This week’s question from Shelly
Many of my friends have $0 Advantage Plans. Can you explain how that’s possible? I have one with a premium. Should I stay with it, or move to a $0 premium plan for next year? And how do I know what my co-pays are on my Advantage Plan HMO?
Answer
It’s Not as Simple as it Seems
This is one of those questions that has quite a few layers. It also exposes how complicated Medicare and choosing a plan can be. Shelly’s confusion is very common and I’m guessing she also doesn’t understand how Advantage Plans work in that they ARE NOT designed to pay the portion of the bill Original Medicare Parts A and B don’t, the 20% for outpatient services and the $1,484 of an inpatient hospitalization.
I’d like to repeat a warning I’ve made in prior columns: Don’t take what I call “over the fence advice.” Meaning don’t enroll in any plan, especially an Advantge Plan because your neighbor, friend, brother, or sister said they have it, they love it, or when there was a surgery or hospitalization years ago, they didn’t pay anything.
First of all, it’s not uncommon for someone to have an HMO or PPO Advantage Plan from a company he or she retired from that has upgraded benefits and lower out of pocket costs. Secondly, Shelly’s question indicated she is unaware of what her co-pays are. If you don’t know what they are, what makes you think your friends or family members do? It’s crazy how many people don’t, including those who often give advice on Medicare Plans without being trained and licensed. Most know what their PCP and Specialist co-pays are but have no idea that services such as multi-day hospitalizations, radiation, a lengthy Skilled Nursing Facility (SNF) stay, infusion or injection therapy such as chemo, Remicade, Prolia, and more that are becoming quite common, can result in bills in the thousands of dollars.
You can find the list of what your Advantage Plan co-pays are in what is called a “Summary of Benefits,” which you should have received when initially enrolling in your plan. We give one out to every client at the time of application and mark the page where the plan benefits begin and highlight them so they can be easily reviewed. However, these are now found in what are called Enrollment Packages or Kits that can include the Summary of Benefits for as many as eight or more plans, as well as all sorts of other information, making them harder to use. Another problem is many agents, when selling Advantage Plans, gloss over the expensive medical services I just named and instead focus on the fun stuff, $0 co-pays for a PCP or Tier 1 generic medications as well as the ancillary benefits and “freebies” like dental, vision, OTC allowances, and Silver Sneakers. Those can be generous and useful for sure. But if you had a 5-day hospitalization that came with a co-pay of over $1,000 or needed chemotherapy to a tune of $4,000 to $7,000, were those teeth cleanings, eyeglasses, vitamins, and the gym membership really free?
Annual Notification of Change (ANOC)
If you already haven’t, you’re going to be receiving what is called the Annual Notification of Change (ANOC) any day in the mail from your current Advantage Plan company. In this 100 plus page publication, there’s a page or two that have what changes are scheduled to occur in 2022 as well as another section listing co-pays for all medical services. This is also not very user friendly and full of legalese. The good news is, the plans we recommend most, as well as the majority of HMO’s and PPO’s, aren’t going to have many significant changes at all for 2022. However, that doesn’t mean you have one of the 10 or so plans we feel are worthy of consideration. There will be more than 100 Advantage Plans to choose from for 2022 and yet another company is entering the market for the first time, bringing the total number of entities selling HMO’s and PPO’s to 11. And unlike Supplements where every letter plan (A through N) covers the same exact medical services at the same costs and provide the exact same access to doctors and hospital nationwide, Advantage Plan network providers, premiums, co-pays, the MOOP, and ancillary benefits can really vary. For example, one plan may have a co-pay for a 6-day or longer hospital stay under $300, while another $1,800. The MOOP can range from $4,000 to $7,550. And not just between companies, but between plans within the same company. With more plans and more companies to choose from every year, it makes a complex industry even more convoluted. This is why we contact our clients prior to every Annual Election Period to ensure they always have one of the best plans for the upcoming year. It has become very common for us to move clients from plan to plan within the same company or change to another to capitalize on the intense competition that has been going on between the three biggest players in the market. And we’re able to do that because one of the regulations for Advantage Plan companies is they must accept all applications regardless of current or past medical conditions as well as pay claims on day one the policy starts, so there’s no need to be afraid to make a change out of fear a pre-existing condition won’t be covered!
Let me now address how it’s possible to get a $0 premium plan, or even one that will refund you a portion of your Part B premium, $500 per year or more, known as the Medicare Part B Reduction Give Back, as CMS refers to it. How can companies do this? Advantage Plan companies are reimbursed by Medicare at a rate of almost $10,000 per year, per enrollee. In return, the company agrees to become the enrollee’s one and only insurance company and pay all medical claims, minus the insured’s cost sharing which is paid in the form of co-pays and coinsurance that are published in both the Summary of Benefits and ANOC. Medicare is then relieved of their obligation to pay any medical bills, with the exception of Hospice. Therefore, those who have HMO’s or PPO’s don’t show their Red, White, and Blue Medicare card at a doctor or hospital because Medicare no longer pays 80% for Part B services and all but $1,484 of a hospitalization (Part A).
The three companies with the most clients in Western Pennsylvania have around 100,000 members each. At close to $10,000 per enrollee, we’re talking about $1 billion dollars a year in payments from Medicare to each company, which I estimate is about 95% of their revenue. Only a fraction comes from premiums paid by their members. And that’s how they can afford to offer $0 premium plans, even give you money back in the form of a partial Part B refund.
Should You Take These Plans?
Should Shelly take a $0 premium plan instead of one that has a premium? We don’t recommend them very often to those who need prescription drug coverage. Here’s why. The majority of $0 premium plans with Part D have the highest allowable MOOP of $7,550 and/or a per day hospital stay co-pay, which as I stated earlier can come with a co-pay of over $1,000 to $2,000 on some $0 premium plans. Many also don’t provide nearly as generous ancillary benefits. With several plans lowering premiums for 2022, it’s often best to choose one in the $20 to $40 per month range. They usually pay for themselves and then some. Almost all of the $0 premium plans we recommend are designed for those who can get their prescription coverage from another source such as the VA, PACE, or PACENET. They are available with some or all of the following: the lowest MOOP in the Western PA market, a $50/month Medicare Part B refund, and a per stay hospital co-pay which we prefer our clients to have vs per day.
Shelly, and anyone else who’s confused about what plan they should be on for 2022, doesn’t know what all their co-pays are, or don’t understand the differences between Advantage Plans and Supplements as well as the pros and cons of each, which I will be addressing in the next column, should give one of our offices a call. I estimate it’s 50/50 that those currently on Advantage Plans have one of the ten or so we feel will be offering the best overall value next year. We will either let you know if that’s the case and provide you with peace of mind or set up a no cost appointment to review your plan side by side with others on the market if you don’t.
Thank you!
If you have any questions or concerns regarding this column topic, or would like to make an appointment for a no-cost consultation, please feel free to give us a call – we would be happy to help. I’d like to remind everyone that I do a live call-in talk show called Medicare A to Z every 1st and 3rd Monday of the month on WMBS Uniontown, 590AM and 101.1FM, from 1 to 3 PM. You can listen in on their website, wmbs590.com.
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