Brokers get lush trips, bonuses to sell Medigap plans

Federal and state regulators are being urged to increase their oversight of insurance agents and brokers selling Medigap policies, the private supplemental coverage owned by millions of people with traditional Medicare that pays out-of-pocket costs.

These brokers received paid vacations and cash bonuses to enroll customers in plans offered by specific companies, according to a report released Wednesday by Sen. Elizabeth Warren, D-Mass.

“Giant insurance companies have free rein to scam millions of seniors in Medigap, offering agents lavish vacations to steer unknowing beneficiaries into more expensive plans,” Warren said in a statement. “Regulators must act to make sure seniors aren’t getting fleeced.”

The report found that at least 32 Medigap insurers were associated with reward programs, either directly or through third parties. These incentives are legal but can create financial reasons for agents to recommend more expensive policies or plans from a single insurer.

“Seniors can pay a high price for these agent bonuses: Signing up for the wrong plan could cost hundreds or thousands of dollars more each year, either in higher premiums, higher out-ofpocket medical costs, or both,” the report said.

Roughly half of those enrolled in traditional Medicare, about 14 million people, have Medigap policies. Sold by a wide range of insurance companies, the supplemental plans differ in price and the benefits they offer. They are intended to fill the gaps in Medicare coverage created through the program’s deductibles and coinsurance.

The Warren report details numerous examples of luxurious vacations and other perks that high-performing brokers receive.

“Earn the sales reward trip of a lifetime,” reads one pitch, offering a paid vacation to St. Thomas in the U.S. Virgin Islands. “Sell Cigna Supplemental Benefits to earn a five-day, four-night trip.”

Brokers who sold large numbers of Aetna policies in 2020 were offered the opportunity to “unlock the magic of the Golden City,” San Francisco, but only if they also retained a high percentage of customers. (The trip never took place because of the pandemic.) Brokers selling Mutual of Omaha plans were offered cash bonuses.

Cigna declined to comment. Aetna said it offered “a wide range of plans to meet the specific needs of Medicare beneficiaries and it is our expectation that agents sell plans that best meet those needs.” Mutual of Omaha said the insurer “provides a variety of compliant, industry-standard incentives in order to encourage independent brokers to consider our solutions.”