Ask The Medicare Specialist

QUESTION:

Question from Melinda: How is it possible that a friend the same age as me is paying $100 per month less for her Supplement? We’re both 71 and I pay $220/month and she pays $122. When it comes to Medicare, nothing seems to make sense.

ANSWER:

You’re right about that Melinda. And it just keeps getting more and more confusing every year. I’m particularly frustrated about how bad our prescription drug system is in this country. More than ever, we’re advising clients to get their drugs at multiple pharmacies using their insurance for some and not using it for others. Many are forced to get drugs from Canadian pharmacies because it saves them hundreds, even thousands of dollars. Every country in the world pays less for brand name medications and the US is basically subsidizing their lower drug costs.

As far as Melinda’s question. How’s it possible for two people the same age to have that kind of premium discrepancy for the same exact insurance? The bottom line is the Supplement company and letter plan one initially chooses is everything. Supplement companies are regulated so they can only raise premiums if they’re paying out more than 85 cents in claims for every dollar they’re collecting in premiums. They literally have to prove this to the Pennsylvania State Insurance Commission to get permission for a rate increase. When someone buys Plan G with United Health Care for example, they go into a pool with everyone else who took the same letter plan with United in certain zip codes or in the entire state of PA. How that pool performs determines future rates. We want our clients to be in a large pool so that the risk can be spread around better. In a large pool, if there are several people who end up needing dialysis or millions of dollars of chemotherapy, it doesn’t affect the bottom line as much. In a smaller pool, it can really skew profits and allow those companies to receive permission to apply large double-digit rate increases.

In addition, I believe some companies don’t request rate increases every time they’re eligible, while others do every single chance they get. There are companies who simply have a bad history of starting out with the lowest or close to the lowest rate, filling up their bucket so to speak, and then going crazy with increases, pricing healthy people out of the plans and leaving the pool with nothing but those who are high utilizers of health care because they can’t pass underwriting to move to less expensive company or letter plan. This just accelerates premium increases.

The Health Insurance Store is currently writing 95% of our business with just four carriers who we have either a long history with or have done extensive research on. We have been doing business with two for the 16 years we’ve been open. There are about 25 companies marketing Supplements in Western PA and I estimate that 50% of Medicare beneficiaries on Supplements are overpaying and could get a better rate on the same letter plan with one of our preferred carriers. I highly recommend emailing me or calling the office to speak to another of our agents to confirm if you are with one of the more reputable companies or not.

Plan G, which is often recommended by other agents and mistakenly, in my opinion, described as “the best,” is going up at a much faster pace than Plan N. The only difference between Plans G and N is the two small co-pays, $20 for a PCP or Specialist physician office visit, and $50 at the Emergency Room. The $20 co-pay DOES NOT apply to physical therapy, blood work, other diagnostic testing, or procedures, therefore most people won’t pay it often. Plans G and N both have the same Part B deductible, $240 in 2024, and those who have either letter pay nothing for blood work, MRIs, CT scans, X-rays, surgeries, chemo, radiation, injection or infusion therapy including chemo, Skilled Nursing, etc., once it’s been met. Most people we meet who have had Plan G for four to five years are already approaching $200 per month while those on N with our favorite companies are usually right around $100. If Plan G is $1,000 more per year than N, that’s the equivalent of 50 twenty-dollar doctor co-pays.

I can’t stress enough that anyone who is on antiquated plans C or F needs to leave those immediately if possible. They were mandated by Medicare for elimination because they’re a rip-off, for lack of a better way to say it. There is no benefit in paying more for those plans than G or N. None. Any fear that you have about doing so is false. All Supplement letter plans cover the exact same services regardless of the company that sells them! They all supply access to the same exact doctors. Far too many people are paying thousands of dollars more for plans C and F. The only difference between those plans and G is the $240 Part B deductible gets paid. Why would anyone want to pay $1,500 to $2,500 more per year to get rid of a small deductible? Fear. Fear that another plan might leave them on the hook for tens of thousands of dollars in bills. That can’t happen because Supplements are highly regulated to protect the consumer.

If you would like to set up an appointment for a no cost consultation to go over Supplement or Advantage Plan options, give one of our offices a call. And feel free to email me personally at aaron@getyourbestplan.com.

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Thanks for reading everyone.