You’re likely being bombarded with marketing messages for Medicare Advantage Plans. These plans offer managed care with low premiums or no premiums.
The fall open enrollment period for Medicare starts Oct. 15th and ends Dec. 7. You can change your Original Medicare coverage, Medicare Advantage or your Prescription Drug Plan.
It seems that all this marketing is working. According to data from Kaiser Family Foundation, 42 percent of Medicare beneficiaries are now enrolled in Advantage plans. This is an increase from 31 percent in 2016. These numbers represent 50% of Black enrollees and 54% of Hispanic beneficiaries, compared to 36% of whites. Half of Americans will be in Advantage plans by 2025.
Advantage is easy to understand. Original Medicare does not cover all medical expenses. Advantage plans, on the other hand, have cost-sharing requirements that limit your out-of pocket costs. You also have low premiums, and all-in-one coverage.
There are hidden risks with Advantage plans, especially for people with serious health problems.
Tricia Neuman is senior vice president at Kaiser.
You can choose Original Medicare, but add Medigap to your plan. This will cover your out-of pocket costs and give you more providers. You will have to pay higher monthly premiums for Medigap policies. If you are not enrolled in Medicare for the first-time, you may be denied Medigap coverage.
It is important to do your research before making the right decision for you. These tips can help you find the right plan.
How Medicare Advantage Plans Work
It will be helpful to first review some basics. Medicare is divided into four parts. Part A covers inpatient hospital care and skilled nursing. If you and your spouse have earned at most 40 Social Security credits, there is no premium.
Part B includes outpatient hospital care and doctor services. This coverage requires a monthly premium of $170.10 by 2022. There is also a $233 deductible. Higher income earners will pay more.
Private insurers can offer Part D and Part C of Medicare, which are optional parts of Medicare.
Medicare Advantage is an all in one managed care plan. It’s typically an HMO/POO. Advantage plans offer the same benefits as Part A and Part B and many also include PartD or prescription drug coverage. Many plans offer additional benefits that are not offered by Original Medicare such as vision or fitness classes.
You will continue to pay your Part A premium, but Medicare Advantage HMO Plans will allow you to pay very little, if any, additional premiums. There are usually copays and coinsurance. However, once you reach the out-of-pocket limit the plan will cover 100 percent of your Medicare-covered medical expenses for the remainder of the year. Prescription drugs and other benefits are exempted from the out-of-pocket maximum.
Advantage plans are designed to keep premiums low by requiring you to see a network doctor, hospital, or other provider. You will usually need preauthorization for specialized treatment.
Original Medicare does not have an annual out-of pocket limit. Part B services will require you to pay 20% of the cost after your deductible. Many seniors who have Original Medicare purchase a Medigap policy, which covers out-of-pocket expenses if they do not receive supplemental benefits from their former employers. You cannot have both an Advantage plan and a Medigap one. Most Original Medicare beneficiaries also purchase a Medicare prescription drug plan.
Medigap plans offer flexibility in provider selections, as they are accepted by every doctor and medical service that accepts Medicare. The vast majority of them do. As we will explain below, in most states you only have guaranteed access for a Medigap policy when you enroll in Medicare.
Medigap will cost you more monthly than Advantage plans (see chart below). It will also take a little more effort to choose your Part D plan.
How Medicare Advantage Plans can fail
Medicare Advantage plans are a good option for many seniors. A JAMA study showed that Medicare Advantage members often receive better preventive care than those who have traditional Medicare. Kenton Johnston PhD, an associate professor of health policy and management at Saint Louis University, is co-author of the study. Advantage plans compete not only on price but also on quality.
However, if you have severe medical conditions, or are suffering from chronic pain, you might want to reconsider Medicare Advantage. This is because you will need to pre-authorize and stay in-network. Melinda Caughill, cofounder of 65 Incorporated (a company that offers guidance on Medicare enrollment to financial advisors and individuals), says it can be difficult to enroll.
Caughill states that it can be difficult to find multiple specialists if you need them all.
Steven Feld, 65, is a retired man in South Pasadena (Fla.) who struggled to obtain coverage for an injection to his arthritic leg. Prefilled injections administered in a doctor’s office are considered medical devices by the FDA. The plan denied coverage twice. Feld joined his Medicare Advantage plan in May.
The plan approved a different brand of injection after nearly three months. Feld plans to continue with his Advantage plan which has top doctors and a fitness plan. Feld says that the premiums are much lower than what I had with group insurance.
A Kaiser studyfound that if you become seriously ill, your Medicare Advantage plan could result in higher costs than Original Medicare. The researchers examined plan cost data and found that Advantage beneficiaries would be subject to a higher cost-sharing rate for hospitalizations for five days or more for pneumonia (assuming there is no supplemental coverage).
David Lipschutz, associate Director at the Center for Medicare Advocateacy, a non profit group, says that Medicare Advantage beneficiaries often don’t realize they might have to pay more for services once they reach their plan cap.
If you live in rural areas with fewer hospitals and doctors, it may prove difficult to access the care you need. A recent study published in Health Affairs showed that rural residents were almost twice as likely as urban or suburban residents to abandon their Original Medicare Advantage plan.
“The findings suggest people might have been dissatisfied because they had difficulty getting to doctor’s offices and making appointments,” said David Meyers (study co-author), assistant professor at Brown University in health services, policy, and practice.
What to do
Julie Carter, senior federal policy associate with the Medicare Rights Center, suggests that you start researching your options before you sign up for Medicare or during your open enrollment period. These are the steps to follow:
- Evaluate your current coverage. If you have lost your letter, call your insurance company or go to the plan website.
Medicare Advantage plans can see changes in doctors and hospitals that are included in their networks each year. Call your providers to find out if they will be staying in the network next year.
According to Danielle Roberts (co-founder of Boomer Benefits, an insurance broker that provides Medicare coverage), there may be changes in the plan’s benefits such as vision, or dental coverage.
A recent Kaiser study found that more than 7 out 10 Medicare beneficiaries don’t compare or review their coverage options each year. You may end up paying more if you don’t review your plans.
- Compare your out-of-pocket expenses. The monthly premium costs will make up a portion of your expenses. Medicare Advantage can be quite affordable. Caughill, of i65, states that it is important to consider your out-of-pocket expenses and look beyond the monthly premium costs. These can be copays, coinsurance or a percentage from your total bill.
Caughill states that if you have a chronic condition and have to pay 20 per cent in coinsurance each visit, it could lead to thousands of dollars in extra costs, which would more than offset any premium savings.
Take a look at your benefits statements and medical bills from the last year. Next, add up the deductibles and copays you have paid to determine the true cost of your plan. Consider what you could pay in the next year if you need a knee replacement or are involved in an accident.
Many people find that Medigap plans offer greater financial security. After running the numbers, Bill Burton, 66-year-old retired man from College Park, MD, concluded that this is what he wanted.
Burton, who is switching from his spouse’s plan to Medicare, says that he estimated that he would eventually have to pay more in copays or deductibles for hospital bills and doctors’ bills under an Advantage policy than I would in Medigap premiums.
- Take into account the implications of switching. You have a guaranteed issue right when you enroll in Medicare at 65. Insurers are required to renew Medigap coverage every year, as long as you pay your premiums.
Roberts from Boomer Benefits says that if you attempt to purchase a Medigap plan after the initial enrollment window closes, insurers might be able turn you down or charge you more because of your pre-existing conditions.
Some states offer greater protections than others. If you enroll in a Medicare Advantage plan at the time you turn 65 or after you have had Original Medicare with Medigap since then, there is a 12-month trial period during which you can switch to Original Medicare. You will also have guaranteed access to a Medigap Plan.
Roberts says that you may be able switch Medigap plans later. However, this can be complicated because your medical history can lead to your being declined. Don’t let your current policy lapse until you are approved for a new one.
- Make use of these helpful resources to help you find the best Medicare plans in your area.
You can also search Medicare.gov for Medigap plans. Here you can compare different types of coverage and find policies in your area.
The State Health Insurance Assistance Program, (SHIP), is another great resource. It provides guidance by phone. You can find the state program by visiting ShipHelp.org, or calling 877-839-27675.
Medicare Savings Programs may offer assistance to seniors with low income. For more information about your eligibility, visit Medicare.gov and search for “help with costs”. You can also call the SHIP program in your state.
Once you have made your choice, you can enroll in the new plan by calling Medicare at 800 633-4227 if you want to switch to Original Medicare. Or by calling the insurance company or independent Medicare broker that offers products from multiple companies. Keep detailed notes of the conversation you had with the representative so that any issues later can be addressed.
You can also decide that your current plan may be the best. At the beginning of each year, you’ll automatically be reenrolled in the plan.