Answer: You’re far from alone when it comes to this kind of fear. It’s unfortunate because that can be preyed upon.
Both types of Medicare health plans, Supplements (aka Medigap) and Advantage Plans are Federally regulated to protect consumers.
Let’s start with Supplements, which in my opinion are almost perfectly regulated. First, there are only 11 choices in plans: A, B, C, D, F, G, K, L, M, N, and FX. As of January 1st, 2020, there will only be nine as C and F will no longer be offered for sale. Regardless of the company one buys their Supplement from, both coverage and access to doctors and hospitals are identical. The only difference between Medigap policies with the same letter sold by different insurance companies is cost. The name of the company has nothing to do with what’s covered or what hospitals you can use.
There’s also very little difference between the three most popular plans, F, G, and N. The reason why Medicare will no longer allow the sale of C and F is seniors are being charged too much in premium for the minimal benefit received in return.
However, people often buy them because they were described as “the best,” or “most comprehensive.” When one hears those descriptions without being told just how limited the extra benefits are, the common thought might be “the other plans may expose me to thousands in bills.” That isn’t the case. For example, the one and only difference between Plans F and G is F pays the Medicare Part B deductible, now $185, and G does not. That’s it! I meet people all the time who are spending $500-$1000 or more per year to eliminate $185 in bills! Plan N, which I advise most often, offers additional premium savings. It works like G in that there’s the same $185 deductible. The only difference is those on N are responsible for two small co-pays, up to $20 for any physician office visit and $50 at the Emergency Room. Those who are paying $500 more per year for G are, in essence, prepaying for 25 doctor visits they likely won’t use. Keep in mind that outpatient rehab, allergy injections, or any other medical service where a treatment or test is rendered are NOT subject to a co-pay.
Now let’s discuss Advantage Plans. Again, they’re also regulated. However, it’s my opinion they don’t quite go far enough. I’d like to see a cap on premiums of $100/month, making it easier to compare plans side by side. You see, unlike Supplements, Advantage Plans do vary in what one can be billed for the exact same service(s). Take the hospital co-pays on two of the most popular plans in 2019 for example. One has a co-pay of more than $1,000 for a 5-day or longer stay, while the other is just over $200. And believe it or not, the plan with the higher hospital co-pay is more expensive!
People on Advantage Plans are often fearful of making a change to another plan or company as well. Like the person who asked today’s question, they may have had some serious health issues in the past, received expensive care, and saw that the insurance company paid out tens or even hundreds of thousands of dollars for their care. The common fear is another company wouldn’t have paid the same amount or covered everything, leaving them on the hook for the difference. I completely understand how one might think that by choosing a plan with a lower premium, they would be more susceptible to larger bills.
That simply can’t happen, however. All Advantage Plans must cover the same categories of benefits, everything that Original Medicare covers. And the benefits must be as good or better than what Medicare provides. There are four major differences between Advantage Plans. 1) Monthly premiums. In 2019 they range from $0 to just under $300. 2) Co-pays and coinsurance for the same medical services, as discussed above. 3) Access to doctors and hospitals, a huge issue with the ongoing battle between our two largest health systems and insurers. 4) The most one can be billed calendar year, known as the Maximum Out Of Pocket, aka MOOP. In 2019 those range from $3,400 to $6,700 for in-network services.
Regardless of the cost, in every plan, the Maximum Out Of Pocket can generally only be reached in the following scenarios: a) Multiple lengthy hospital stays. b) Multiple expensive Chemo treatments. c) Large number of Radiation treatments. d) 40-day or longer stay in a Skilled Nursing Facility. e) The need for a Prosthetic device. F) The need for a high dollar piece of durable medical equipment, such as an electric wheel chair.
Again, as long as an in-network provider was used, it wouldn’t matter what company or plan you had, the most you can be billed is between $3,400 and $6,700 in a calendar year. Paying more for a plan doesn’t guarantee you will be in the lower range either. In fact, plans that cost over $200/month or more generally have the same or a higher MOOP than several of the less expensive plans. I don’t care if you pay $3 or $300 in monthly premium. In five out of the six scenarios I listed above you will likely reach your MOOP.
Unfortunately, there are still tens of thousands of seniors who don’t understand these regulations on Supplements and Advantage Plans and continue to overpay in premiums and/or co-pays.