2017 Medicare Supplement Report: What You Really Need to Know

2017 Medicare Supplement Report: What You Really Need to Know

Gen Re’s annual Medicare Supplement Market Survey came out, and we’d like to share the highlights with you, including:

  • the popularity of Med Supp plans, 
  • open enrollment vs. underwritten apps, 
  • policy lapse rates, 
  • percentage of apps that were declines, 
  • and more.

The results from the report were generated from 57 questionnaires that represent 81 companies in the Med Supp business. The companies who participated represent a total of $21.7 billion of in-force premium. You can see a list of them at the end of this article.

When it all boils down, we know that more insurance is being sold to more people.

Which Medicare Supplement Is the Most Popular?

Plan F is still the most sold plan, accounting for about 50% of the total premium sold in 2016.

However, Plan G is becoming more popular, accounting for about 25% of premium sold in 2016.

How Old Are the Seniors That Buy Medicare Supplements?

With many seniors opting to work past the age of 65, a lot of us are wondering what age ranges are actually purchasing the most Med Supps.

We do find that the majority of seniors are age 65, but a large number are also 66-75. The chart below shows the percentage of people who bought Medicare Supplements.

AGE Under 65 65 65-70 71-75 76-80 80+
% OF PEOPLE 5% 33% 27% 18% 10% 8%

Are Open Enrollment or Underwritten Apps More Popular?

Underwritten applications actually accounted for more sales premium in 2016 than open enrollment apps. The same was true for 2015.

The chart below shows how open enrollment, GI, and underwritten apps compare.

  Open Enrollment GI Underwritten
% of Premium Sold in 2016 38.6% 16.6% 44.8%

How Many Med Supp Policies Lapse?

According to the companies who were surveyed, the lapse rate for active companies was about 10.9%.

Compared to 2015, the lapse rate decreased for about half of companies, while it increased for about a quarter.

How Many Med Supp Apps Were Declined?

On average, about 4.2% of open enrollment and GI apps were not taken.

For underwritten apps, about 16.2% were declined. This percentage is actually higher than it was in 2015, when the average was about 15.2%.

Just as a side note, about 3.6% of applications weren’t accepted, because they were incomplete.

What Was the Average Turnaround Time on an Underwritten App?

While the range was 1-15 days, the average was about 5.3 business days.

Several companies reported that they have started using an automated underwriting system, which means that there is no human involvement in the approval process. Of the applications that went through the automated underwriting system, only 15% were approved.

Which Companies Participated in This Survey?

To understand who these numbers represent, we’ve included a list of the companies who participated in the survey.

You can read the full report here.

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