In a move to retain baby boomers who have a tendency to leave credit unions after a certain age, CUNA Mutual Group has partnered with Humana Inc. to offer a suite of Medicare products.
For credit unions, the alliance will bring a choice of several Humana Medicare Advantage plans, which are Medicare supplement plans that cover gaps in original Medicare coverage for deductibles and co-insurance and Part D prescription drug coverage to serve as an addition to the standard Medicare program.
The Medicare suite will be offered this year through CUNA Mutual's MemberCONNECT direct-to-member distribution channel. Targeted members of participating credit unions are able to take advantage of the remaining 2009 enrollment period for the Medicare product, which is Nov. 15 through Dec. 31. "Targeted" means selecting the right product for members for their age, said Jeff Hunt, consumer program manager at CUNA Mutual. The products will also be available to credit unions not enrolled in MEMBERConnect, but they will have to complete paperwork to participate.
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"One of the difficulties for those approaching retirement that have elected Medicare is they are confused about [it]," said Hunt, who oversees product development for those age 55 and over.
"Medicare is seasonal and regulated. People get blasted by an awful lot of information, and they often have to make a decision in a short time frame. We want to provide guidance on making sure the product is right for the member."
To that end, CUNA Mutual is setting up a phone center with noncommissioned persons representing the company who "can walk [members] through, listen to them and recommend the right product."
CUNA Mutual has not yet released figures on what credit unions will earn through the health service alliance, Hunt said. However, credit unions will be paid on a per policy basis. Because Medicare is highly regulated-the program approves how much participants will pay for use of the services offered and certain products are regulated at either the state or federal level-the cost structure can get complex, Hunt said. Humana's Medicare products, with the exception of the Part D prescription coverage, also have subproducts with different costs.
After a due diligence search of Medicare providers, CUNA Mutual went with Humana because of its array of products and ability to offer coverage in all 50 states and withstand regulatory changes common to the Medicare program, Hunt said. The most important component was Humana's ability to "understand member value."
Those traits are important given credit unions' struggles with cementing long-term relationships with retirees. According to research conducted by CUNA Mutual, credit unions have had trouble retaining baby boomers-defined as those born between 1946 and 1964-into retirement, primarily because they don't view credit unions as providing all the products they need or seek in retirement.
When boomers were asked how likely they were to stop using their credit union in retirement, 17% of respondents said they were somewhat or very likely to leave, according to the 2008 CUNA National Member Survey. While the percentage sounds small, it translates to a loss of more than five million members when applied to the estimated 33 million boomer credit union members. Likewise, 37% of the industry's membership is among 45-64-year-olds. The percentage drops to 26% for those 65 years and older.
"The size and wealth of this generation means credit unions will face a membership drop of millions and an asset loss of billions if loss rates match up with historical averages," Hunt said. "Replacing the boomer retirees with younger generations of members is just not possible in the short term.
Generation X is too small and financially stretched, and Generation Y is too far away from their peak borrowing and earning years to fill the gap."
To retain those boomers, Humana is hoping the new partnership will build on a legacy of loyalty credit unions are familiar with. The Louisville, Ky.-based health care company provides coverage for nine million customers, including more than 4.5 million Medicare members.
"We know millions of Americans place a tremendous amount of trust with their credit unions, and relationships such as this new Humana-CUNA Mutual relationship are vital to Humana's continued success as one of the nation's leading Medicare Part D health-benefit plan sponsors," said Lance Hoeltke, vice president of strategic alliances with Humana.
Hunt said so far, 16 credit unions have signed on to offer the suite of Medicare products through CUNA Mutual and Humana.
"One of the things I like is Humana's tag line: 'Guidance when you need it most.' We know that when some credit unions hear [about the partnership], there will be a fear that they have to be an expert in Medicare. We want to provide that [guidance] too."
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