Welcome back to “New to Medicare!”
Welcome to Part 6 of the series, “New to Medicare,” which I’m writing to help those who will be going on Medicare Part A, B, or both for the first time in the near future.
This Week’s Question
What are the most important considerations when choosing a Supplement as well as a Part D prescription plan, and what and plans and companies are the best?
According to the Centers for Medicare and Medicaid, “All Medigap policies must follow federal and state laws designed to protect you, and policies must be clearly identified as Medicare Supplement Insurance. Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies.”
Let me start by explaining there are only 11 Supplement plans those on Medicare Parts A and B can choose from, nine for those who turned 65 on or after January 1st, 2020. They are A,B,D,G,K,L,M,N, and high deductible G. Plans F and C were eliminated for sale because they are a rip off, a description I give for lack of space to explain it more tactfully.
The bottom line
The bottom line is this. Every Supplement plan covers the same exact medical services and grants access to the exact same doctors and hospitals nationwide, and providers don’t even bill Supplement companies. They bill Medicare, who then coordinates with the company to pay their share of the claim. Supplement companies also have no say in what’s covered. That’s Medicare’s determination alone, which means no prior authorizations are necessary and doctor’s call the shots, not an insurance company. Therefore, it makes no difference to the doctor or hospital what Supplement company their patients have.
I estimate there are 100 or more who sell Supplements. Currently we send 99% of our Supplement business to just three. Two of those have the lowest available prices in Western PA, which is our first criterion when considering who we are going to place clients with. Next is what their history of rate increases are. All three we use have an excellent reputation of keeping those to a minimum over the years.
We can get appointed to sell plans with almost any Supplement company, however I’m very leery of doing business with new ones out of fear they may start out competitive, then employ more frequent and larger premium increases, something we see often.
Common thinking is, “If rates go up, I’ll just move to another company or plan.” Unfortunately, it’s not that simple with Supplements like it is with Advantage Plan HMO’s or PPO’s, who must accept everyone who has Medicare Parts A and B. Supplements are underwritten, meaning your medical history is taken into account and your application for coverage can be denied. A physical isn’t required when applying, a very common misconception, but Supplement companies do is ask a series of medical questions and review one’s Medical Information Bureau, the medical history equivalent of a credit report. Based on it, and one’s answers to the questions, companies determine who they accept and decline.
This means there will be people who won’t be able to move to companies or plans that offer lower premiums. And there will almost certainly be a time when those with certain medical conditions are either stuck paying more money to remain on a Supplement or will be forced to move to an Advantage Plan that can expose them to as much as $7,550 in medical bills each year as well as limit what doctors and hospitals they can use. HMO’s and PPO’s are good options for many, but not everyone.
What’s the best?
As far as what plans are the best, we advise our clients to choose between G and N. I recommend N about 95% of the time. Again, the company selling the plan doesn’t matter due to all the regulations. Many people are skeptical of N for two reasons, both of which they need not be. My experience is that F and G have been labeled “the best” and in peoples’ minds, choosing Plan N could result in thousands of out of pocket costs. That’s simply not the case. When premium savings are factored in, N is almost always the better value. This will be especially true in five to ten years when I predict premiums on G will be $700 to $1,200 more per year than N, and $1,400 to $2,500 more per year for F. Some also worry about “Excess Charges” that are covered by F and G, but not N. Again, not a concern. First, it’s illegal to bill excess charges in Pennsylvania. Secondly, only doctors who don’t accept Medicare Assignment are able to do that. There are almost zero specialists, and not one full service medical hospital in the country that doesn’t accept Medicare Assignment. Out of the thousands of clients we’ve enrolled in Plan N since 2010, not once have we heard from anyone who was billed Excess Charges.
Regarding Part D, there really is no plan or company that’s “best” for everyone. What Part D plan is most cost effective is almost 100% determined by what medications one is taking at the time they go on Part B. Part D also needs to be reviewed every single year, which we do for all our Supplement clients. Even if one’s medications and premiums haven’t changed this is a must because drugs that were covered one year can be taken off formulary the next. Drug tiers can also change, resulting in higher co-pays. Insulin dependent diabetics risk missing out on thousands of dollars in savings if they buy a plan that doesn’t include the new “Part D Senior Savings Program.”
Paying $500 or $600 more a year for Part D “just in case,” of what one might be prescribed later in the year, or a plan that doesn’t have a deductible is also a common mistake. In addition, higher priced plans do not eliminate the Donut Hole. All Part D plans, regardless of monthly premium, have regulations designed to protect the consumer. Those who get prescribed medications that aren’t on their plan’s formulary must be given what is known as an emergency transitional 30-day supply. This gives him or her time to get with their doctor to prescribe an alternative drug or to file for an exception to the formulary. We help our clients navigate through all of this in the event they find themselves in these situations. We also have a Prescription Drug Caseworker, Tony DiRoma, who works one on one with any client who is in danger of falling into the Donut Hole and/or paying exorbitant costs for medications.
If you have any questions regarding this column or any other in the “New to Medicare” series or would like to set up an appointment for a no cost consultation, please call one of our offices or reach out to me personally at Aaron@GetYourBestPlan.com.
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We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.