Protect TVA Retirees and other Seniors From Misleading Medicare Information
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HELP TVA RETIREES & OTHER SENIORS ACROSS THE U. S. Read the following. You will be surprised and disappointed. If you sign the petition at the end, you will join over 1,700 others in asking for an investigation into the sales and marketing practices of all Private Medicare Exchanges (PME). What the heck is a PME? They claim to be seniors' "trusted advisor" for Medicare insurance. Read on and judge for yourself.
A growing number of U.S. employers are capping their risk of rising health insurance costs by terminating their employer-sponsored Medicare plans and sending their retirees to private Medicare exchanges (PME) to buy replacement coverage. Unfortunately, it appears that some retirees who purchased their new Medicare plans through PMEs may have been subjected to anti-competitive, deceptive, and unfair marketing and advertising tactics. Moreover, these seniors may have paid substantially higher prices for their Medicare insurance, while believing they were purchasing their coverage at "competitive" rates.
Some believe that this treatment of seniors may be elder abuse.
Even a federal agency, the Tennessee Valley Authority (TVA), used a PME to help terminate its retirees’ health insurance plan and transition its retirees to Medicare plans offered by insurers. TVA terminated its retirees’ health plan effective January 1, 2017, and contracted with a PME to help around 15,000 retirees find replacement coverage from individual insurers.
The following information is primarily based on TVA's experience with the transition of its retirees to Medicare insurance through a PME. However, there have been other reports of PMEs failing to provide full transparency about rates and other issues similar to those listed below.
The PME's marketing materials touted a broad selection of plans from major, well-established insurers and stated that those plans were priced competitively. In addition, a PME representative twice told a large group of retirees that the plans offered by the PME could not be purchased elsewhere at lower rates.
The PME's promotional material emphasized that the PME would act as retirees' "trusted advisor" by providing "objective and unbiased" advice and providing competitively-priced Medicare plans. In addition, the PME stated that its advice was "free". These commitments were very important to TVA and its retirees. Unfortunately, it now appears the PME may have failed to deliver on these and other promises for many retirees.
In Fall of 2016, TVA retirees started looking at the Medicare Supplement (Medigap) plans offered through the PME and realized that the most popular Medigap plan (Plan G) was 35-67% more expensive than buying it directly from the insurers. The PME offered only 2 insurers for Plan G while there were at least 30 different insurers in the local market, some offering Plan G at substantially lower rates than those offered through the PME.
The PME's higher rates could end up costing some retirees an extra $15,000 or more over the next 15 years while providing absolutely no additional benefits. For a family of two, that amounts to $30,000.
Retirees continued to complain to TVA about the PME’s rates when, in July 2017, TVA executives challenged the PME about its high rates. The PME eventually admitted to TVA that many of its high-priced plans may carry the look and brand of major, well-established insurers, but the plans are really "separate legal entities" with rates based on different cost structures, resulting in much higher rates.
TVA executives, just like retirees, were surprised and very concerned to learn about the PME’s use of “separate legal entities” and the significantly higher prices of those plans.
Fast forward two years and the above chart compares current rates (effective January 1, 2019) for plans obtained through the PME with rates for plans easily available directly from insurers in the local market. Rates were based on age of 72, female gender, and Zip of 37204 (Nashville, TN area). Clearly, the PME’s rates continue to be, in many cases, substantially more expensive than purchasing directly from the insurers.
It is extraordinary that, as shown in the chart, Mutual of Omaha Plan G purchased through TVA's PME is 107% more expensive than buying Aetna's Plan G directly from Aetna. Even more stunning, purchasing the Mutual of Omaha Medigap Plan G through TVA's PME is 78% higher than purchasing the same Medigap Plan G directly from Mutual of Omaha. The other two Plan G offerings through TVA's PME were Humana and Cigna and the rates for these plans were also much higher than purchasing directly from insurers.
While the above chart clearly shows that some of the PME's rates are higher than its competition, the most egregious issues relate to false and misleading communications telling retirees that they "must enroll" with the PME or face a lapse in coverage. In fact, the retirees were free to purchase their plans in the local market, but they were not informed of that option.
Healthier retirees had absolutely no need for the PME's high-priced "guaranteed issue" plans. Because of their better health, it appears that several thousand TVA retirees would have qualified to purchase any plan (not just guaranteed issue plans) from any insurer in the local market, many at very low rates (check out Aetna's rate in the chart).
Unfortunately, the thousands of retirees with no serious pre-existing health conditions were not informed that they were eligible to purchase plans in the local market at much lower rates.
Especially troubling is that many retirees trusted their "trusted advisor" and believed they were required to purchase their new plans through the PME. It is likely the following statement presented to retirees in a marketing brochure and posted for almost two years on the PME's website is largely responsible for that mis-perception:
"You must take action... Because the coverage under the current TVA Medicare Supplement Plan will no longer be available as of January 1, 2017, you must enroll through TVA's PME during the October 3- December 31, 2016 enrollment period." This statement is clearly misleading. Surely Cigna, Mutual of Omaha, Humana and other major insurers would object to these tactics being used to market their products.
It is true that some retirees were essentially required to purchase their replacement plans through the PME. For example, those receiving health care subsidies from TVA stood to lose those subsidies if they did not purchase through the PME. In some cases, the subsidies may have been significant enough to offset the higher cost of the PME's plans. However, those with very small subsidies, or the thousands of TVA retirees who receive no subsidy, may have made a bad financial decision when they purchased their Medigap plans through the PME.
Also, those retirees who had spouses under age 65 and covered by the TVA employees' health plan were required to purchase their plans through the PME. Failure of the retiree to purchase replacement coverage through the PME would result in their spouses being denied access to TVA's healthcare plans. For these retirees, purchasing the PME's higher-priced plans may have been the wisest decision for them and their spouses. However, some retirees believe these requirements were unfair and amounted to "coercion".
Based on the foregoing, it appears that the PME:
- did not always act as a "trusted advisor",
- did not always provide "objective and unbiased" advice,
- did not always provide plans with "competitive" prices,
- did not advise retirees that they were not required to purchase their plans through the PME
- did not disclose that healthier retirees had no need for guaranteed issue plans, and
- failed to disclose its use of high-priced "separate legal entities".
Here is the bottom line: Unless they were receiving significant subsidies or had spouses under age 65, why would any fully informed TVA retiree voluntarily purchase the PME's high-priced plans?
If other PMEs use similar pricing schemes and marketing tactics, there could already be a very large and growing number of seniors across the nation who innocently purchased their plans thinking they were getting appropriate coverage at a competitive price. Of course, there is no way, based on the limitations of this review, to make a reliable estimate of how many were affected. However, if there is just one, that is one too many.
Fortunately for seniors, the Center for Medicare and Medicaid Services (Medicare) has laws that protect against misleading information.
By law, if seniors are provided misleading information while selecting their Medicare insurance, they are eligible for a new “open enrollment” opportunity. The new open enrollment period would allow them to, without penalty, cancel and replace their high-cost plans with lower cost plans that provide the same exact plan benefits!
CONCLUSION & RECOMMENDATIONS:
It is likely that seniors (not just TVA retirees) all across America may have received misleading information about their Medicare options from PMEs. To prevent this, and to make things right for those who were misled, Medicare and the major insurers represented by the PME should work collaboratively with state insurance commissions to investigate PMEs' pricing and marketing schemes and, if necessary, take the following actions:
- Declare an open enrollment period for any seniors who were provided with misleading information. This would allow, without penalty, replacement of their current plans with lower cost alternatives that include identical plan benefits.
- Ensure employers and PMEs fully disclose to retirees that they are not required to purchase their plans through the PME.
- Ensure employers and PMEs fully disclose that retirees may be able to find plans in their local market that are less expensive than those offered through the PME.
- Evaluate the adequacy of Federal and State laws pertaining to the sale of Medigap plans. If it is found that current laws are not sufficient to adequately protect our seniors from unfair and deceptive marketing and pricing practices such as those described above, then the major insurers and lawmakers should work together to craft and implement laws that will protect our seniors.
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