Ask The Medicare Specialist

QUESTION:

Question from Karen: Currently, my husband and I have a Medicare Advantage Plan HMO that costs around $20/ month. About 3-4 years ago, we had a retiree Medicare Advantage Plan through US Steel, my husband’s former employer. We were both relatively healthy when we made the move to our current plan. My husband is now 77 and I’m 74. In October, my husband was in the process of getting a hernia repaired when he had routine tests. His lung X-ray indicated issues and now he is dealing with pleural effusion. The doctors are still doing tests to determine exactly the extent. Cancer has been mentioned, but not yet diagnosed.

I called three times to get information regarding returning to the US Steel plan. By the time I received the book, the deadline to enroll had passed and I was told no exceptions would be made. We really wanted to enroll in the US Steel PPO because the Maximum Out of Pocket (MOOP) on it versus our current HMO is $4,000 less. Can you offer some assistance and advice?

ANSWER:

I asked Karen what prompted her to leave the US Steel Plan, which costs $110/month per person. Here was her response.

Before we switched from the US Steel plan, I called and was told we could return at any time. We did not leave because of cost, although the plan we moved to obviously had a lower premium. The biggest driver was the deductible in the US Steel Plan that we met a chunk of every year, and I was also paying $284.52 every 3 months for dental insurance because the US Steel plan didn’t provide it while the HMO we moved to did. Also, we were healthy at the time so we didn’t think about the potential out of pocket costs of the US Steel plan versus the HMO. Continued Answer: Karen and her husband made two of the most common mistakes I see among those on Medicare. The first was making a decision on a plan based on their current good health. I will never understand how so many people think because they’re in good or excellent health at 65 or 70, that will continue as they age. I don’t care if you eat healthy, exercise daily, or take vitamins regularly. Cancer and other diseases or illnesses don’t discriminate and only strike those who may not eat well or work out. Accidents don’t avoid healthy people. The line of thinking, “I’m healthy so there’s no need to pay more money for a retiree plan with a lower MOOP or a Supplement that has almost zero out of pocket medical costs,” is akin to not carrying homeowner’s insurance because you’ve never had a fire burn your house down or a tree fall on your roof. Not everyone may feel this way, but if myself, my son, or my daughter were to get a rare disease or cancer, I want to be able to go to the best hospitals in the world. I want access to not only UPMC and AHN, but the Mayo Clinic, Cleveland Clinic, John’s Hopkins, and MD Anderson Cancer Center. I’ve had clients who are only still on this Earth because they were able to be treated at those facilities. I also want to get the care me or my kids’ doctors order immediately without waiting for an insurance company to do approve services such as advance imaging, biopsies, surgeries, infusions, injections, etc. Only Supplements allow for this and the freedom to go to any full service hospital in the country. However, they cost more and don’t come with dental, vision, OTC benefits, and the other extras that Advantage Plans do. It’s generally for these reasons many people forgo Supplements. Another reason some choose Advantage Plans, which I’ve written about a lot lately, is many aren’t given the Supplement option, or the risks of Advantage Plans aren’t explained correctly. One very important piece of information that’s often left out is that six to 12 months after one enrolls in an Advantage Plan, it may become impossible to ever enroll in a Supplement because those companies can pick and choose who they want to insure based on the applicant’s current and previous health conditions. The Affordable Care Act (ACA), also referred to by some as Obamacare, did not make it illegal for Supplement companies to discriminate in this manner. That’s a common misconception.

The other mistake Karen and others make is overvaluing dental insurance. Dental is nice if an employer or Advantage Plan supplies it as a no cost benefit with an Advantage Plan. But paying anywhere near what Karen was makes no sense. Buying dental insurance could be compared to having insurance for oil changes and tire replacements on your car, truck, or SUV. Why would you want to spend $600 a year for insurance that pays for two $60 oil changes and 50% of a set of $800 tires every three years? In this case, over three years, you paid an insurance company $1,800 in premiums and they only spent $940 in claims. You would have been $860 better off without the insurance and paying for your oil changes and tires yourself. The same holds true with dental insurance. A mouth full of implants or crowns is $20,000 to $40,000. You can’t buy dental insurance for that kind of expense. The most any dental plan will pay out in a year is $1,000 to $2,000.

I understand someone who’s on a fixed income and needs some major and expensive dental work choosing an Advantage Plan based on $2,000 to $3,000 in first dollar coverage that many come with. However, those who are financially stable don’t need dental coverage. It doesn’t even fall into what I would consider to be the top 10 most important things to have in a health or Medicare insurance plan. I’ve written this 100 times; We have insurance to protect our assets. The vast majority of the readers of this column aren’t going to be put into financial hardship because they don’t have insurance to pay for 50% of a $1,200 crown or root canal or 80% of a $100 filling. Those who chose an Advantage Plan strictly for dental, vision, or other “free stuff” often aren’t looking at the bigger or more important picture. I urge those who did to go read last week’s column on our website or join our Facebook Group by the same name as the column. It’s also not too late to move from an Advantage Plan to a Supplement or from one Advantage Plan to another. There is a limited time that starts in January to do that.

Thanks for reading. Happy Holidays everyone!