"New Modernized Plans" VS "Standard Medicare Plans" Should You Convert ?
If you purchased a Medicare Supplement before June 1st 2010; you have a "Standard"
Medicare Supplement governered by the 1992 Federal Law.
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When the Modernized Medicare Supplement Plans were introduced on June 1st 2010 the Standard
plans were no longer allowed to be sold. The owners of the the Standard
plans were allowed to keep the plans if they wished. The Standard plans will contintue until they liquidate over time and
are grouped together in what is now considered a "Liquidating Block of Business".
As a Liquidating Block
of business there are no new policy holders being added to the group. This will cause the average age of the group to increase
as each year passes. As the groups average age increases you can expect the claims frequency to also increase. Each year as the policy holders increase in age there will be fewer and fewer people in the group resulting in fewer premiums
being paid in to pay the increasing amount of the claims.
With fewer people paying premiums and more claims to
pay; premiums will have to increase. We are already starting to see sizeable rate icreases in the :Standard"Plans. This
will become more progressive each year that the block liquidates.
If you switch from your old "Standard Plan"
to one of the "Modernized Plans" you will be in a Block of Business that is growing and expanding with new and younger
policy holders which will generate a more stable average age and claims ratio. Rate increases on the new Modernized Plans
should not increase as much as on the older Standard Plans.
You may want to review your options while your health
is good enough to be approved for the new plans should the company that you apply to require that you be subjected to medical
underwriting.
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