Seniors Assail Supplemental Medicare Policy Scams

Orange County’s senior citizens, who are targets of Medicare supplemental insurance marketing ploys, asked state officials Tuesday for protection from unscrupulous agents and carriers and the growing number of celebrities peddling insurance on television commercials.

The seniors testified before the state Insurance Department in the second of eight hearings being held around the state on the issue of supplemental insurance. Commonly referred to as “Medicare-gap policies,” supplemental insurance is sold as a way of helping to pay medical costs not covered by Medicare.

The hearings were prompted by numerous complaints received by the state agency about marketing and claims practices by carriers, according to Jerry L. Whitfield, a special deputy insurance commissioner, who headed Tuesday’s session in Orange.

‘Top Priority’

Whitfield said Insurance Commissioner Roxani M. Gillespie, who was appointed last July, has created a Senior Citizen Task Force and is giving “top priority” to the needs of the elderly.

One critic of insurance carriers testified Tuesday that some agents rely on fear as “a basic sales technique.”

“They try to tell the elderly person that they don’t have adequate coverage. Once you put the fear in them, they’ll buy anything,” said Arthur Blackburn, a representative of the National Council of Senior Citizens’ Orange County chapter.

Blackburn said he has heard complaints that some agents sell clients a second insurance package, without disclosing that the benefits in the supplemental plan are automatically canceled by their existing coverage.

He added that Orange County’s senior citizens are ready and willing to provide political support to help the insurance commissioner push for new laws and restrictions against the politically powerful insurance industry.

Orange County has an estimated 205,316 residents over 65, or about 10% of the county’s estimated 2.1 million population. In addition, the county traditionally has had a strong seniors’ lobby, and leaders often point to voting strength at large retirement communities such as Leisure World.

Should Be Licensed?

Art Findley, a volunteer Medicare counselor in Orange, contended that celebrities soliciting Medicare supplemental insurance in television commercials should be required to have licenses.

“Buy Dick Van Dyke’s insurance. Buy Lorne Green’s. That’s all we hear on television. These people must be licensed just like an insurance agent because they are selling insurance,” Findley argued.

Older people often feel that they can trust these celebrities but know “very little” about an insurance company or the policy they may be buying, Findley said. “In reality, it (the supplemental policy) only helps deplete their pocketbook,” he contended.

Findley suggested that insurance agents provide an outline that can be left with the client “to eliminate a lot of hocus-pocus.”

Other suggestions given Tuesday to insurance officials included:

- With hospital stays shorter, Medicare supplemental insurance should have in “big letters” that custodial care, which covers convalescent homes, is not included.

- Marketing practices forcing customers to buy “club memberships” that entitle them to buy Medicare supplemental insurance are unnecessary costs and should be eliminated.

- The Legislature should move to standardize a single Medicare supplemental insurance policy that is easily explained.

- The Insurance Department should help conduct a massive educational program aimed at senior citizens, one that would give the elderly the necessary awareness needed when buying Medicare supplemental insurance.

Dennis Ward, the Insurance Department’s chief investigator, said at Tuesday’s hearing that the department has heard stories that insurance carriers offer greater incentives to agents who sell supplemental policies with one-year expiration dates.

“This gives agents the motivation to sell new policies each year to the elderly to get more commissions than if the client simply renewed annually,” Ward said.

The hearings will be completed this month and their findings will be forwarded to the Senior Citizen Task Force. The task force, in turn, is expected to make recommendations, including legislative changes, Whitfield said.