Special Annual Open Enrollment/Guarantee Issue windows = Less Competition & Higher Premiums
The recent passage of special annual open enrollment/guarantee issue periods in Nevada and Idaho prompted Telos Actuarial to analyze the nationwide marketplace by state-specific enrollment rules. This analysis is based on a comparison of the competitive landscape in “normal” states (which have OE/GI enrollment rules in line with model regulation) and states that have special open enrollment/guarantee issue rules.
Note: More information on the open enrollment/guarantee issue rules can be found at the end of this post.
Based on an analysis of current competitor data, states that require special annual open enrollment/guarantee issue periods have less competition and higher premium rates. Conversely, normal states (those with OE/GI rules in line with the model regulation) have significantly more competition and have lower premium rates. The trade-off for allowing special open enrollment/guarantee issue windows is an increase in morbidity risk for carriers, resulting in less competition and higher premium rates, as shown in the table below.
The chart below displays the number of carriers currently selling Medicare Supplement products in each state, color coded by what type of open enrollment/guarantee issue rules each state currently has. Today, NV has 41 carriers offering products, and ID has 35 carriers offering products.
Due to the anticipated increased morbidity risk in Nevada and Idaho (with the new special annual OE/GI rules), it is expected that fewer new entrants will release products in these states. It is also likely the case that some of those currently selling products will decide to discontinue selling once these rules are in full effect. Carriers that do enter these markets will need to factor in the increased morbidity risk when setting premium rates. Additionally, carriers who already have products in these states will need to factor the increased morbidity risk into their rate increase filings heading into 2022.
Oregon Example
Oregon is the most recent state to pass regulation similar to those recently passed in Idaho and Nevada. Oregon began requiring Carriers to offer a special annual open enrollment/guarantee issue period beginning in 2012.
Oregon had 31 companies offering products in 2012. There are only 25 offering products today. This reduction of competition in Oregon happened while “normal” states saw increased competition. Here are a few examples:
More information on the OE/GI rules
Generally speaking, Medicare Supplement annual open enrollment/guarantee issue periods fall into 3 buckets.
The special annual open enrollment/guarantee issue period allows consumers who already have a Medicare Supplement policy to switch to a different Medicare Supplement policy without going through underwriting. While some of the details of the Idaho and Nevada regulations are still being drawn up, the general structure allows for an open enrollment/guarantee issue period around the policyholder’s birthday or policy anniversary.
No special annual open enrollment/guarantee issue period – when Medicare Supplement policyholders switch from one product to a different product (typically with a different Carrier) they are required to go through underwriting. Most states fall in this bucket and are considered “normal” states. The open enrollment/guarantee issue rules in these states generally follow the Medicare Supplement model regulation.
Special annual open enrollment/guarantee issue period – Medicare Supplement policyholders have open enrollment/guarantee issue rights once per year during a designated time period when they can switch from one product to a different product without going through underwriting (Typically 30 – 60 days around the policyholders birthday or policy anniversary).
Special Year-round open enrollment/guarantee issue period – Medicare Supplement policyholders have open enrollment/guarantee issue rights year-round allowing them to switch from carrier to carrier without going through the underwriting process.
For more information on the recent regulation changes or to find out more about the Medicare Supplement market, send us a note info@telosactuarial.com.
* Count of carriers currently selling Medicare Supplement products is based on Telos Actuarial data
** 2020 Average Annual Premium for all plans combined, issue years 2018 – 2020, based on National Association of Insurance Commissioners, by permission. The NAIC does not endorse any analysis or conclusions based upon the use of its data.
*** 2020 Average Annual Premium for all plans combined, all issue years, based on National Association of Insurance Commissioners, by permission. The NAIC does not endorse any analysis or conclusions based upon the use of its data.
Note: some of the difference in premium may be due to geographical cost differences and premium rating structure differences
