Ask the Medicare Specialist

QUESTION:

From Sheila: Your recent columns have focused on Advantage Plan HMO’s and PPO’s. I thought you really liked Supplements, which I have. I’m wondering if I should move to an Advantage Plan. Are there any reasons why that might not be a good idea?

ANSWER:

I’ve focused on Advantage Plans a lot in the past few weeks because so many people have them in Western PA. They work very well for millions of Americans and can provide tremendous value. But in my estimation, about half or more of those on HMO’s and PPO’s aren’t on the right plan. They’re so much more confusing than Supplements and always changing, so it’s important to keep reminding the public that they need to be looking at the market every Annual Election Period (AEP) and not be afraid to move from plan to plan or company to company.

That being said, I do need to address Supplements, aka Medigap policies. They’re a great choice for several reasons. Let’s get into those as well as some of the pitfalls of leaving a Supplement like Sheila is considering, enrolling in an Advantage Plan when turning 65 or going on Part B for the first time, and even deciding to remain on one while still being able to pass medical underwriting.

Let’s quickly discuss some of the fundamental differences between Supplements and Advantage Plans. Medigap is the perfect moniker because that’s exactly what Supplements are designed to do, cover the gaps in Medicare, namely the $1,484 of a Part A hospital stay and the 20% of Part B services.

Advantage Plans, aka Part C, pay in place of Medicare and are not designed to pick up the $1,484 hospital deductible and the 20% of Part B. Instead of Medicare covering any bills, they subsidize a private company of one’s choice at about $10,000 a year. In return the insurance company agrees to take on the responsibility of supplying a health insurance benefit package as well as the financial burden of paying all claims of that member.

The biggest difference may be the amount of out-of-pocket costs. People with Supplements pay little or nothing for Medicare covered services. Those with Advantage Plans have co-pays or coinsurance for virtually all services. As little as $5 to $10 for PCP and blood work, $150 to $350 for Advanced Imagining such as CT scans and MRI’s, ambulance rides and outpatient surgeries, to thousands for 5-day or longer hospitalizations, chemo and other infused drugs, radiation, injection therapy, a lengthy Skilled Nursing stay, and a couple other less common services, up to one’s Maximum Out of Pocket (MOOP). Let’s talk about what we like about Supplements and why Sheila and others may want to think twice before leaving, enrolling in an Advantage Plan when fist going on Part B, or even renewing in an HMO or PPO this Annual Election Period (AEP) that starts on October 15th.

1) They are really easy to understand because the only medical expenses on the two letter plans we recommend are the Part B deductible ($203 in 2021) on Plan G, and the deductible and a $20 copay at physician’s office visit or $50 at the ER. That’s it. Period. I often use the example of a cancer diagnosis, which I understand no one likes to think about, but is a reality unfortunately. Those who go through that battle are likely to need biopsies and scans, a surgery or surgeries, chemo and/or radiation, follow up scans, and possibly more. Those on Supplements G or N would not pay one dime for any of those services once their deductible has been met. Those on Advantage Plans who go through the same would almost certainly meet their MOOP, which will run between $4,000 and $7,550 in 2022, depending on the plan.

2) Virtually every doctor and hospital in the country including UPMC, AHN, Excela, other local or independent hospitals, as well as world class facilities such as the Mayo Clinic, Cleveland Clinic, Johns Hopkins, and MD Anderson Cancer Center can be utilized at no additional costs. I’ve had clients who received lifesaving care at all four of those out of state facilities. Advantage Plans use networks and will not provide coverage at all the health care systems and hospitals I listed here.

3) The insurance company has no say in what’s covered. You and your doctor get to decide what’s medically necessary because Medicare rarely requires prior authorizations for medical services. I believe this is the number one reason to enroll in a Supplement. Almost everyone who has ever had commercial insurance from an employer, the ACA, or an Advantage Plan has experienced a claim being denied, been forced to do physical therapy or get injections before a surgery was approved, or had to wait for an authorization for an MRI or CT scan. One of my very best friends fought with her insurance company for over a year to get an MRI on her back that the orthopedist ordered. By the time it finally got approved, she needed two surgeries and will probably live in pain the rest of her life. If she would have had Medicare and a Supplement, she could have gotten her MRI the same day and her surgery the next if that is what the doctor wanted. 4) Benefits never change other than the deductible, which increases just a few dollars a year. This means in 20 years, those who have Plan G will still be paying the deductible only and those on N will never pay more than $20 for a doctor visit or $50 at the ER. And no new co-pays for other services can be added. This is not the case with Advantage Plans. As I’ve mentioned the last couple of weeks, HMO’s and PPO’s have never been better as far as the low premiums and co-pays as well as ancillary benefits like dental, vision, OTC, and Silver Sneakers. However, that can change in coming years and those benefits could be eliminated or reduced, and co-pays along with premiums increased.

Supplements do come with some disadvantages; no pun intended. 1) They’re more expensive than the Advantage Plans we recommend. Although Supplements start under $80-$90/month for a 65-year-old, they get more expensive as one ages. Those who are in their mid to late 80’s or 90’s are paying from $250 to $300 or more per month. 2) They don’t come with any cosmetic vision, dental, or hearing benefits, OTC allowances, or Silver Sneakers. Advantage Plans offer extremely generous benefits for these services and more.

3) Stand Alone Part D needs purchased at an additional cost and will have a $480 deductible in 2022 on Tier 3, 4, and 5 drugs. Advantage Plans come with Part D and don’t have a deductible for prescriptions. 4) They are medically underwritten. Other than going on Part B for the first time, those who want a Supplement can have their application denied based on current or previous health issues. Those currently on Advantage Plans who have or develop heart disease, A Fib, insulin dependent diabetes, COPD, Lymphoma, auto immune issues, among others, may never be able to get a Supplement. Ever. To me, this is the biggest risk of choosing an Advantage Plan. I love meeting people in their late 60’s or 70’s, especially married couples, who have been on low cost, or no cost Advantage Plans for a few years, stayed healthy and saved ten thousand or more dollars in premiums. Often, I recommend that they think about “cashing in their chips”, so to speak, and move to a Supplement because health issues are more likely the older we get.

For questions regarding this column or any other Medicare related topic, to speak with an agent for a quick opinion if your Supplement, Advantage, or Part D plan is going to be offering the best value in 2022, or to make a no cost appointment to have your plan reviewed side by side with others this AEP, give one of our offices a call. Feel free to contact me directly as well. Aaron@getyourbestplan.com.