Question:
Question from Ron: I’ve been reading your columns on Facebook for a few months now and it seems to me like you’re always recommending Supplements over Advantage Plans. Why is that when most of my friends have Advantage Plans?
Answer:
Answer: I want to make sure everyone understands that I’m not anti-Advantage Plan. Not at all. They’re a vital choice for those on Medicare and play a crucial role. In fact, our agency has well over 4,000 clients on an HMO or PPO Advantage Plan.
A big problem in the Medicare insurance industry is most people who are going on Medicare for the first time are only given the Advantage Plan option and Supplements are never mentioned or dismissed as “too expensive” or “only for sick people.” This most often happens because Advantage Plans pay much higher commissions than Supplements, and instead of an agent looking out for the client’s best interest, they’re only concerned about their own financial gain. This is very upsetting and it’s a dereliction of duty for an agent or broker not to provide an unbiased presentation of both Advantage Plans and Supplements so each individual can make their own decision on what type of plan is best for them. To take that decision from someone is malpractice as far as I’m concerned.
That being said, I am a bit partial to Supplements, especially for those who are going on Medicare for the first time. Let me explain some of the reasons why.
Reason #1 is that in 46 states in the country, a choice to enroll in an Advantage Plan can be permanent with no possible way to move back to a Supplement ever! Once you’ve been on an Advantage Plan for 6 to 12 months, Supplement companies, with the exception of 4 states, are under no obligation to accept everyone into one of their plans and can discriminate based on current or previous health issues.
Meanwhile if one’s first choice is a Supplement, they can always move to an Advantage Plan during any Annual Enrollment Period because regulations state everyone who has Medicare Part A and B must be accepted into any plan those companies offer.
Reason #2 why I prefer Supplement is because the benefits never change. Our agency recommends Supplement Plan N most often. The only out of pocket costs for Medicare covered services with Plan N is the Part B deductible, which is currently $283, a $20 co-pay for a physician’s office visit, and a $50 co-pay at the Emergency Room. That’s it. All other covered services are paid 100%. Those two co-pays can never be increased, and no new co-pays can ever be added.
Advantage Plan benefits, on the other hand, can change dramatically. People who enrolled in them 5 years ago had a low hospital co-pay that averaged $300 per stay, no drug deductible, $45 co-pays on Tier 3 brand name drugs, $2,500 allowance for comprehensive dental services, and $100/quarter OTC allowances. Now, all over the country, a 4 to 7 day hospital stay co-pay averages $1,250 to $2,000, there’s a $700 drug deductible on virtually every plan, co-pays for Tier 3 brand name drugs are 25% of the retail cost, there’s no comprehensive dental coverage and little or no OTC allowances. And when people decide they don’t like the changes or start having large bills roll in, as I mentioned above, it may not be possible to move to a Supplement.
Reason #3 is a newer phenomenon, but each year more hospitals cancel contracts with Advantage Plan companies, deciding to no longer accept them, giving people fewer options in what plans they can enroll in or what medical providers can be used. Those who have Original Medicare and a Supplement never have to worry about this happening, or who is in or out of network, because any doctor who accepts Medicare also takes all Supplements regardless of the name of the company.
Reason #4 is Original Medicare combined with a Supplement is the only health insurance in the United States that allows a treating physician to decide what is medically necessary without any insurance company approval or interference. A doctor and can order MRIs, CT scan, surgeries, etc., for those on Supplements and their patients can have those services performed the same day. That’s not the case with Advantage Plans where insurance company authorizations are necessary for those same services which delays getting them performed. When this dynamic is explained correctly, it’s what most often convinces people to choose a Supplement instead of an Advantage Plan.
There are other details and differences that we go over with all clients and certainly there are also benefits of Advantage Plans that lead people to often choose them instead of a Supplement. Advantage Plans cost much less. Supplement Plan N that we recommend most often, starts at around $100 per month for a 65-year-old and premiums increase as one gets older. The last two years, there have been historically high rate increases on Supplements.
The most popular Advantage Plans, in comparison, are just $0 to $45 per month and come with ancillary benefits, valuable “extras,” like dental and vision coverage, a no-cost gym membership, and OTC allowances that Supplements don’t provide.
Please be aware that my columns are not meant as a substitution for a one-on-one meeting with myself or one of the other licensed and experienced agents at The Health Insurance Store. Each individual has different health care needs and situations that need to be evaluated and considered. Only after spending time with our clients, listening to and asking them questions can we come up with a recommendation.
If you have any questions or would like to make an appointment for a no cost consultation, give us a call, 724-603-3403, or email me personally, Aaron@GetYourBestPlan.com.