Editor’s Note: Our neighbor, Gerry Kurth, has conducted considerable research into US Medicare options and offers the community his personal insights. The author is neither a medical nor insurance expert. Readers are strongly encouraged to seek out professionals in those fields before making their own personal insurance choices.

By Gerry Kurth

A January 5 Spoonbill Courier article noted that Island Doctors, a popular local medical practice, would begin honoring only select Advantage plans and refuse all Medigap plans which are the supplemental plans covering expenses not paid by basic Medicare. The practice later agreed to mend fences and accept existing Medicare patients but only for consultations with a Physician’s Assistant, not the doctor. Concurrently, Mayo continues to refuse ANY Advantage plan. What was happening in our Medicare landscape? Here is one man’s perspective: 

My Journey

My decision to switch to an Advantage plan last year was driven by a very appealing offer from my ex employer. But after one of my doctors dropped out and I had to wait for “pre-authorization” to get a minor procedure done, doubts crept in. I also wanted to have access to the Mayo Clinic if I ever needed it, so my journey to rejoin basic Medicare began. On the way, I discovered there is more to the story… much more! I thought I’d share it with hopes that some may benefit.

My big discovery: Medical underwriting may become a real issue in your future.   

The Basics

Those in Medicare pay about $175 a month (more for higher earners). You may not even know the exact amount, they are made before your receive your Social Security benefits.  

Basic Medicare subscribers often buy a Supplement (Medigap) plan, covering the 20% of medical bills not paid by Medicare. Those premiums range from $100 to $400 monthly. In addition, you need a drug plan (Part D) that costs $30-$50 or more per month.

Advantage plans, on the other hand, are offered free and include drug coverage. Most also include perks like dental, vision, hearing, and gym memberships. So financially, Advantage plans are the clear winner.

Caution

If you’re on basic Medicare with a Supplement, be extra skeptical about joining an Advantage plan, especially after the carpet bombing ad campaign during the Open Enrollment Period from October 15 to December 8. Conversely, if you’re already on an Advantage plan, take another look now to make sure you’ve made the right decision. If you’re on the fence, time may work against you.

Medicare in Florida

In Florida, about half of seniors opt for Advantage plans. Given the financial appeal, why doesn’t everyone choose an Advantage plan?

Advantage plans are “managed care” plans run by private, for-profit companies. They are paid a fixed amount per subscriber by Medicare. They have three main drawbacks:

1. The network of doctors may be limited
2. They manage your care: The carrier can review and decide treatment eligibility or duration
3. If your health deteriorates, you may not be able to switch back to a basic plan with a Medigap policy due to medical underwriting. You do have a 12 month trial period.

The network limitations are usually not a big factor unless a large provider like Mayo opts out.

The managed care limitation is glossed over in most comparisons, but can affect your treatment program of choice. 

Those two drawbacks are well known, but the ads never mention the underwriting requirements necessary to return to basic Medicare. It’s the dirty little secret. And it’s not so little. It’s huge for some and could leave you with your Advantage plan for life.

When a person is healthy, none of those drawbacks is very important. As someone gets ill and/or older, the benefits of original Medicare, choosing doctors and not having your care “managed,” become much more important, sometimes crucial.  That is the big tradeoff against cost savings. Advantage plans become less attractive as medical needs increase.

Strategic Medicare Decision Making 

Moving from one Advantage plan to another is very flexible and does not require underwriting. You can move as often as you like to find the best price/value point  for you. The move to basic Medicare is not screened, but the step-up to a Medigap plan is always medically scrutinized.

So the smart way, or so it may seem, is to sign up for an Advantage plan when you’re healthy to save money and then convert to the basic Medicare plan with a Medigap supplement once you’re older.

But there’s a dark side to that strategy: Since all Medigap plans are medically underwritten, the chances of rejection increases if your health deteriorates. This could leave you locked into an Advantage plan just when unrestricted access to providers and “unmanaged” treatments become important to you.

So one could argue that Advantage plans “sour with age.” 

Something to think about….

Tick..tick..tick…..

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If you’re still reading and your eyes aren’t glazed over, here are some details and a renewed disclaimer: 

Twelve Additional Notes from the Medicare Battlefield

Disclaimers and caveats: Standard medical disclaimers are, of course, applicable. Rules are created by our Federal government, so are needlessly complicated. They are simplified here. They may also reflect the author’s bias. Each topic warrants a detailed discussion. An overwhelming amount of detail is available on Google and YouTube. Not here!

1. Shopping

– You can contact carriers directly or you can use a broker. Some brokers are captive to one carrier. Others are independent.

– The independents represent most, but not all Medigap and Advantage carriers in your zip code. Fees are always paid by carriers, so there is no cost to you.

– USAA may be a cost-effective carrier for you, but they do not use brokers. No military affiliation is necessary to sign up for their Medigap plans.

2. Do you need a Medigap plan at all?

– It’s the most expensive component in the financial equation. It pays for some of the co-pays, but it also caps the out of pocket costs.

– Less than half of those in basic Medicare buy a Medigap plan. The other half save money but are exposed to huge bills. Those bills are usually not identified when you’re checking in.

– Unlike Advantage and Medigap plans, basic Medicare alone has no cap on your exposure to unforeseen medical expenses. Herein is the root of many financial disasters.

– Medical billing is notoriously slow. It starts with the provider billing Medicare or the private carrier, and in the case of Medicare, they in turn bill the Medigap carrier. Add to that the delay in actual payments, and it could be several months after treatment before patients realize how much they owe.   

3. Choosing a Medigap Plan

– There is plenty of online help available to navigate the alphabet soup of Medigap plans. Plans F, G and N are the most common options.

– Plan G is always cheaper than Plan F with exactly the same coverage.

4. Cost Elements

– Costs include premiums, co-pays, deductibles, and “excess charges.”

– Without a Medigap plan, basic Medicare co-pays could be as high as 20% of all treatments. 

5. Excess Charges

– Some providers may accept Medicare, but not all Medicare-approved charges. It happens rarely. 

– Some Advantage plans (particularly Plan N) will hold you responsible for paying up to 15% over the Medicare approved charges

– This does not happen often, but you can always check with the provider to make sure.   

6. Drug Plans

– Consider the premium and the total cost of drugs when comparing drug plans

 – In particular, evaluate how quickly you get to the “donut hole,” officially the “coverage gap”, is where your contribution is stepped up significantly until you reach the next level of total payment.

– Weigh those total costs in an Advantage drug plan against the cost of one of the many separate drug plans available with basic Medicare.

– Medicare.gov (“Health and Drug Plans” tab) has a tool to compare drug plans. It’s effective and easy to use, in spite of being developed by our government! It reflects your personal prescriptions and calculates total annual costs of various plans.

– If you have a Medigap plan, you can switch drug plans annually without affecting your Medigap plan. With Advantage plans, you don’t have a choice of drug plans.   

7. Dental, Vision, Hearing and Gym Membership

– These are usually included in Advantage plans, but read the fine print.

– Some seemingly free plans may be outsourced, turning them into profit centers for subcontractors rather than genuine free benefits for subscribers.  

– They are not included in Medigap plans, with occasional exceptions for gym memberships

8. Other Perks

– Also read the fine print about meals, free rides, drug store vouchers, and other goodies touted by the likes of Joe Namath and William Shatner. Those benefits are usually conditioned on chronic or severe illnesses.

– Those perks are also not included in Medigap plans.

9. Extended Care in Hospitals, Rehabs, and Home

– Extended care treatments are available in Medicare for 90 days, but they tend to be more subjective than more defined treatments. If you’re enrolled in an Advantage Plan, you can access the long-term benefit. However, since the Medicare rules are more subjective, there is more focus on preauthorization, eligibility, and stay reduction. That additional scrutiny during this time often frustrates the patients. Anecdotes abound.

– Note that long term care after 90 days is only covered by private Long Term Care (LTC) plans, not by Medicare.

10. Enrollment Windows

– Open enrollment is from October 15 to December 8.

– Most ads directly or indirectly promote Advantage plans, often cloaked in “free, objective opinions.”

– In addition to selling Advantage plans, many brokers also deal with Medigap plans.

– No ads promote basic Medicare   

– If you have an Advantage plan, you can also switch those from January 1 to March 31, but only with medical underwriting.

11. Overseas Travel Coverage.

– Medigap policies cover most medical costs, capped at $50,000.

– Advantage plans tend not to offer this benefit. Those that do are much less generous.   

12. “Concierge” Plans

– These plans are strictly out of pocket and are offered to provide more personalized medical services in addition to your medical insurance.

– They cost from $2,000 to $5,000.