TVA Retirees Misled About Medicare
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A growing number of U.S. employers are capping their risk of rising health insurance costs by sending their retirees to a private Medicare exchange (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 and their spouses to a new TVA-sponsored retiree health plan administered by a PME known as Via (formerly OneExchange).
Via routinely refers to itself as a "trusted adviser" which provides "free unbiased and objective advice" to retirees about Medicare insurance. However, many of the plans offered by Via and other PMEs are substantially more expensive than buying from a local agent or broker and their advice is not always unbiased and objective.
It appears that many TVA retirees who purchased Medicare insurance through Via may have been subjected to anti-competitive, deceptive, and unfair marketing practices. These practices have caused some retirees to unwittingly purchase Via's higher-cost Medicare insurance instead of simply purchasing lower cost plans available directly from local agents and brokers.
To offset a PME's higher rates, most employers provide a "credit" or "stipend" to their retirees. However, without a healthcare credit or stipend, purchasing Medicare insurance through a PME could be an unwise financial decision. This is exactly the case with the TVA-Via retiree health plan.
Around 14,000 TVA retirees signed up with Via. Of those 14,000, only 6,000 receive credits to offset Via's high prices. It was stunning to learn that the remaining 8,000 TVA retirees purchased their plans through Via with 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 Via - some with substantially lower rates.
For example, during 2019, Via offered only three plans for Medigap Plan G, all of which were significantly higher than a plan available directly from Aetna. The accompanying bar chart shows that a 72 year old female would pay $228 per month for the TVA/Via Mutual of Omaha Plan G, while a plan with the identical benefits was available directly from Aetna for only $110 per month - Via's rate was more than 100% higher. This data was confirmed to be accurate by the State of Tennessee Department of Commerce and Insurance.
TVA did not start providing credits to retirees until the beginning of 2002. Consequently, the group of 8,000 who receive no credits includes the preponderance of TVA's oldest retirees.
These older retirees generally:
- have more critical health issues,
- incur higher health costs,
- receive lower pension and social security income,
- pay higher rates for their Medicare insurance,
- and are more vulnerable to misleading information than their younger cohorts.
It was very disturbing to learn that many of these retirees are now stuck in Via's higher-priced plans because, if they move to another insurer, they will not have "guaranteed issue" rights and would be subject to denial of coverage because of pre-existing health conditions.
Not only were Via's rates higher, Via used unfair and misleading information to convince retirees to purchase their high-priced plans. Some of the tactics Via used with TVA retirees included:
(1) claiming Via's rates were "competitive" or that local agents could not offer lower rates than Via's.
(2) failing to tell the retirees they were not required to purchase through Via.
(3) failing to disclose that lower cost plans with the same plan benefits may be available from local agents.
In the interest of fairness to all retirees regardless of age or gender, Via should offer another open enrollment period to any retiree who believes Via provided misleading information about their Medicare options. Under Medicare rules retirees who received misleading information would be eligible for another open enrollment period, which would allow them to purchase new coverage with "guaranteed issue".
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