 medical. Underwriting was much more stringent and rates were lower than BC. FB agents would promote the plans as "Blue Cross " when they were really selling a self-funded trust administered by BC with no actual liability of BC or even FB. The trust was the only entity backing claims and there was no easy way to know that there was sufficient funds to pay claims.

Bottom line: plans aren't the same just because main characteristics in this case deductible and coinsurance are the same. This applies to all types of insurance and understanding is part of what we get paid for. Anyone can look at rates and say "buy this because it's cheaper ". A better recommendation may be "buy this. It costs a little more but it's worth it because...."

 

[somarco]

Is there a question in there or are you just wanting to spout off?

 

[LostDollar]

A better recommendation may be "buy this. It costs a little more but it's worth it because...."

That may be pretty much what the Farm Bureau agent did with your acquaintance.

A committed Farm Bureau customer with enough of a budget to make a discriminating purchase could very well make the decision that a Plan F is "worth it" because of convenience and peer group comfort. Those are the two emotional purchase support factors I've seen mentioned a number of times for Plan F.

When I was looking at a medsupp purchase, I had a retirement consultant tell me he was quite pleased with his USAA Plan F.

As far as pricing changes for Plan F go; I don't think there is a lot of consensus among the forum agents as to the degree and timing of those changes, at least for something like the 2020 to 2025 time period. Which could lead to another interesting buying question. What percentage of 2018 T65 medsupp buyers will still be alive in 2028?

 

[Chazm]

Carriers always run blocks of business to cover expected claims. They generally don't make experience public and looking at the rate schedulecan give an indication of what the actuaries are predicting. There is price compitition for newby enrollees and some carriers low ball the turning 65 rates and use insureds reluctance to change to keep them enrolled in the face of larger increases at age 67 or slightly older. Ignoring the schedule and selling only rates does your clients a disservice.

I remember that FB used to have BCBST administer their under 65 medical. Underwriting was much more stringent and rates were lower than BC. FB agents would promote the plans as "Blue Cross " when they were really selling a self-funded trust administered by BC with no actual liability of BC or even FB. The trust was the only entity backing claims and there was no easy way to know that there was sufficient funds to pay claims.

Bottom line: plans aren't the same just because main characteristics in this case deductible and coinsurance are the same. This applies to all types of insurance and understanding is part of what we get paid for. Anyone can look at rates and say "buy this because it's cheaper ". A better recommendation may be "buy this. It costs a little more but it's worth it because...."

Like I thought, it must be state specific. It just doesn’t happen in Florida.

I’ve written 99% UHC and they don’t do a block of business. When they have an increase, it’s across the board. Every plan letter has the same increase and every age.

So, when clients say, “oh at age 70 I’ll be paying this?” I let them know the average rate increase and that’s only if you purchased at age 70. You’ll most likely be paying less than that at 70

 

[LostDollar]

Bottom line: plans aren't the same just because main characteristics in this case deductible and coinsurance are the same. This applies to all types of insurance and understanding is part of what we get paid for. "

Medigap policies may be an exception to this general statement.

Medigap policies are standardized Every Medigap policy must follow federal and state laws designed to protect you, and they must be clearly identified as “Medicare Supplement Insurance.” Insurance companies can sell you only a “standardized” policy identified in most states by letters A through D, F through G, and K through N. All policies offer the same basic benefits, but some offer additional benefits so you can choose which one meets your needs.

P79 Medicare and you 2018
https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf

 

[junkman]

Medigap policies may be an exception to this general statement.

P79 Medicare and you 2018
https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf

You sir do not understand how rates are established by a carrier. They are always, always, always based mostly on claims with admin charges making a smaller part of the premium.

The question boils down to why does a carrier (FB in this case) expect claims to be such that they can charge 20% less than other carriers for standardized plans. Their target market may be healthier. They may have more stringent underwriting. Perhaps their agents write for low or $0 commission. Something caused them to have lower rates. What is the cause?

 

[LostDollar]

Bottom line: plans aren't the same just because main characteristics in this case deductible and coinsurance are the same. This applies to all types of insurance and understanding is part of what we get paid for. Anyone can look at rates and say "buy this because it's cheaper ". A better recommendation may be "buy this. It costs a little more but it's worth it because...."

You sir do not understand how rates are established by a carrier. They are always, always, always based mostly on claims with admin charges making a smaller part of the premium.

The question boils down to why does a carrier (FB in this case) expect claims to be such that they can charge 20% less than other carriers for standardized plans. Their target market may be healthier. They may have more stringent underwriting. Perhaps their agents write for low or $0 commission. Something caused them to have lower rates. What is the cause?

You are correct, I don't.

But, in the case of medigap insurance, variable carrier pricing for standardized plans does not mean the plans are not standardized with a common feature set from carrier to carrier. This is a condition mandated by the US government as a condition for participation in that market.

 

[junkman]

You are correct, I don't.

But, in the case of medigap insurance, variable carrier pricing for standardized plans does not mean the plans are not standardized with a common feature set from carrier to carrier. This is a condition mandated by the US government as a condition for participation in that market.

No, it means that carriers have different claims experience. Of course, none of this answers the original question related to FB and what they do to restrict claims.