Vital signs for the U.S. Medicare Supplement market were mostly positive through 2021, according to our latest benchmark report on the sector. Gen Re’s annual U.S. Medicare Supplement Market Survey reveals that in force premium grew 3% over 2020 for participating companies. Half of companies with open blocks (15 of 30) and 84% with closed blocks (31 of 37) reported a profit for 2021.

Ninety‑two companies were represented in the survey – close to 90% of the market – including those with open and/or closed blocks of business, with 53% of the companies managing both.

Market Results

Survey participants reported $13 billion in total Med Supp in force premium for 2021; participants also reported 5.4 million covered lives, up by about 1% overall.

However, new sales premium at $1.3 billion for 2021 declined by about $60 million, or -4% compared with 2020.

Lapse rates, including mortality, averaged 11% for open blocks of business and 17% for closed blocks in 2021. Excluding mortality, lapse rates averaged 10% and 12%, respectively. Overall, lapse rates were slightly higher in 2021 than in 2020. About 60% of the responding companies reported 2021 lapse rates increased compared to 2020.

Enrollment

The most popular Med Supp plan sold in 2021 was Plan G, accounting for 66% of both new sales premium and new lives covered. Although most companies (97%) sold Plan F in 2021, it accounted for only 15% of the sales premium. In 2021, over 90% of the participating companies sold Plans F, G and N. Plan A was also widely sold, with 22 companies (71%) offering it.

Overall, open enrollment applications accounted for 45% of 2021 new sales premium; underwritten apps accounted for 36%, while Guaranteed Issue apps made up less than 20%. Policyholders aged 65 through 70 constituted 58% of new sales premium and 65% of the new lives covered in 2021.

Most of the participating companies sell Med Supp plans through independent agents (90%), while 57% use direct-to-consumer sales (via phone, mail, online, or a combination of these methods without the involvement of a traditional agent receiving compensation). Captive agents were used for 27% of sales.

The Future

Over our 30‑year history in the Medicare Supplement space, Gen Re has always taken a long-term view. Just looking at the generational demographics, the opportunity in the Med Supp space will continue. More attention needs to be focused not just on sales today but the persistency and future loss ratios of the block of business. The keys to long-term success will be sustainable growth and robust in‑force block management.

Gen Re has the expertise and proprietary pricing and marketing tools to assist clients who want to enter the market for the first time, manage an in‑force block of business, or complete an exit from the space. Whichever option is relevant to you, we can help.