Ask the Medicare Specialist

QUESTION:

From Liz: I moved from an Advantage Plan HMO to a Supplement this year. I was upset to discover that I had a deductible for my prescriptions I never did with my Advantage Plan. I’m thinking about moving back to it next year. Can I do that and what would you advise?

ANSWER:

You can absolutely go back to an Advantage Plan, because unlike Supplements, one can always choose an HMO or PPO regardless of current or pre-existing health conditions. But be careful of simply going back to the plan you previously had in 2021. Benefits can change year to year on Advantage Plans, sometimes quite significantly as far as co-pays and out of pocket costs are concerned. Ancillary benefits like dental can also be reduced or eliminated. As for the second part of the question, what we do at The Health Insurance Store is go over the pros and cons of both options, Supplements and Advantage Plans, answer all questions our clients or prospective clients may have, and then help them make the best choice based on each individual’s circumstances. I would have to sit down with you before I could advise you either way. There’s no one size fits all approach. I’ve always said that if I consulted 25 random Medicare beneficiaries, I would probably give 20 different sets of advice.

There are several factors that people need to consider in order to make an educated decision. Affordability is probably right at the top of the list, if not the number one factor. There are many others such as current or past health issues, access to insurance such as retirement or VA benefits, eligibility for the PACE prescription program, household income, family medical history, aversion to risk, how much one travels, and more.

The deductible for both Part D prescriptions and Part B medical services is absolutely part of the equation and can be factored into what I sometimes refer to as “total cost of ownership.” There’s much more to overall cost of a plan than just premiums. People who choose to go with Supplements generally need to purchase what is known as a Stand-Alone Part D plan because Supplements, unlike 95% of Medicare Advantage Plans, don’t come with prescription coverage. These plans not only have their own premiums ranging from $13 to $25/month for the most popular plans in addition to a Supplement, they also have a $435 deductible that Liz referred to. The deductible only applies to Tier 3, 4, and 5 drugs on most plans so those who only take Tier 1 and 2 generic medications would not be subject to it. However, those who use brand names would have to pay $435 out of pocket before their meds would be covered on a co-pay basis. Advantage Plan HMO’s and PPO’s do not have a prescription drug deductible. In addition, they generally have lower monthly premiums than Supplements. The plans we recommend 99% of the time to our clients who choose to go with an HMO or a PPO are under $60/month, many as low as $0. They also can come with other helpful ancillary benefits such as dental, vision, no cost gym benefits (Silver Sneakers), as well as hearing aid and over the counter (OTC) allowances. Be advised that not all plans provide all of these or at the same level as others. Some may provide comprehensive dental benefits such as fillings, crowns, root canals, extractions, and dentures while others only cover cleanings and a set of X-Rays. Some plans may offer close to $500 per year in OTC allowances while others just $100 or none at all. When you add up the dollar amount of all the benefits available in certain Advantage Plans, it can be a pretty big number. For those who choose plans wisely, which the agents at The Health Insurance Store ensure our clients do every year, Advantage Plans can be a great value for those who stay relatively healthy. And that’s the key phase. Because not having a deductible, paying a lower premium, and getting extra benefits doesn’t necessarily mean a lower “total cost of ownership.” Supplements have very little out of pocket medical costs. Those on Plan G pay only the Part B deductible of $198. Plan N has the same deductible and only two other small co-pays, $20 for a doctor visit and $50 at the Emergency Room. Once the deductible is met on either plan there is zero cost for CT scans or MRI’s, blood work, x-rays, hospitalizations, surgeries, chemo, radiation, outpatient rehab, etc., etc., etc.

Although we rarely recommend HMO’s or PPO’s with hospital co-pays more than $350 per stay, on many plans they can be $1,000 or more. So, just one admittance could be equal to a year of Supplement premiums for people in their 60’s or early 70’s. Let’s quickly look at the average cost of a common knee replacement on a Supplement vs the most popular HMO’s. Let’s assume the following would be necessary: three specialist visits, two MRI’s or CT Scans, two nights in the hospital, and 18 sessions of physical therapy. Those on Supplement Plan N would pay their deductible of $198 and three $20 co-pays for a total of $258, less if their deductible had already been met. The average total for our clients on Advantage Plans would be over $1,200 based on an average specialist co-pay of $40 per visit, $165 per MRI or CT Scan $300 for the hospitalization/surgery, and $30 per physical therapy.

Now obviously there may never be a need for a knee replacement and certainly not a need for one every year. Again, those who stay just somewhat healthy, go to the doctor a few times a year, use the Emergency Room from time to time at a cost of less than $100, or even have the occasional outpatient surgery or other low-cost services like x-rays, blood work, etc., can and do save money with Advantage Plans. We’ve had clients who never needed services that cost more than $200 over a 10-year period. The premiums those folks saved, even when factoring in co-pays was over $10,000.

But there’s a flip side. For every 20 or so people who saved that kind of money, there may be one who was diagnosed with a condition that requires costly medical services year after year that could total $3,400 to $6,700 annually, depending on their plan’s Maximum Out of Pocket. Are you willing to take that risk as well as others? That’s a question that always should be asked in my opinion. I suggest you let myself or one of our other licensed agents help you do the math, put pen to paper, assess all risks and rewards, and compare plans side by side before making that final decision.