5 months ago ·
by alan ·
Walmart made a lot of waves in the insurance world last week by announcing that its in-house brokerage unit, known as Walmart Insurance Services, would begin selling Medicare Advantage and Part D plans for the 2020 Annual Enrollment Period this fall. This understandably created concern among independent insurance agents that we would now be directly competing with Walmart for our clients, a position that clearly not many people whose name doesn’t begin with “Amazon” are anxious to be in. Indeed, there are very few who can compete effectively with Walmart for most products.
But there are a couple of factors that make Walmart insurance very different from other types of products they sell. Generally, Walmart only has one bullet in its marketing gun – low prices. If Walmart were to become an insurance carrier like Aetna, Humana, or Cigna, and begin underwriting their own Walmart branded policies and paying claims, it’s possible they might be able to offer lower prices on their policies because they would control the underwriting and premiums. But that isn’t what they are doing. Walmart is a broker (i.e., agent), and they are selling the exact same Humana, United, and Wellcare policies that every broker in the country has access to. That means you pay the exact same amount for your policy whether you buy it through Walmart or an independent agent, and thereby Walmart loses their one weapon – the ability to control price.
The other thing that makes insurance different is the basic economic difference between products and services. Walmart products are commodities – things that you can buy virtually anywhere. It doesn’t matter whether you buy your peanut butter at Walmart, Kroger, Dollar General, or Sprint Mart. It’s still the exact same peanut butter, and the only difference is how much you pay at the different outlets. Commodities is where Walmart steamrolls everyone. But insurance is not a product; it’s a personalized service. A good agent has to take the time to develop a relationship with you in order to thoroughly understand your needs and recommend the product that is right for you, even if it means a lower commission for the agent. Most insurance products also have varying underwriting requirements, and the simple fact is that a lot of applications that get submitted through Walmart will be denied because the agent either didn’t understand the client’s needs or have the experience to know which companies have the most favorable underwriting. You can’t just choose a policy based on a price tag, and insurance is a relationship business that can’t be run through the express checkout lane.
Products are easy, and Walmart is good at them. Services are hard and require time, experience, and relationships in order to be provided the way they are supposed to be, and Walmart is not good at that. When was the last time you got quality, personalized service at Walmart? Right, that’s what I thought. So while there will unquestionably be some people who find Walmart insurance compelling, they are almost certainly the same people who would never have gone to a quality independent broker anyway. Our business will always be built on personal relationships, trust, and expertise.
So, self-checkout insurance? I don’t think so.
5 months ago ·
by alan ·
The Medicare Annual Election Period (AEP) runs from October 15 to December 7, and so beginning around October 1 every year, you probably see advertisements for Medicare Advantage plans just about every time you turn on your television. These ads are usually touting all the benefits of Advantage plans and telling you how you should be enrolled in one if you are over 65 and give you an 800 number to call. The fact is that Medicare Advantage may indeed be right for you, depending on where you live and your particular situation, but it’s important to understand clearly what Medicare Advantage is – and isn’t – before you put too much stock into those ads. It’s vital that you consult with an experienced Medicare professional to review your needs and options before making that move.
Medicare Advantage, often referred to as Medicare Part C, is a completely different way to receive your Medicare benefits from original Medicare. Under original Medicare, you have separate Part A (hospitalization) and Part B (medical expense) coverages that are administered by the government through the Centers for Medicare and Medicaid Services, and a separate Part D (drug plan) that is administered through a private insurance company that has contracted with CMS. Under this model, you may be enrolled in various combinations of A, B, and D plans with separate coverages for each.
Medicare Advantage is a way of conveniently rolling all of your A, B, and D benefits into a single health plan administered through a private insurance company. These companies contract with CMS in much the same way they do for Part D drug plan coverage, and they agree to deliver at least the same benefits as original Medicare in return for reimbursements from CMS. In addition to the standard Medicare benefits, these plans frequently include additional benefits not included in original Medicare, such as vision, dental, or hearing coverage. Additionally, all Medicare Advantage plans include the protection of a maximum annual out-of-pocket limit that you don’t have under original Medicare. But if you currently have a Medigap supplement, you’ll have to give it up, because you can’t have both a supplement and an Advantage plan.
Sounds pretty nice, huh? Well, yes, but…. there are some tradeoffs that have to be weighed out before deciding whether it’s right for you. The most important is that under an Advantage plan, you are locked into provider networks that may or may not be beneficial for you. If your doctor or pharmacy is not part of the network set up by your plan provider, it’s possible that you might have to find a new one that is. And if you travel outside of your network area, you may have additional costs if something happens and you need to see an out-of-network provider. Under original Medicare and a Medigap supplement, you are free to see any provider who accepts Medicare without those restrictions.
There are also some costs associated with Advantage plans that you don’t have under original Medicare, starting with a monthly premium in addition to the Part B premium that you already pay. Some plans may offer a premium as low as $0, while others may charge a higher amount, but it is always there. And while Advantage plans do offer the security of annual out-of-pocket limits, there are back-end costs that can add up in some situations, including copayments and coinsurance that don’t exist under original Medicare. A copayment when you visit your doctor might not be significant if you only see your doctor every few months, but if you develop a health issue that requires frequent visits, a copay can quickly add up to more than the cost of a good supplement.
Lastly, Medicare Advantage plan benefits, networks, and premiums can change year over year. If you joined a particular plan for a certain benefit or because your doctor or pharmacist is in-network, you can be left with some difficult choices to make if those factors change at some point. You may choose to find another Advantage plan or go back to original Medicare, but getting a Medigap supplement may be more difficult if your health has changed because you will have to pass health underwriting.
These issues can be very complex, and it’s vital that you not try to make these decisions alone. Talk to an experienced Medicare professional that you trust to find out whether an Advantage plan is right for you. If you have questions, we are here to help and will be happy to sit down and assist you in choosing the right plan at the lowest cost. There is never a charge for a consultation, and we will never recommend a plan that isn’t right for you just to make a sale. Call us at (662) 269-2519 or email us to schedule an appointment with one of our experts to examine your options.