Question from J:
I enjoyed your column last week. When I was a young man in the 1970s, my first job was as a stockbroker for a large regional firm. There were no “barriers to entry” except a college degree, and no “barriers to exit” either. Upon hire, I spent two months at the company headquarters in classroom training to get past the FINRA, SEC, insurance, commodities, and other exams. There was limited training on financial planning, portfolio management, taxation, or legal issues that are very important to customers. When I was licensed, they handed me a phone directory for wealthy neighborhoods and said, good luck. The job was to open accounts, transfer assets, and encourage trading. The company also underwrote new issues, so we had sales quotas for underwritten stocks. There was no apprenticeship that might include supporting senior brokers at customer meetings or on sales calls. It was a pure commission-based job, and you competed for customers with brokers in your office as well those at other firms. The pay was strictly commission.
The company knew their risks—how many young brokers would fail and how many would succeed—but leave for other firms. So, they limited their investment to license acquisition, administrative support, and a small draw against commission. Their financial model worked well. Turnover was inexpensive and no surprise, so when brokers failed, they were quickly replaced at low cost. The acquisition of “product knowledge” was up to brokers, not the company. Some were great cold callers but had limited investment or financial knowledge. They pushed sales and trades regardless of suitability, annoying (and losing) many customers, but could replace them with a few good sales calls. In effect, these brokers treated customers the same way they were being treated by the company.
There were a few financial management companies at the time with a different financial model: lots of training, long apprenticeships, and high expectations for customer suitability. These firms took the risk that paying the salary of “brokers” in a two- or three-year training process would result in knowledgeable, trustworthy representatives who would remain loyal to the company when they started generating revenue. If the company was smart in their hiring process (the key to success), their gamble paid off, and customers enjoyed highly trained support.
What’s my point? There are two different business models, and both can be successful for the company. But, as a customer, I’d always want to work with model #2.
Answer:
J is a loyal reader and it’s also very common for him to send me feedback. This is the word for work email he sent me the day after my last column ran and is the perfect description for what is currently, and sadly, going on in the Medicare industry. I’m extremely proud that from the day The Health Insurance Store opened on April 1st, 2008, I’ve employed model #2. The client’s interest comes first. Every. Single. Time. It’s for this reason we just surpassed the 15,000 active client mark. And we did it with 10 full time agents, not the 100 plus like those who choose the alternative model and how the vast majority of agencies operate. The result is Medicare agents not being trained properly or understanding the most important aspects of Original Medicare, Supplements, Advantage Plans, or Part D and who is best on what type of coverage. Some new agents aren’t given any ethical direction and even encouraged to mislead seniors.
That once again became even clearer to me after last week’s column. Not due to J.’s response, but because of how many people who spend their winters in warmer weather emailed me or called the office explaining they had been advised to take, and still had, an Advantage Plan that doesn’t cover elective or non-emergency care out of network without possibly having a provider deny services, getting charged significantly more money, or jumping through hoops to get care, but were led to believe otherwise.
Let me explain these extremely important facts again. Only Supplements have no network restrictions and allow people to go to any doctor or hospital in the country who accept Medicare. Only those on Supplements can immediately get CT scans, MRIs, both inpatient and outpatient surgeries, etc., performed with just a physician’s order and without waiting on an insurance company’s approval. Only one of the “Big Three,” as I call the most popular Western PA Advantage Plan companies, has a PPO with a national network where doctors and hospitals can be accessed in the same manner and at the same costs in other states as they are at home. The majority of PPOs don’t automatically provide that, but many brokers will falsely state they do. Others will claim there are HMOs that provide it as well. That’s not true either.
Advantage Plans work very well for certain subsets and can offer tremendous value for the right people. We like them for probably 30% to 40% of our clients. But for what seems like the 100th time I’ve written this, they’re absolutely wrong for many and there’s a ton of agents who don’t realize it or care !
If it sounds like I’m annoyed, I’m actually past that. I’m angry. I’m angry the industry I’ve been in for almost 16 years now has turned into an ugly business very similar, if not identical, to how J. described his experience as a stockbroker/financial advisor in the 70s. I’m angry that everyday our staff comes across victims of bad advice, untrained agents, and outright deceptive practices who turn to us for our help, often after it’s too late and the available solutions not ideal.
Today, the financial industry has many more regulations and consumer protections than Medicare. They even have a self-regulating body, something we desperately need in Medicare. Unfortunately, we don’t have anywhere close to what is necessary, and I don’t see it coming in the near future.
Knowing that, I can tell you with no uncertainty that if you, your family, or friends go to another broker who isn’t employed by The Health Insurance Store, there is a much better than average chance they will get bad advice and not have the two Medicare options; Advantage Plans and Supplements explained correctly, or at all. I also highly recommend those who didn’t originally get their Medicare plan from us reach out to make sure you didn’t make the wrong choice in plan. If you did, and there’s better than 50% chance of that, there’s a limited time everyone has to correct it.
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If you would like to make an appointment for a no cost consultation to go over Medicare options, individual ACA marketplace plans, you’re an employer and would like a second opinion on your group policy, or are interested in life insurance, give us a call or email me personally at aaron@getyourbestplan.com. And keep the great column questions coming! Also, I am now licensed in over 20 states and able to help people choose and enroll in Advantage, Supplement, and Part D plans throughout the country.
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If you have any questions or concerns regarding this column topic, or would like to make an appointment for a no-cost consultation, please feel free to give us a call – we would be happy to help. I’d like to remind everyone that I do a live call-in talk show called Medicare A to Z every 1st and 3rd Monday of the month on WMBS Uniontown, 590AM and 101.1FM, from 1 to 3 PM. You can listen in on their website, wmbs590.com.
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