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What are the pros and cons of both Medicare Advantage Plans and Supplements?
This is the 3rd of my 7-part “Medicare Reset” series that is designed to prepare those who are currently on Medicare for the Annual Election Period that starts on October 15th. I only have room to discuss Advantage Plans today, so I will address Supplements next week. If you would like to read the first two columns in the series, they can be found on our website and Facebook page.
Before I get into the answer, I want to let everyone know there’s an unexpected development regarding Western Pennsylvania Advantage Plans for the benefit year 2021. Several popular Advantage Plan HMO’s and PPO’s annual Maximum Out of Pocket (MOOP) limit are being increased by as much a $4,000, to just over $7,500. As many as 200,000 seniors currently have plans that will see these changes. The MOOP represents the most one could be billed for medical services in a calendar year and I’ve heard estimations that 1 out of 20 people on Advantage Plans meet it. At The Health Insurance Store, we prefer our clients who go the Advantage Plan route enroll in plans that have a lower MOOP, a per stay hospital co-pay, and a premium under $50.
Let’s start with the pros of Advantage Plans which are as follows:
*In my opinion, the number one benefit of Advantage Plans are the low costs, as little as $0 per month. With Supplements averaging $100 per month or more, potential premium savings for those on Advantage Plans could be as much as $6,000 over a five-year period if one stays relatively healthy.
*Almost all Advantage Plans come with Part D prescription coverage embedded in them. Those who have Supplements must buy a separate “Stand Alone Part D” plan in addition to their Supplement that will start at around $10 in 2021. In addition, almost all Stand Alone Part D plans have a deductible of over $400. There is no Part D deductible on Advantage Plans.
*Advantage Plans come with ancillary benefits such as dental, vision, hearing, OTC allowances, and Silver Sneakers (free fitness center access). It’s our opinion for the 2021 benefit year that not only should your Advantage Plan cost less than $50, have a MOOP lower than $7,500, and a per stay hospital co-pay vs per day, it should also provide at least $2,000 in annual comprehensive dental benefits. The combination of Medicare and a Supplement do not provide any ancillary benefits.
*Advantage Plans have dedicated customer service reps that can help with doctor referrals, billing questions, and even booking an appointment, among other conveniences. And you can talk to an actual person with very little if any hold time. That’s not the case if you call Medicare. And I might suggest grabbing a book to read while waiting on hold to speak to one of their representatives.
Supplement companies can be helpful when called and the wait time is minimal, however, they aren’t able to provide the services that Advantage Plan companies do.
*There is no medical underwriting with Advantage Plans. You can move from plan to plan and company to company regardless of your previous or current health issues. They must accept everyone and there are no pre-existing condition clauses. This is extremely important in benefit years where there are significant changes like 2021. People are never stuck in plans that implement increases in premiums, co-pays, or out of pocket costs. Supplement companies on the other hand, can discriminate on who they accept into their plans based on current or prior health conditions, although there are a few exceptions, including when someone goes on Medicare Part B for the first time.
The negatives of Advantage Plans are as follows:
*Advantage Plans are HMO’s or PPO’s and have network restrictions, meaning you can be limited to what medical providers you can use, unlike Supplements that allow access to virtually every doctor and hospital in the country.
* Advantage Plan Premiums and benefits can change annually. In the last few years, premiums have remained very stable, even gone down. However, co-pays and out of pocket costs can be increased, sometimes dramatically as I’ve mentioned is going to happen in 2021. I’m very concerned about higher MOOPs becoming a trend which all our regional Advantage Plan companies may follow in future years. I suspect we may see more people move from Advantage Plans to Supplements than in years past due to that fear.
*Advantage Plans can expose those who have them to thousands in out of pocket costs for services such as skilled nursing, durable medical equipment, chemo or other infused or injected drugs, radiation, prosthetics, and hospitalizations.
*The biggest risk of choosing an Advantage Plan in my opinion is that once enrolled, it may become impossible or unaffordable to get a Supplement due to those companies’ ability to discriminate based on pre-existing conditions as I mentioned earlier. Many people choose Advantage Plans not realizing this or based on their current good health, thinking they won’t need services with large co- pays or coinsurance. However, no one can predict what the future may hold in that regard. And in the 13 years I’ve been in this field, I’ve spoken with hundreds of clients who were in excellent health when I met them at age 65, only to be diagnosed with very serious and costly medical conditions not long after. In most cases, those who went with an Advantage Plan as their first choice, can’t get on a Supplement that would eliminate expensive medical bills.
If you want to know if your current plan is going to experience significant changes for 2021 or you would like to make an appointment, give one of our offices a call. You can also email me personally with any questions or appointment requests at firstname.lastname@example.org.
Stay safe everyone!
The column runs every Tuesday on page A7 in the Tribune Review
This is a guide to prepare for the up coming Medicare Annual Election Period. Click on articles, videos and podcasts dedicated to helping those soon to be new to Medicare and just as importantly those who are already on Medicare.
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