Why carriers are paying more for your Medicare Supplement Plan N business (probably)

Note: Bonus information in this article is valid as of May 6, 2025. Please verify current bonuses if looking after that date.

Take a look around this spring, and you’ll notice carriers are paying big bucks for Medicare Supplement Plan N Open Enrollment bonuses – up to $200 per enrollment. For everything else? It varies by carrier, but their incentives for underwritten plans, or open enrollment in any other plan, are often half that.

So why are carriers pushing Plan N so hard? And what does that mean for your health insurance business?

Plan G makes up a significant portion of business, but….

In 2023, the most recent year for which data is available, Plans G & N combined to represent 75.8% of all Medicare Supplement policies written in the previous three years. But that is in no way an even split – 85.1% of those were Plan G policies[i].

For those of you struggling with the napkin math, about 64% of all new business written between 2020 and 2023 was enrolled in a Plan G.

That’s a lot of folks in one product.

…Loss ratios are climbing….

But, Plan G is popular for a reason: It has the richest set of Medicare Supplement benefits available to those newly eligible for Medicare (bow your heads for plans C, F, and J). Richer benefits tend to mean higher premiums. And, there’s often a strong correlation with the number and cost of claims that must be paid. Plan Gs are no exception.

In 2024, carriers’ combined earned premium was $36.7 billion, up 4% from $35.3 billion in 2023.

Incurred claims were $30.9 billion, up 4.4% from $29.6 billion.

You’ll notice, of course, that claims increased more than the earned premium, and that trend has held constant over the past several years. Loss ratios, or the ratio of claims paid to premiums earned, are steadily climbing, putting carriers in a tricky situation.

…Which means rates have to increase.           

So, if claims are getting more expensive, what can a Medicare Supplement carrier do? Raise their premiums, of course.

And raise they have.

In each of the last two years, both plan N and G rates have increased 2-3% higher than in previous years. Note, though, that Plan N increases have not been quite as steep as Plan G increases.

Carriers want to spread their risk

As premiums continue to climb, it’s fair to ask: “How can carriers afford to pay nearly double the bonus for Plan N enrollments?”

Well, they can’t afford not to.

We don’t have any insider information on this, to be clear, but if we’re reading the tea leaves, Plan G claims are likely driving the bulk of the claims increase. To help right the ship (and potentially discourage enrollments), carriers are offering you a bit more to take a second look at Plan N.

If you do, at least in their eyes, they save money on paying excess charges, and they don’t have to pay for other covered services at 100%. Instead, your client would have some skin in the game for excess charges, as well as office and emergency visits.

What you and your clients can do instead

You’re under no obligation to take carriers up on their offer. After all, your first duty is to your client.

But it’s entirely possible your clients could soon be priced out of Plan G, if current trends continue.

To protect against that, you have a few options:

Plan N: Your clients have lower premiums here, but some out-of-pocket exposure to excess charges, office visits ($20 each) and ER visits ($50 each if not admitted). A client who might not use health care often could fit well here.

Plan N with Hospital Indemnity: It’s true that most providers accept Medicare’s approved amount as payment in full. But if your clients are loyal to a provider that doesn’t accept assignment, a hospital indemnity benefit can help shield them from costs they incur in the hospital and offset their ER copays. Your client would still be on the hook for those office visit copays, though.

The dark horse: High-deductible G with Hospital Indemnity: On a High-Deductible G, your clients are responsible for their entire Part A and B deductibles and coinsurance until they meet the plan’s deductible -- $2,870 in 2025.

That’s a hefty deductible, to be sure. But how will your clients most likely reach it?

Through inpatient care, of course. Fortunately, hospital indemnity plans can help make your clients whole for stays in the hospital and/or a skilled nursing facility.

What to keep in mind:

This is a decision that will very much be made in the margins. For each of these scenarios, you’ll want to calculate:

• Your client’s yearly Medicare Supplement premium
• The maximum amount of cost-sharing they’d incur under each Medicare Supplement option
• If desired, your client’s yearly Hospital indemnity premium and possible payouts

Because rates will vary from carrier to carrier, it’s difficult to walk through each and every scenario here. However, it’s very probable your clients can realize some premium savings in a Plan N or High-deductible G, and offset much, if not all, of their out-of-pocket exposure with a supplemental product.

Let’s talk it out

Plan G has been the gold standard in Medicare Supplement ever since 2020. However, that gold is losing a little bit of its shine. If you’re worried about your clients being priced out of that product – and they very well could be – it’s time to explore some more affordable options. Our individual team can help you find the right Medicare Supplement carrier and pair it with a great-fitting hospital indemnity plan.

[i] Telos Actuarial. The Future of Medicare Supplement: 14^th Annual Market Projection | 2024.