What if I’m no longer happy with my Advantage Plan?

Question from Jim: Something in one your previous columns has me concerned. You stated that “once a choice in Advantage Plan is made, there’s a good chance that moving back to Original Medicare and a Supplement may not be possible.” I have an Advantage Plan now but that was never explained to me when I made the decision to enroll in a PPO when I turned 65 last year. I’m happy with my plan, but what if someday I’m not? What are my choices then? And lastly, why is the system set up where people like me may not have a choice to move back to a Supplement from an Advantage Plan? 

Answer: In 47 states, the only time acceptance into a Supplement is guaranteed for everyone in any company and letter plan is the 3 months prior to one’s initial Part B effective date and the 6 months after. This 9-month time frame is referred to as the Supplement “Open Enrollment Period (OEP).” There is a 6-month extension of the OEP if both Parts A and B are the same and someone’s first choice was an Advantage Plan. But after that, in all but 3 states, companies are allowed to discriminate on who they accept based on the applicant’s current and previous health conditions, a practice known as “medical underwriting.” 

The reason the system is set up like that is because it helps keep Supplement rates lower for everyone. In the 3 states where there is no medical underwriting, and enrollment into any letter plan is guaranteed all the time, the starting cost of Supplements at age 65 is 250% to 400% higher than in almost all of the other 47. What happens in those 3 states where underwriting is illegal is that most healthy people choose a $0 Advantage Plan or remain on Original Medicare to save money and move to a Supplement only if they get sick. This creates Supplement pools full of far more unhealthy people than healthy, resulting in higher claims rates and ultimately much higher premiums. 

It’s my opinion that the current system used in 47 states is best and the problem isn’t the restrictions of when one can enroll in any Supplement, it’s that there’s no regulations on agents or Advantage Plan insurance companies to disclose the short Open Enrollment Period window and the risk of never being able to purchase a Supplement after the OEP has expired. And since Advantage Plans pay much higher commission than Supplements, especially when someone is new to Medicare, many agents purposely leave this important information out. In fact, most agents don’t even mention Supplements as an option at all. I believe a regulation that would make commissions on both Supplements and Advantage Plans the same would largely solve this problem. I’m actually a proponent of lowering Advantage Plan commissions by 50% to make that a reality. 

Advantage Plans can provide tremendous value with lower premiums and the ancillary benefits that Supplements don’t supply such as dental, vision, hearing, gym membership, and OTC benefits. When Advantage Plans are presented with no downside, of course people, especially those who are healthy, are going to choose them. But when the risks of Advantage Plans are explained and disclosed properly, the pros and cons are compared and contrasted with Supplements, like we do with all our prospective clients, I estimate that Supplements are the choice for 70% of those who are going on Medicare for the first time.

What does someone do if they’re no longer happy with an Advantage Plan after their OEP has expired? If healthy enough to pass underwriting, a change to a Supplement can be made during the Medicare Annual Enrollment Period that runs from October 15^th to December 7^th. But healthy people almost never become dissatisfied with an Advantage Plan. There’s no reason to be with all the no cost “extras” and co-pays on common services for PCP visits, blood work, and generic drugs just $0 to $10. Even bills for the Emergency Room, MRIs, CT scans, and outpatient surgeries are generally very reasonable at $100 to $250. It’s not until people get sick, have to deal with waiting on prior authorizations before they can receive care, or bills get into the thousands of dollars that they become unhappy.  At that point, however, there’s virtually no chance of moving to a Supplement because those companies will not approve someone who is actively being treated or has been treated in the last 2 to 5 years for major health issues, leaving remaining on an Advantage Plan the only option in almost every state in the country. 

No matter how often I write about the differences between Advantage Plans and Supplements, we meet people almost every day who never had the OEP rules explained and didn’t know that choosing an Advantage Plan when first going on Medicare may wind up being permanent. It’s so important to choose a Medicare broker who has integrity and puts their clients’ best interests ahead of commissions, which has been our mission since the day I opened the doors of The Health Insurance Store back in 2008. You can make sure your family and friends get all the facts and aren’t misled by referring them to us. And we never charge a fee for consultations. 

With questions or to make an appointment, give us a call, 724-603-3403 or email me personally, Aaron@GetYourBestPlan.com.