Welcome back to “New to Medicare!”
Welcome to Part 5 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.
The last two weeks I went over the pros and cons of Supplements and Advantage Plans. I suggest reading Part 4 again prior to today’s column if you’ve been following. If you’re new to the series, I also recommend reading from the beginning and/or listening or watching the podcast and webcast versions. They all can be found on our website.
This Week’s Question
Who is best to choose a Supplement and who an Advantage Plan?
Answer
What works for others, may not work for you
Remember, what’s best for your mother, father, brother, sister or neighbor may not be best for you. There are so many factors that go into choosing a Medicare plan. Plans that bear the same name can have completely different benefits from one person to another. There are up to 11 Supplement plan letters and approximately 80 Medicare Advantage Plans to choose from in Western PA.
Unfortunately, many people enroll in a plan when first going on Medicare not understanding how they differ or without being given the Supplement option by an agent or Advantage Plan company representative, an egregious omission in my opinion, especially when not explained to those who have health problems. However, if both Supplements and Advantage plans are gone over in detail, which myself and the other agents of The Health Insurance Store do every time we sit down with someone new to Medicare, I believe one’s personality has a lot to do with making the initial choice between the two Medicare options.
Those who are more risk adverse tend to go with Supplements because they’re very predictable as far as what one can be billed for medical services, both now and in the future. With very few exceptions we recommend only two Supplement plans, G and N, which keep out of pocket medical expenses to a bare minimum. One of the Federal regulations on Supplements is benefits can never change as long as one remains on the same plan letter. For example, those who have G today can be assured that in 20 years, they will never pay any bill other than the Part B deductible, which is currently $203.
Those who don’t mind taking a couple calculated risks, are healthy at the time they make their initial choice, and believe they will stay that way, often choose Advantage Plans. Those who remain what I would consider just relatively healthy and avoid serious or chronic health conditions can reap the reward of premium savings to the tune of $5,000, $7,000, $10,000, or more in a decade compared to a Supplement.
Select Advantage Plans also come with ancillary benefits such as comprehensive dental and vision, Over the Counter (OTC) allowances, free gym memberships (Silver Sneakers), etc., which Supplements don’t provide. Those who find them to be important often choose Advantage Plan HMO’s or PPO’s. Ancillary benefits are currently more generous than at any time in my 13 years in the Medicare field, and when adding the true dollar value of them to premium savings, the figures can be eye-popping. There are plans that annually offer as much as $3,000 in comprehensive dental benefits, almost $500 in OTC allowances, and up to $300 a year for eyeglasses, not to mention the value of a gym membership which is over $400 per year.
Advantage plans have more risks
Advantage Plans have more risks as I mentioned, the first of which is the possibility of paying thousands of dollars in bills each year. Another is that benefits can change from one year to the next, which can include increased co-pays and other out of pocket costs, as well as the elimination or reduction in ancillary benefits. This happened for the benefit year 2021 and as many as 200,000 Western Pennsylvanians had their annual Maximum Out of Pocket (MOOP) limit, the cap on what one can be billed for medical services in a calendar year, raised to over $7,000, an increase of more than $4,000 on many plans.
I personally consider the biggest risk of choosing an Advantage Plan to be the possibility of never being able to enroll in a Supplement again. For almost everyone, the only time one can enroll in a Supplement without pre-existing conditions being considered is up to a year after going on Part B for the first time. After that, Supplements can discriminate and deny applications based on current or previous health. COPD, Emphysema, Heart Disease, Atrial Fibrillation, Lymphoma, Insulin Dependent Diabetes, Auto Immune Disorders, and other serious diseases and diagnoses result in automatic denials from virtually every Supplement company. What this means is those who are going on Medicare Part B for the first time and have any of these conditions really should enroll in Supplements in my opinion because it’s very the only opportunity to do so in their lifetime.
There are other reasons people make their choices. Those who spend a significant time outside of Western PA also have almost no choice but to choose a Supplement, which provide unrestricted nationwide access to virtually all doctors and every non-VA medical hospital at no additional cost. HMO’s will not pay for any out of network medical service other than those provided in an emergency. And with almost every PPO, even if a doctor or hospital agrees to take someone as a patient, the costs can be dramatically higher out of network, as much as $6,500 or more out of pocket than the same service performed in network.
Those on a fixed income are often best to choose an Advantage Plan. Some people simply can’t afford Supplements, which generally cost more than Advantage Plans, especially as one gets older. Although they start at just $75 to $100/month at age 65, costs can creep up towards $300 for those in their late 80’s or early 90’s. Advantage Plans offer a much better value for older Medicare beneficiaries. We always have a significant number of clients who reach a breaking point, so to speak, as far as premiums go and make a change from a Supplement to Advantage Plan during the Medicare Annual Election Period (AEP). AEP runs from October 15th to December 7th and is the one time during the year when every Medicare beneficiary can make a change in their plan lineup.
Thank you!
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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