Look at the 'private label' for Medicare supplement plan

When you are in the grocery store looking for ketchup, you have a choice between Heinz, Hunts or usually a store brand. Most people recognize that the store brand probably is made and packaged in the same factories that produce the brand-name ketchup and the ingredients will be virtually the same.

Insurance plans also can be made brand name or "private label." The most recent version of "private label" insurance concerns Medicare supplement insurance.

Since 1993 individual Medicare supplement plans have been standardized so the benefit levels are identical from company to company.

The main criteria for choosing a company are usually premium, service and reputation. Most people are willing to switch if the premium savings are substantial.

In Washington state, people can switch from one insurance company to another at any time regardless of their age or health. Also, there are no exclusions for any pre-existing health conditions.

The insurance company that has released the "private label" plan is called Woodmen of the World. It enjoys an A+ rating from A.M. Best.

How does this "private label" plan work?

Woodmen of the World, while they have a very high rating, have little experience in the Medicare supplement business. They have contracted all the administrative work out to another company that has far more experience and already has all the necessary systems in place.

The administrative company will receive all the applications, issue all the policies, provide service and pay the claims for Woodmen of the World.

So, the policy is Woodmen of the World in name only, as all other functions are handled by the administrative company.

In this instance, Woodmen has contracted with Mutual of Omaha to provide all the administrative work.

The premium for Plan F with Woodmen is a very low $154.17 per month. When this is compared to $186 for Mutual of Omaha and well over $200 per month for Regence Blueshield, Premera Blue Cross, State Farm and Kitsap Physicians Service, the savings per person can be quite dramatic, in many cases more than $700 per year per person for identical coverage.

The question I hear most frequently is, "Why can their premium be so low?"

It is really very simple: All the other carriers who have offered Plan F in the state for many years have a very large and rapidly aging clientele. The age of the clients translates into more claims, and that translates into higher premiums.

In my opinion, when a company is new to the marketplace, they offer a very competitively priced plan to build market share and name recognition, like Humana did with Medicare Part D a few years ago.

What usually occurs is that over the next five to seven years, the premiums of the Woodmen Plan F probably will increase to be more in line with the other companies.

However, if you can save hundreds of dollars for a number of years for exactly the same benefits, why wouldn't you?

We currently are in the process of moving hundreds of clients to this plan. Why do we do this? We believe, as a small-town local agency, it is imperative that we offer the best plans available to our clients. I hope you have enjoyed this behind-the-scenes glimpse into the industry.

If you are interested in these savings, contact your local insurance agent for terms and conditions. All premiums will increase over time - our job as agents is to find the best coverage for the best price while continuing to provide excellent local service.

Phil Castell is an independent insurance agent in Sequim. He can be reached at 683-9284 or

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