Ask the Medicare Specialist
QUESTION:
I wanted a Supplement but wasn’t sure I could afford one, so I took a $0 premium Advantage Plan HMO. Now I’m scared I made the wrong decision. I’m a type 1 Diabetic with complications. Can you help advise me please?
ANSWER:
Before I get into answering the question, it’s been awhile since I went over the differences between Advantage Plans and Supplements. Let’s start there. Supplements, aka Medigap, are secondary to Medicare. They do just what the moniker suggests, cover the gaps in Medicare, namely the $1,408 Part A hospital deductible and the 20% Part B doesn’t pay. For this reason, those on Supplements are responsible for very little, if any, medical bills while being provided access to virtually any doctor and every non-VA medical hospital in the country. Supplements do tend to have higher premiums than Advantage Plans. Advantage Plans, which are HMO’s or PPO’s that utilize networks of providers, are not designed to pay the portion of the bills Medicare doesn’t. They pay in place of Medicare. When you choose an Advantage Plan, Medicare stops paying the hospital bill minus the $1,408 as well as the 80% of Part B services. What they do instead, is pay a private insurance company of your choice approximately $800 per month. In return, the insurance company is responsible to provide health insurance and pay claims, minus your cost sharing. In other words, unlike Supplements, which pay virtually everything that Medicare doesn’t pick up, those on Advantage Plans have co-pays for almost every medical service. A handful can cost thousands of dollars. When I’m explaining this, people will often ask, “Why would anyone take an Advantage Plan?” The reason is cost. As John indicated, there are plans available for as little as $0. Those who stay relatively healthy over the years can see big savings. When our clients prefer or need to go this route, we always recommend plans with premiums under $60. Advantage Plans can also include ancillary benefits like Dental, Vision, hearing aids, a gym membership, and over the counter allowances. Supplements do not.
I often simplify it this way to people who are having a hard time understanding the differences; If you take a Supplement you pay more at the front door in the form of premiums, but if you get sick, you don’t pay anything at the back door. With an Advantage Plan, you pay less at the front door, but if you get sick, you can pay thousands out the back.
Answer: Sometimes you can’t afford NOT to choose a Supplement. We just had a client with this exact scenario John is dealing with. And thank God he was still able to change his mind and move to a Supplement. Listen, Advantage Plan HMO’s and PPO’s can be a great value. However, there are certain people like John, who literally should not be on them in my opinion. Here’s an example of why I say John might be in a position where he must choose a Supplement, which at age 65 would cost him $115 /month including the premium for a Part D prescription plan. With Supplement Plan N, which I recommend probably 95% of time, the only bills one can receive are the $198 Part B annual deductible and two small co-pays, $20 at a PCP or Specialist and $50 for an Emergency Room visit. That’s it. So, once the deductible is met, there are no costs for any Medicare covered services such as blood tests, X-Rays, MRI’s, CT scans, surgeries, hospitalizations, skilled nursing, chemo or other infused or injected drugs provided in an outpatient setting, radiation, diabetic supplies, durable medical equipment, etc. Advantage Plans on the other hand have co-pays or coinsurance for all the above services. A few can cost thousands of dollars as I already mentioned. The client I referred to earlier receives Eylea injections as often as every four weeks. The co-pay for this injection and all other medications that are considered Part B, which also includes Chemo, is 20% no matter the company or plan. The cost to someone on an Advantage Plan for Eylea is roughly $400 per injection. If eight were needed in a year the total would be $3,200 for those treatments alone. The bills don’t stop coming until you have met the annual Maximum out of Pocket (MOOP), which range from $3,400 to $6,700. With a Supplement there would be no cost for Eylea injections.
You might be thinking if I ended up needing an expensive treatment like this I’d just switch to a Supplement. It doesn’t work like that. Once enrolled in an Advantage Plan longer than 12 months, Supplement companies have no obligation to accept anyone in their plans. They can discriminate based on current or previous health conditions. There wouldn’t be a single company that would accept someone who has Diabetes with this kind of complication.
Our client wound up on the wrong plan because he simply called the company he had insurance with before he turned 65, which is a mistake in my opinion for several reasons. The employees of these companies are paid to talk you into enrolling you in their plans. In this case, it appears the representative he spoke with either didn’t ask if he had any special medical needs and advise him accordingly.
Another way people end up on Advantage Plans without understanding the ramifications is using an agent who doesn’t sell Supplements which is quite common.
At The Health Insurance Store, the agents are brokers appointed to provide plans from virtually every competitive Supplement, Advantage Plan, and Part D prescription company on the market. We go over the positives and negatives of both types of plans and are concerned with all the details of each clients’ individual health care needs when determining what plans are the best fit.
If you would like to make an appointment for a no cost consultation or have any questions regarding Medicare please give us a call or visit us online.