Medicare Advantage plans may not provide a real advantage
Updated: Feb 15
It’s the time of year when Joe Namath, George Brett, and many other celebrities are on television selling Medicare Advantage plans for insurance companies. It’s not because its time for the holidays, though. It’s because this is the time to reenroll for a Medicare plan.
Why do insurance companies use celebrities to sell these plans? Like any other product that uses celebrity endorsements, people trust these celebrities – for whatever reason – to have their best interest at heart.
Many of these advertisements are nationwide ads and include information that is only for certain states. Possibly, the benefits they are talking about only pertain to one or two states.
Also these plans make a lot of claims about fantastic benefits you gain by using them. You might get $1,400 extra on your social security, you might get dental benefits, you might get hearing aids, you might get people to take you to the doctor and guess what you might not even have to pay a premium for it.
Do people really get something for nothing? Let’s take a look at the Medicare program and how it works and then at the Medicare Advantage policies.
The Medicare Bill was signed on July 30, 1965 by President Lyndon Johnson . When it started out people received Part A from the government for hospital insurance and Part B as medical insurance.
Medicare Part A (Hospital Insurance) - Part A helps cover inpatient care in hospitals, including critical access hospitals, and skilled nursing facilities (not custodial or long-term care). It also helps cover hospice care and some home health care. Beneficiaries must meet certain conditions to get these benefits. Most people don't pay a premium for Part A because they or a spouse already paid for it through their payroll taxes while working.
Medicare Part B (Medical Insurance) - Part B helps cover doctors' services and outpatient care. It also covers some other medical services that Part A doesn't cover, such as some of the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically necessary. Most people pay a monthly premium for Part B, usually taken automatically out of their social security checks.
This premium usually increases every year. In fact, when Social Security recipients get a raise for example, $15 per month, the amount of their Part B premium might go up $10. For 2022, Plan B will eat into the raise given to social security recipients by going up 14.5 percent to $170.10, a $21.60 increase from 2021.
Now if a person just has Part A and Part B offered by the federal government, there is no cap on out-of-pocket maximums. So if a person has a serious illness, they may not be able to afford medical care or owe huge amounts to the medical system.
Supplemental plans are also called Medigap plans. DO NOT CONFUSE THESE WITH MEDICARE PART A AND B.
Medicare supplement insurance (Medigap) can help offset any out-of-pocket costs you may be responsible for paying. Medigap plans are standardized so that all the plans cover the same thing. All Medigap plans titled “Plan F” – no matter which company they are purchased from – cover the same things. Some plans cover additional services. The price you pay for a Medigap plan depends on which plan you choose, which company, where you live, your age, and more.
Many people take out a supplemental plan that covers the deductibles and co-pays that Part A and B do not cover. With a supplemental plan you can go to any doctor, specialist, or hospital that takes Medicare. You do not have a network that you have to stay with. That means that if you are traveling in the United States your supplemental policy should be accepted anywhere Medicare is accepted. These supplemental plans are sold through private insurance companies and are required to cover the standardized services.
People may also pay extra for vision, dental and prescription plans that are not covered under Medicare or the supplemental plans.
A major change in the Medicare Program, the Medicare Prescription Drug Improvement and Modernization Act of 2003, was signed into law on Dec. 8, 2003 by President George W. Bush.
Medicare Part D (Prescription Drug Coverage) - Medicare prescription drug coverage is available to everyone with Medicare. To get Medicare prescription drug coverage, people must join a plan approved by Medicare that offers Medicare drug coverage. Most people pay a monthly premium for Part D unless they are on an Advantage plan.
Each plan can vary in cost and specific drugs covered, but must give at least a standard level of coverage set by Medicare. Medicare drug coverage includes generic and brand-name drugs. Plans can vary on the list of prescription drugs they cover (called a formulary) and how they place drugs into different "tiers" on their formularies.
The research and paperwork involved in renewing these plans yearly would be difficult for 20-year-olds, let alone people 65 and older. To look at the plans available you can go to medicare.gov.
If you call one of the telephone numbers on television, or work through a person that calls you or even mails you information, you are usually working through a specific company that wants you to take the plans they are selling that they profit from. They do not necessarily give you unbiased information.
Or, you can go to an independent broker for help. Ask them what plans and variety of plans they can access for you. If they seem to be stuck on one kind of plan or one company, they are not the help that you need.
There is other help available. Often your pharmacist will help you by running several prescription drug plans to let you decide which is best for the medications you take at that time.
Or the Kansas State Extension office has people who can help you look at different options in deciding on your prescription plan, supplemental plan, or whether to take an Advantage plan. For Linn County, the K-State Research and Extension (KSRE) Family and Consumer Science Agent Kathy Goul is in the Paola Extension office at (913) 294-4306.
Medicare Advantage Plans are often called Medicare Part C but are really not connected to the Medicare program. They are run by private insurance companies who are paid from the federal government funds for Part A and Part B. Part D is usually included in the Advantage plan.
Legislators had hoped that initiating this plan would save the government money, but some research shows that the government is actually paying out $321 more per individual per year than they are on the people who have stayed with the federal Medicare Program. (From the Kaiser Family Foundation [KFF], Aug. 17, 2021)
About 40 percent of Americans who are eligible for Medicare choose the Advantage programs.
In an article by the Medicare Rights Center, they provide information from a KFF, June 25, 2021, report that shows that it is more common for Medicare Advantage enrollees to face cost-related problems than beneficiaries who have traditional Medicare with supplemental coverage.
Report says plans may not be affordable
This report by KFF demonstrates that the existence of the out-of-pocket maximum does not guarantee that beneficiaries will find their care affordable. About 17 percent of all beneficiaries reported difficulty affording their care.
This number was 19 percent for Advantage enrollees and 12 percent for traditional Medicare enrollees with a supplemental policy.
Sometimes people become dissatisfied with their Advantage plan because they start to feel like they are having to pay a lot of out of pocket expenses. If you are enrolled in an Advantage Plan, you pay a much lower premium for the plan, but you will pay co-pays and coinsurance for services as you go along.
These are charges for your primary care doctor, specialist, bloodwork, or MRIs. Every Advantage plan has a summary of benefits that will list the costs in detail. Purchasers of these plans need to carefully review the summary.
On a traditional Medicare Supplement plan, you pay a higher premium upfront and have to pay very little else. There is no co-pay for doctor visits, lab work, or daily hospital stays.
Concerns about the Advantage programs include whether people really receive all the extras that are advertised on television. It depends on where you live.
And if you live in a rural area, you will probably not receive those extras. When they talk about these extras on commercials, they almost always say you “may” receive these benefits.
KSRE Family and Consumer Science Agent Kathy Goul did a comparison of Johnson, Miami, and Linn Counties to see if the extra benefits and out-of-pocket maximums were equal. They were not. Miami and Linn counties received fewer of the additional benefits and higher out-of-pocket maximums than Johnson County.
Goul recommends that people who have special needs like medical histories of cancer or stroke, special medications, or live in long-term care call her office or contact someone who can help them choose the plan they need.
Benefits change annually
These extra benefits often change each year, so you need to check the fine print to see what the actual benefits really are for dental, vision and hearing. These benefits are usually quite limited. Sometimes you get preventative care, for example, for dental but nothing for an actual procedure like getting a filling.
Another concern about Advantage plans is that people have to get approval for procedures and sometimes have to wait or apply more than once for that approval. Another is that people only receive the insurance coverage if they are in that company’s network. These networks often change yearly as the Advantage companies search for the lowest-cost providers so that they can profit from the program.
Advantage plans have networks. With traditional Medicare and a Medigap plan, the consumer has access to nearly a million providers nationwide. Advantage plans are often local or regional with only a few thousand providers.
Some Advantage plans have either a health maintenance organization (HMO) plan or a preferred provider organization (PPO) plan. Your doctor may participate in one of these plans. Check with your doctors’ billing offices to see if they are in the network you are choosing.
People that enroll in an Advantage plan with an HMO network usually have to pick a primary care provider. That doctor will have to provide a referral for you before you can see a specialist. If you choose a PPO plan through Advantage plans or go with a Medigap plan, there is much more flexibility.
Advantage plans change their benefits every year. Benefits that can change are premiums, provider network, pharmacy network, co-pays, coinsurance and deductibles. Medications that appear on the plan formulary may change every year. Plan participants need to review these benefits every year.
Not being able to change plans is another concern. If a person decides that they are feeling healthy or that they cannot afford the premiums of the supplemental plans, and decide to take out an Advantage plan, they may have trouble getting back on the supplemental plans.
One plus of an Advantage plan is that you can change Advantage plan companies without worrying about pre-existing conditions. On a Medigap Plan, changing companies usually requires a health examination for pre-existing conditions.
As long as you decide to return to your supplemental plan within one year after starting an Advantage plan, they are obligated to take you back. But if you go over a year, you will be required to go through a health screening, and more than likely will not be accepted due to preexisting conditions on a supplemental plan. Surprisingly, the preexisting clause for the Affordable Care Act does not apply to seniors on Medicare.
People have different needs and sometimes the Advantage program is helpful to those who have little money to spend on premiums or feel that they are healthy enough and do not go to the doctor often.
The Advantage programs do have an out-of-pocket maximum limit that their customers have to pay out on deductibles and co-pays. The limit is usually around $7,500, but some are less.
People that also have enough money saved or have a Health Savings Account that can afford to pay up to this maximum might think this a good deal except for the network constrictions.
In deciding what is better for you, a Medicare supplement plan or Advantage plan, check out the benefits of both on medicare.gov or with the local KSRE Family and Consumer Science Agent Kathy Goul in the Paola Extension office at (913) 294-4306.