Retirees Misled About Their Medicare Options

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A growing number of U.S. employers are capping their risk of rising health insurance costs by sending their retirees into private Medicare exchanges (PME) to buy coverage. For example, The Tennessee Valley Authority (TVA), a federal agency, terminated its retirees' health plan in 2017 and directed about 14,000 retirees to a PME known as Via to find replacement coverage.

Via routinely refers to itself as a "trusted adviser" who provides "unbiased and objective advice" to retirees about Medicare. However, it appears that many who purchased Medicare insurance through Via may have been subjected to anti-competitive, deceptive, and unfair marketing practices, resulting in purchase of high-cost Medicare Supplement plans that provide no extra benefits.  Despite Via's claims to the contrary, many of its rates are significantly higher than simply purchasing from a local agent or broker.

To offset the PMEs' higher rates, most employers provide a "credit" or subsidy to their retirees to offset the PMA's higher rates.  Consequently, without a healthcare credit or subsidy, purchasing Medicare insurance through a PME is often an unwise financial decision.

Unfortunately, it appears that around 8,000 (60%) of TVA retirees who purchased their plans through Via receive no credit or subsidy to offset Via's high rates.  Data shows that local agents and brokers are able to provide 30 or more plans at lower rates than . 

For example, during transition to Via in 2017, Via offered only two plans for Medigap Plan G, both of which were significantly higher than those available through a local agent or broker.  Many of hose retirees are now stuck in those plans because, if they move to another insurer, they will be subject to denial due to pre-existing health conditions.

Not only were Via's rates higher, Via used unfair and misleading information to convince retirees to purchase the Via's high cost plans.

Some of the tactics used with TVA retirees included:

(1) providing misleading information about their Medigap (Medicare Supplement) rates by saying the rates were "competitive" or that local agents could not offer lower rates than Via's.

(2) failing to fully disclose that the retirees are not required to purchase through Via,

(3) failing to disclose that lower cost plans with the same plan benefits may be available in the local market, and

(4) failing to disclose that 60% (8,000) of TVA retirees with no serious pre-existing health conditions had absolutely no need for the Via's high-priced guaranteed issue plans.