How to Choose a Medicare Advantage Plan
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We just completed our first client survey at GIardini Medicare. One question that we asked was, “What was the hardest thing to deal with in your transition to Medicare?”
We thought the answer would be overwhelmingly the government.
The #1 most difficult thing for consumers was understanding the differences between Medigap policies and Medicare Advantage plans.
I’ve already written about Medigap, so it’s time to dig into the Medicare Advantage side of the world.
We primarily work with people who are transitioning to the Medicare system. That could be when a person is turning 65 and they are leaving their ACA coverage behind. Or it could be that they are 68-years old and leaving the workplace and their employer-sponsored coverage that was provided while working.
Two to three months before triggering either event mentioned above, we get many calls leading with, “I’m turning 65 in October…” We spend time explaining the overview of the Medicare system. “You’ll need to get Parts A and B with Medicare set up, we’ll guide you through that and then, it will be time for us to put our insurance-agent hat on and teach you about the two paths of coverage you can choose from and enroll you into the one you prefer.”
Hopefully you caught the key phrase, “the two paths.” There are only two options. One is purchasing a Medigap policy, and the other is enrolling into a Medicare Advantage plan. There truly is a third option, but it’s one that I don’t recommend. That option is to have nothing beyond original Medicare’s Parts A and B. Again, not recommended; I’m only going to discuss the coverage path called Medicare Advantage here.
On page 6 of the Medicare and You Handbook, it points to the fact that the government is showing us that, again, you have two paths. On the right column on page six; you’ll see the reference to Medicare Advantage – also known as Part C.
Why is it called part C at times? No clue. My best guess is that since the government calls this part A, part B – they’d like people to assume that part C is necessary to add to the mix and thus enroll.
Why would the government like that? Because Medicare Advantage plans are funded by our government. When people enroll into these private insurance company plans, the government transfers dollars each month to the insurance carriers to manage the plans that people enroll into. It is a transfer of risk. The government has a finite amount allotted per person versus an unknown sum by paying 80% of a person’s future health insurance costs.
Back to the handbook. I love the language used here: “Medicare Advantage is an ’all in one’ alternative to Original Medicare. These ‘bundled’ plans include Part A, Part B and usually Part D. Plans MAY have lower out-of-pocket costs than Original Medicare.”
Let’s be clear here. When someone enrolls into a Medicare Advantage plan, they are no longer enrolled into Original Medicare – Part A and Part B. However, the person will still pay their premium to the government each month for Part B coverage (unless they are on Medicaid) Those dollars are collected and in turn more dollars are added to it; all of those dollars are transferred to the XYZ Insurance Carrier that is providing the Medicare Advantage plan that Jack Smith enrolled into when he turned 65.
What does Jack’s coverage look like?
It depends on a lot of factors: his health, where he lives, what plan he chose, what medications he takes, what hospital system he uses, what doctor he is a patient of and more.
What else should you know about Medicare Advantage plans?
These plans can work well for some folks, but not so well for others.
I’ll walk through some important features of these plans that you should be aware of as you enroll. If you accept all that they offer and are good with how they work, then they may work well for you, and you have the convenience of that “bundled” approach. Some people like the fact that it is bundled. You get to use one ID card for all services including your prescription refills.
As you approach looking at plans, be sure that the plan you are looking at will do a good job for you covering your medications along with allowing you to go to your current doctors. Is it possible to find a plan that fits both your medications and your doctors? Sometimes but not always.
If Jack has six different doctors that he sees along with five prescriptions, we can narrow down to a plan that will do a good job for him. Can we confidently say that all six of his doctors will participate in that plan? Sometimes, but not always. What happens if another insurance carrier happens to price his medications 50% lower than the first plan we look at? Well, he can certainly enroll in that plan but now only four of his six doctors participate in the plan.
Our conversation with Jack turns to, “Which doctor are you okay ’losing’? Or, are you okay with spending $800 more on your medications so that you can see Dr. O’Connor?”
Those are some of the things that we need to walk through with Jack to see if a Medicare Advantage plan will work for him.
Jack is fine with losing his two doctors, so he heads down the path of Medicare Advantage.
Jack called us two years later after he learned he had to have a knee replacement. He had to jump through some hoops with prior authorization. Prior authorization is a management process where the insurance carrier must provide approval for a medication, the procedure, etc. It must be authorized in advance for things to be covered. He complained that it held things up a bit. But it wasn’t a huge deal. What bothered him the most was the limitations that the plan put on his physical therapy post-surgery. The plan determined that 10 sessions of PT was enough for him even though his doctor had ordered more. It eventually got worked out and he was able to get more sessions, but he was frustrated.
Jack also complained a bit that each time he went to PT, the charge was $40.00 and that started to add up. On top of that, he had to stay in the hospital for two nights due to some complications with the knee. He had more bills than he had anticipated – but nothing horrible. Jack was okay with the coverage at the end of the day.
A year later, Jack learned that he had melanoma. He contacted the carrier and found a specialist who was in the network and scheduled a visit. Since the melanoma was caught rather early, he was able to have the spot removed surgically and all was well. He again needed prior authorization for the procedure. It was approved and he scheduled the surgery. Jack was a bit used to the system at this point. Not perfect but not so bad.
Jack was talking to his friend who had chosen a different path for his Medicare coverage. He picked a Medicare supplement (Medigap). He told Jack how he could see any doctor that takes Medicare and he only had to pay an annual deductible of $203 and everything else was paid for because he purchased this supplement that he paid $140 for each month. Jack thought about his plan. He paid zero each month for his plan but he was starting to like the concept of “doing what I want to do and not waiting on prior authorization”.
Jack called Giardini Medicare to inquire about getting a Medigap plan. Unfortunately, due to the melanoma, he wouldn't be able to qualify. He didn’t realize that was how things worked when he originally picked his path at age 65.
Let’s talk about the great part of Medicare Advantage. They provide a financial cap for a person who only has Part A and B of Medicare. There is no financial cap in that situation. Medicare will pay 80% and the consumer will pay the 20%. When you introduce a Medicare Advantage plan, at least that person now has a financial threshold of protection. The CMS limit for plans in 2021 is $7,550.
Our country has thousands of Medicare Advantage plans from which to choose. They all differ. In Las Vegas, for example, there are plans that have $1,000 max out of pocket. In Michigan, we average about $5,000 for a max out of pocket. Florida averages about $3,500.
Is it purely a math equation? You can see those plans can work at times. If you’re healthy, you don’t use the coverage much, you win financially.
But when you introduce the psychology part of healthcare, Medicare Advantage is a challenge. Are you okay having to be in a facility 30 miles from your daughter’s house since that’s where your plan is contracted? Does prior authorization frustrate you? Do you want to pick any doctor you want? How is travel affected?
So many questions.
Let’s end on a good note. Who does Medicare Advantage work well for?
I have an 83-year-old client who I enrolled into a zero-premium plan about five years ago. Bill despises paying doctors and doesn’t like to go anyway. His plan costs zero per month. He pays zero when he goes to his primary care doc. He fiddles around on his farm 24/7 and never travels. If he were to have a bad year health-wise, can he afford the $5,000 max out of pocket? Sure can. He bought a $60,000 new truck and helped his daughter buy a house recently. I’m sure he can handle the $5,000.
Bill loves his Medicare Advantage plan.
In addition to the “Bill’s,” we like Medicare Advantage plans for veterans. Veterans do not need to enroll into Medicare Part B (but should, in our opinion). Then, add the Medicare Advantage plan and now that person doesn't have to rely solely on the VA for all services. They don’t have to worry about emergency travel and not being near a VA facility. They can get some dental insurance through the Advantage plan. They can even get credits on their Part B premiums at times.
Medicare Advantage is also a great solution for those who are eligible for Medicare due to disability prior to their being 65-years old. Medigap contracts are very expensive when a person is under 65 years old. Medicare Advantage fills that void for that person. When that person turns 65, they can get a Medigap contract at the preferred rate if they choose to do so.
Medicare Advantage certainly has its fit in our world. Unfortunately it’s not for everybody like Joe Namath claims!
Joanne Giardini-Russell is a Medicare nerd with Giardini Medicare, which was created to help those approaching Medicare eligibility or those currently enrolled in Medicare better understand what they are purchasing and how their choices may affect their long-term outcomes regarding care, finances, etc.