Ask the Medicare Specialist

QUESTION:

What are my options in Medicare plans and how do they differ?

This is part II of my “Medicare Reset” series that is designed to educate those who are new to Medicare as well as help those already on Parts A and B prepare for the Annual Election Period that begins in just six weeks.

ANSWER:

There are actually three options but the first, going with Medicare only, isn’t a good idea in my opinion. I discussed what Original Medicare covers in the last column. You can read it and others on our web site. We publish them a few days after they run in the paper. In short, Medicare has no limit on what you can be billed, unlike the other two options. For example, if someone who had Medicare A and B only needed $ 200,000 of Chemotherapy, not out of the question, he or she would be on the hook for 20% of that cost, $ 40,000.

So, the two viable choices are to go with a Medicare Supplement or Advantage Plan, aka Part C, that put an annual limit on what one can be billed. They are very different in a number of ways. Understanding those differences as well as the risks and consequences of the choices one makes is vital.

Supplements have been around almost since the inception of Medicare in 1965, although they weren’t subject to Federal oversight until 1980. Today they are highly Federally regulated.

Medicare Advantage Plans were introduced en mass to the public for the benefit year 2005. They too are Federally regulated. But Advantage Plan companies, unlike those who sell Supplements, can make changes to their plan benefits year to year. This is going to be very prevalent in 2021 as number of popular Advantage Plans are going to significantly increase, some even double, the amount of medical bills one could be responsible for in 2021.

One of the nicest benefits of Supplements, also referred to as Medigap, is they are very easy to understand and compare. Plans are labeled with letters A through N and there only 11 plan choices one has, nine for those who were new to Medicare after 2019. Since what is covered, as well as access to doctors and hospitals is exactly the same regardless of the company that sells them, making a choice mostly comes down to who offers the lowest initial monthly premium.

As far as coverage, there are very few medical bills those with Supplements are responsible for. The name Medigap describes what the policies are designed to do, pick up the “gaps” in Medicare, the portion of the bill that isn’t paid. We recommend just two plan letters, and with both, once the Part B deductible of $ 198 has been satisfied, there are no other bills to pay for Medicare covered services such as blood work, X- Rays, MRI’s, CT scans, surgeries, hospitalizations, chemo, radiation, medical equipment or diabetic supplies, skilled nursing, etc. What we explain to people is, “you pay your premiums and almost nothing else.” The Supplement plans we recommend start at $ 74 to $ 97/ month for a 65- year- old and vary based on zip code, marital status, gender, and age. Almost everyone who goes the Supplement route also needs to buy a Part D prescription plan that start at $ 13/ month.

Advantage Plan benefits can really be different from company to company and plan to plan, even within the same company. There are currently around 60 different plan choices and almost none are identical, making one’s choice a bit trickier. Those who have Advantage Plans pay co- pays or coinsurance ( a percentage of the total bill) for almost every medical service. And in 2021 a large number of plans will expose those who are enrolled in them to as much as $ 7,550 in bills. This is a significant and unexpected change that I will be discussing more as we get closer to AEP. We generally like our clients to avoid plans with the higher Maximum Out of Pocket ( MOOP) limits.

Advantage Plans, however, can offer good value if chosen wisely. Plans are available for as little as $ 0 per month and almost all include Part D prescription coverage. They can also provide other “ancillary” benefits such as dental, vision, free gym memberships, as well as others that Medicare and a Supplement do not. In 2021, our agency will not be advising clients to choose any Advantage Plan HMO or PPO with a premium higher than $ 50/ month.

The use of abbreviations HMO and PPO are another major difference between the two types of plans. Advantage Plans have networks of doctors that one can utilize. With an HMO, except in an emergency, one must use an innetwork provider for all services. PPO’s provide access to out of network providers, however, the costs to do so can be much higher.

Supplements are neither an HMO or PPO and don’t have networks. They provide access to any medical provider in the entire country who accepts Medicare Assignment, which is virtually all hospitals and the vast majority of doctors.

One other difference that isn’t talked about much is how claims and services are approved. Supplements let doctors “steer the ship” so to speak. If he or she wants a patient to have an MRI, CT Scan, even a surgery due to what they perceive as medical necessity, it can be performed immediately. With Advantage Plans, those services and others must be “prior authorized” and could potentially be denied, something that isn’t nearly as common as it was 15 years ago but does happen from time to time. Supplement companies have no say in what is covered. When Medicare pays their portion of the bill, the Supplement company must pay theirs, no questions asked.

If you have questions, would like to know if your plan is going to have significant changes in 2021, or would like to make an appointment for this upcoming AEP, call one of our office locations or email us.

Next week’s column topic will focus on the pros and cons of both Supplements and Advantage Plans.

Stay safe everyone! No- cost, unbiased Medicare plan review and consultation with local, licensed and experienced agents