March 31, 2023 The Honorable Elizabeth Warren United States

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www.naic.org

March 31, 2023

The Honorable Elizabeth Warren

United States Senator

309 Hart Senate Office Building

Washington, DC 20510

Dear Senator Warren:

Thank you for reaching out to the National Association of Insurance Commissioners

(NAIC) and for forwarding a copy of your report outlining your concerns about the

marketing of Medicare Supplement (Medigap) plans. As state insurance regulators,

we share your desire to ensure that all consumers, and particularly the most

vulnerable consumers, are protected from deceptive marketing practices.

In response to your letter and report, we surveyed the states to determine if there

have been consumer complaints filed with state departments of insurance about the

marketing and sale of Medigap plans. A significant majority of responding states

reported no such complaints. A few states had received one or two complaints

unrelated to sales incentives and those were resolved. One or two states have seen

violations of state incentives rules and have taken appropriate action. While your

report raises concerns about the potential impact sales incentives could have on

consumers purchasing the right plan for them, the states have not seen evidence that

such incentives have led to consumer harm, but we will remain vigilant. Sales

incentives and commission structures do not relieve agents and brokers of their legal

obligations to recommend suitable products to consumers.

As you note in your report, Medigap plans are standardized and are designed to be

suitable supplemental coverage for seniors who choose traditional Medicare

coverage. They do not have networks or other limitations that could make a plan

more or less suitable for enrollees depending on their unique needs and

circumstances. While your report raises important questions about the potential for

situations where incentives could influence how producers present Medigap plans to

seniors, state regulators have no indication that these incentives have led to harm to

consumers. When complaints are made, state regulators have the tools, and use

them, to investigate and resolve issues.

The recent report from the Senate Finance Committee points to a more pressing

threat to seniors – the improper marketing of Medicare Advantage (MA) plans. As the

NAIC said in its May 5, 2022, letter to the Congress, since the adoption of the

Medicare Modernization Act, which preempted state authority to oversee the

marketing of MA plans, “State Departments of Insurance, as well as State Health

Insurance Programs (SHIPs), consumer advocacy organizations, and the media, have

reported patterns of overly aggressive, deceptive, and abusive marketing and sales

practices in the MA plan marketplace.” State and Federal regulators have

documented tens of thousands of complaints from consumers who have been placed

into an MA plan that is unsuitable for them, and sometimes without their knowledge

or understanding. The Senate Finance Committee report highlights just some of the

complaints states have received and some of the questionable practices used to sell

these products. The NAIC continues to urge Congress to return MA marketing

oversight authority to the states.

As for the NAIC Medigap Model (#651), we would like to note that all NAIC models

are developed using an open process where all participants can raise issues and offer

amendments. The Medigap Model was most recently amended in 2016 after

passage of MACRA and during those lengthy discussions there were no objections

raised to the current marketing language. Marketing was specifically discussed since

consumers would need to be clearly and accurately informed of their new choices,

but no state regulators or consumer advocates suggested the need to amend the

marketing language.

For many seniors, Medigap, with traditional Medicare, can be a superior choice to

MA due to the networks and other limitations associated with MA plans. However,

the commissions for Medigap plans are relatively low compared to those for MA

plans. Medigap issuers use bonuses and incentives to encourage agents and brokers

to inform seniors of their products and the advantages of traditional Medicare. State

regulators believe it is important for consumers to know all their options and that

unnecessary limitations on incentives could be detrimental to a balanced

marketplace for Medicare options and lead to a health insurance coverage gap for

seniors.

Thank you again for your letter and your report. State regulators take seriously their

responsibility to monitor the marketing practices of all insurers and producers within

their jurisdiction to ensure consumers are protected. We look forward to continuing

to work with you to keep insurance markets fair and accessible to consumers.

Sincerely,

Chlora Lindley-Myers Andrew N. Mais (He/Him/His)

NAIC President NAIC President-Elect

Director Commissioner

Missouri Department of Commerce Connecticut Insurance Department

and Insurance

Jon Godfread Scott White

NAIC Vice President NAIC Secretary-Treasurer

Commissioner Commissioner

North Dakota Insurance Department Virginia Insurance Department