Drug Insurance Carriers Are Counting On You to Be Passive This AEP
It may seem counterintuitive, but many seniors are opting to stay with their current drug coverage despite premiums being at an all-time high. Lack of movement among seniors gives insurance companies just what they want – a complacent market that makes room for higher premiums.
Everyone has been hit hard by inflation, so why wouldn’t someone take advantage of the opportunity save money on insurance? Here’s one theory: Academic researchers have speculated that during election years people tend to hold off on spending. This is mainly due to the uncertainty that surrounds these important elections, although occasionally it can have the opposite result.
Another culprit could be brand loyalty. It is no secret that good marketing can generate lifetime customers. For a long time, it was implied that the only place to enroll in Medicare insurance was with one specific senior organization – AARP. Since AARP has an exclusive contract with United HealthCare’s Medicare products, they receive commissions from each policy sold. This led many to tie themselves to AARP for use of United HealthCare’s insurance, even if they did not share the same left-leaning beliefs. Now fast forward to year 2022, they have some of the highest prescription drug plan premiums on the market, which are about 30% higher than the next comparable plan according to the Kaiser Family foundation.
“We’re certainly at the point where this AARP (Drug) plan is so expensive that it’s likely that most people in it could save money by switching…But it comes down to brand loyalty” says Juliette Cubanski, co-author of the Kaiser report.
Now we know that their drug plan premiums are among the highest on the market, but AARP is not the only one taking advantage of customers who decide to leave well-enough alone. During the past few years, a new pattern has emerged. Consumers enroll in a new low-cost drug plan, only to realize that the premium significantly increased the following year.
Those who did not do their due diligence only realized the price hike after the Annual Enrollment Period ended, leaving them with no other option but to keep the now unaffordable drug plan. On the other hand, there are those who knowingly chose to stay because they didn’t want to bother changing plans. Both scenarios create opportunities for insurance carriers to slide in higher rates for the following year. Since they know many people won’t change their plan, they stand to make a nice profit from their already established customer base.
Maybe you have had great experience with your current carrier, and they have always covered your prescriptions, but keep in mind these drug plans are subject to change each year. What happens when your plan becomes unaffordable or does not cover your essential medications? For a lot of people, this is their reality. Whether you are nervous about upcoming changes or have the “if it’s not broken don’t fix it” mentality, you are doing yourself a disservice if you do not shop around for drug coverage annually.
Call a trusted AMAC Medicare advisor to ensure you are not paying more than you have to for your coverage. Our services are always complimentary and there is no obligation to enroll.
For help with Medicare plans – or any questions you may have about Medicare – contact AMAC’s Medicare Advisory Service at 1-855-611-4856 or request a quote below!