Ask the Medicare Specialist
QUESTION:
From Charlene: You’ve mentioned Over the Counter allowances in several of your columns. What are they? My plan doesn’t offer them to me. Why?
ANSWER:
An Over the Counter (OTC) allowance is a benefit that until 2019 was only offered in plans available to people who had both Medicare and Medicaid. They are now provided by several Advantage Plans that are available to anyone. But as Charlene’s question indicates, not all plans offer them or the same amount, which I will discuss in more detail. OTC allowances are a set dollar amount that can be used to order items that can be found on the shelves of practically any drug store, grocery store, or large retail chain. Acetaminophen, Ibuprofen, cold and flu remedies, vitamins, toothbrushes, toothpaste, body lotion, thermometers, braces for ankles, knees, or elbows, and even sunscreen and mosquito repellent, among many other products are available. Most plans utilize a catalog with a list of items to choose from. They are ordered via phone or a website and then mailed to the beneficiary’s home. There is zero out of pocket cost for both the products and the shipping. It’s a popular benefit. As I stated above, not all plans have OTC benefits and some offer a larger allowance than others. They can be provided on a monthly or quarterly basis. On the high end, the allowance is $40 per month and on the low end $25 per quarter, which equates to less than $10 per month. I must say that the published costs of these items tend be quite a bit higher than what one would pay at larger retailer, dollar stores, or online. I would estimate that $40 worth of OTC allowance equates to an actual value of approximately $20 worth of items you could buy on your own. Keep that in mind if you are calculating “total cost of ownership,” which I discussed in last week’s column. You can read that as well as listen to my webcast on the subject. Both can be found on our website. OTC benefits are part of a recent trend in Advantage Plan HMO’s and PPO’s where more and more “ancillary benefits” are being offered. These are what I would describe as value added items or services that plans provide on a voluntary basis but are not required to. Other newer no cost benefits include rides to and from doctor appointments, prepared frozen meal delivery after an inpatient hospitalization or skilled nursing stay, and bathroom safety products. In addition, more generous dental benefits were added to some plans in 2019 and 2020. Prior to those years only two teeth cleanings and one set of bitewing X-rays were available and not all plans offered even that. But like OTC allowances, what is covered, and the dollar amount of coverage can vary. Some plans cover zero dental, some just annual cleanings and x-rays, while others may provide as much as $2,000 per year for fillings, periodontal, extractions, root canals, crowns, and even dentures. Other ancillary benefits that have been provided for years include a free routine eye exam and an allowance for eyeglasses or contacts, free gym memberships known as Silver Sneakers, and help with hearing aids. Original Medicare and Supplements generally don’t offer any of these services. If these benefits are important to you and a reason for choosing an Advantage Plan, in my professional opinion it’s very important you not only enroll in a plan that provides as many as possible and larger allowances, but one that has a lower monthly premium and “per stay” hospital co-pays as opposed to “per day.” Some people may be more interested in having a $1,500 to $3,000 lower annual Maximum Out of Pocket (MOOP) than ancillary benefits. The other agents and I always make sure to provide these plan options to clients. Those who don’t go to the gym and have little need for dental benefits other than cleanings and X-rays aren’t going to receive near the dollar value as those who do. Be aware if you pay too much in premium or end up with a hospital co-pay of over $1,000 as opposed to say, $300, much of the value of ancillary benefits gets wiped out. And just because Advantage Plans offer ancillary benefits doesn’t necessarily mean an HMO or PPO is the best choice for everyone. Those who are higher utilizers of medical services or are concerned about that in the future should consider Supplements which eliminate most or all out of pocket medical expenses. I’ve posed this question on more than one occasion. If you were billed $2,000 to $6,700 for medical services, how free were your OTC benefits, gym membership, and teeth cleanings? Another important consideration that was recently brought up to me by a reader of the column is network restrictions. In some plans, if you are willing to give up access to certain hospital systems, the ancillary benefits can be richer and premiums lower. Are you willing to give up access to UPMC doctors and hospitals, Allegheny Health Network, or other world class facilities such as the Mayo Clinic, Cleveland Clinic, M.D. Anderson Cancer Center, and Johns Hopkins? I’ve had several clients whose lives were saved because they had Supplements and were able to utilize those hospitals. The Health Insurance Store can help you navigate these questions and go over the pros and cons of both Supplements and Advantage Plans as well as advise what plans offer the best possible value considering your health care needs, preferences of benefits, aversion for risk, as well as budget. Consultations in one of our offices, over the phone, or via Zoom meeting are always free of charge.