Ask The Medicare Specialist

By: Aaron Zolbrod

QUESTION:

Question from Rick: In last week’s column you stated Medicare Advantage Plans don’t pick up the portion of the bill Original Medicare doesn’t pay. That was not explained to me when I signed up. I’m very confused now. Can you tell me how I’m covered?

ANSWER:

It’s far too common for Advantage Plans not to be contrasted with Supplements when an agent, or a representative of a company, is selling them. I think there needs to be some regulation that eliminates that, especially because one’s initial enrollment in Part B is the only time acceptance in a Supplement is guaranteed. Six months after companies can deny applications based on current or previous health issues.

The two types of Medicare plans are also dissimilar in almost every way. Advantage Plans do not pay in addition to Medicare. They don’t pick up the $1,600 Part A hospital deductible, nor the 20% that Part B doesn’t cover for outpatient services. What they do instead is pay in place of Medicare. When someone chooses an Advantage Plan, they are choosing to have Medicare take on a completely different role than was originally intended. Instead of paying all but $1,600 of a hospitalization and 80% of covered Part B services, Medicare actually pays a private company approximately $12,000 per year to take on the burden of being that person’s lone insurer, providing him or her a health insurance package, and paying all claims minus the insured’s cost sharing which is usually in the form of co-pays or coinsurance. In return, the Advantage Plan company must cover everything that Original Medicare does and pay for any and all services, even the most expensive, such as a $160,000 quadruple bypass surgery, for example, in full less the client’s copay.

Because Medicare is no longer responsible for paying any claims, those on Advantage Plans literally don’t show their red, white, and blue Medicare card at a doctor’s office or hospital. In fact, we tell our Advantage Plan clients to put it in a drawer or filing cabinet.

There are plenty of other differences. One is how much money in bills those on Advantage Plans could potentially be responsible for vs Supplements. We most often recommend Plan N for those who prefer Supplements, and it has only three out of pocket costs; The $226 annual Part B deductible, a $20 copay at a physician’s office visit, and $50 for a trip to the Emergency Room. Advantage Plans have co-pays or coinsurance for virtually every medical service. As little as $0 for a primary care visit, $25 to $40 for a specialist, $0 to $20 for bloodwork, $25 to $50 for an X-ray, and $90 to $110 at the Emergency Room, all very reasonable. Co-pays for MRI’s, CT-scans, and outpatient surgeries generally range from $150 to $300, while an inpatient hospitalization co-pay can be $225 to $1,800. Chemo and other infused or injected medications, radiation, a lengthy Skilled Nursing stay, and a couple of other less common services result in thousands of dollars in bills. However, all Advantage Plans have an annual Maximum Out of Pocket (MOOP) that limits the total amount of bills one can receive in a calendar year. MOOPs in 2023 range from $4,000 to $8,300.

Often, when we explain that Supplements have little out of pocket expenses compared to the costs for the services above, I’m asked, “Why would anyone choose an Advantage Plan?” The short two-fold answer is: #1, they have lower premiums. The HMOs and PPOs we prefer cost less than $40 per month, some as low as $0. Supplements start at $75 to $95, get more expensive with age, and have an additional cost for a Stand-Alone Part D prescription policy of $5 to $40. What’s really driving the increased popularity of Advantage Plans is #2, the generous ancillary benefits they supply such as comprehensive dental care, a free eye exam and glasses, allowances to order practically any over the counter item you can find at a pharmacy or other store, hearing aid coverage, a gym membership, and more. Supplements come with none of these benefits.

Unlike Supplements, Advantage Plans have networks that tend to limit access to Western PA doctors and hospitals, although some plans offer access to the Cleveland Clinic while a select few have a national network. Supplements don’t utilize networks and every full-service non-VA hospital and virtually every doctor in the country can be used with no additional costs.

In my 15 years’ experience in the business, the reason half of US Medicare recipients are willing to pay more money for Supplements and forgo the “free stuff” is the difference in how claims are approved vs Advantage Plans. Supplements are regulated so that insurance companies have no say in what’s covered. Medicare, who is the primary insurer, allows doctors to decide what’s medically necessary. There are no authorizations or prior approvals needed to have an MRI, CT-scan, biopsy, surgery, home health care, etc. All those services and others must be approved by an Advantage Plan company before the insured can have them performed. There are times when someone is forced to get physical or injection therapy before approval, and it’s possible a test or service could be denied.

I’ve only scraped the surface of the differences between the two types of Medicare Plans in this column. I’d like to remind readers it’s not a substitute for a sitdown with myself or another of our licensed agents to decide which type of plan is best for you, especially considering the choice you make when first going on Medicare, changing plans, or remaining on the one you have during Annual Election or Open Enrollment can have affects that last a lifetime.