It seems every company out there is offering Medicare supplement insurance plans. On one hand, this makes sense since there's a huge wave of eligible Medicare recipients with the wave of baby boomers approaching 65 for years but we're still going to be surprised when McDonalds comes out with a plan. For all the other legitimate carriers, it can be hard to really decipher which one to go with and you don't necessarily want to just go with the name you recognize or the carrier you currently have for individual or group coverage now. Sounds like a good time to look at the landscape of Medicare supplement insurance carriers and see how they stack up from an insider's view.
There are literally dozens of carriers out there for Medicare supplement plans. We'll go through some of the big kids on the block and leave a lot of smaller players to your own research. So let's get started with one of the biggest. AARP.
AARP is actually not an insurance carrier but a marketing arm for United health care's Medicare Supplements. And what an arm it is. United has almost a third of the Medicare supplement market primarily due to its contract with AARP. You can't get close to age 65 and not know about AARP as they are a dominant player in all things senior including supplement plans. The underlying carrier, United is strong...one of the top 3 biggest in the nation so there's no issue in terms of long term stability. As for pricing, AARP has always been a bit different and you can interpret their move either way. They tend to discount up front with this initial discount (may be reserved for new Part B's at age 65) graduates down over a period of years. For year's, this was impossible to beat with other carriers, which tended to be within a few dollars of each other on a monthly basis for the same Medicare supplement plan (i.e. an F plan). The other carriers have all adjusted to match this or incorporate other pricing models so that they could compete and this is relatively recent. The inherent problem is that all the carriers deal with the same underlying risks since the plans are standardized so how could a carrier offer a 30% discount on average in the first year? There's no free ride in the universe and that must be recouped somewhere which is usually in the out years. Consequently, it's those years in which you're less likely to be able to change based on health. Just make sure to look at the pricing across different age bands to really understand your expected cost profile.
The next group is all roughly grouped together. These are big, nationwide carriers that are financial stable, secure, and generally under 10% of the total Medicare supplement plan market share. In this camp, you find Wellpoint (many BCBS affiliates in multiple States under the Anthem brand), Aetna, Humana, and independent Blues (Blue Cross Blue Shield's not associated with Anthem). All these carriers should be fairly competitively priced for Medigap plans and will vary from State to State. Ultimately, if you've had good experiences with them on the individual/family or group side, you should be fine with their Senior products.
Mutual of Ohama is the rare life insurance carrier that is very competitive in a health insurance product with their Medicare supplement market share at high single digits. This is a function of aggressive pricing with comparable rates to AARP even back when the other carriers couldn't match AARP's discounted first year. They have enough experience in the Medicare supplement market for us to feel comfortable looking at them as a stable and viable candidate.
Beyond these 4 tiers, there are dozens of carriers some individual BCBS's affiliates and some life insurance carriers that offer Medicare supplement. Unless you have an existing relationship with the carriers and it's been a good experience, it's harder to justify getting away from the big boys above which should offer more price stability and competitive service going forward.