Medicare Plans
Choosing between the seemingly endless variety of options can be daunting. The choice of plans, companies, costs, and coverage confuse many. Our goal is to simplify this so that our customers can make a choice based upon their needs, not the slick marketing material every company seems to send.
There are really only two different types of plans to consider, Medicare Advantage or Medicare Supplement. Each has their strengths and weaknesses. It really boils down to how much you are willing to spend on your freedom to choose your doctors and hospitals.
Medicare Advantage plans are by definition network based. HMO’s have a “tight” network and referrals are required for most services. The advantage is generally a low cost (as low as zero) additional monthly premium in exchange for limited choice of providers. PPO plans have larger networks and may not require a referral, however the potential cost for care can be high - as much as $10,000. Both these plans generally include your prescription benefit.
Medicare supplements have no network. You can see any provider that accepts Medicare. The tradeoff is a higher premium cost for your freedom. No supplement includes prescriptions so you will also need to purchase a Part D plan.
Which is best? It really depends on you and where you live. Some areas have no advantage plans. Some areas may have terrific networks and low to zero cost for premiums and next to nothing for care. But nothing is as good as a supplement for care. It’s a tradeoff. Premium versus access to doctors.
Once you are out of your initial enrollment period (usually turning 65) you need to qualify for supplement by being in reasonable health. So if you want to enroll in an advantage plan for the low premium and then move to a supplement if your health deteriorates, you could be out of luck. You don’t buy insurance for what you have now. You buy it for what could happen.
Let's look at these plans in greater detail.
Medicare Advantage HMO
Medicare Advantage Plans with Drug Coverage (MAPD) are the most common advantage plans. There are some without the Part D with the most common being used by those who also access the VA. (We will discuss that elsewhere).
These plans will replace Medicare benefits with private insurance. Both Medicare A & B must be in force as the majority (if not all) of the cost of these plans is paid by Medicare. Medicare Advantage insurance companies receive approximately $900-1,000 per month to prove their members with benefits.
The only qualification to be eligible for these plans is having Medicare A & B and living in the service area. Prior to January 2021 those with end stage kidney disease would not be eligible but that exclusion no longer exists.
Medicare HMO plans will have a restrictive network of physicians, hospitals, labs, and other providers. Many people simply look at the cost of the coverage and if their doctor(s) are in the network. What they fail to consider is a critical illness that may be better treated out of network. If this is the case generally 100% of the cost of care is paid for by the patient. Only network services are covered under an HMO.
The original authorization for Medicare HMO plans was to save the taxpayers money. This is no longer the case as the cost is higher than Original Medicare. Benefits may be more robust and from a financial standpoint beneficiaries are the “winners.”
So, on the plus side, premiums for these plans are as little as zero per month and the cost of care can also be quite low. In fact, in some areas there are no copays for doctors or hospitals. Annual out of pocket costs aside from medication can be as low as $1,000. For some, the coordination of care between the primary care physician and the (generally required) referrals can be of benefit.
On the negative side, a limited network can make it difficult to receive the care a patient needs or wants. As an example, let’s choose someone living in Las Vegas diagnosed with cancer. The best facility for treatment might be in California. It would be very unlikely that the patient can go there without paying all the costs out of pocket. And don’t think “well, let’s drop the HMO and get a supplement.” Once a critical disease is present it may be impossible to get another plan.
Medicare Advantage PPO
The low cost makes MAPD plans seem like a terrific option, especially for those who are healthy. After all, why spend money when a person rarely visits a doctor?
Here’s the reason. Don’t buy insurance for what you have now. Buy it for what might happen in the future. On a personal note, I am happy to help people with whatever plan they choose, and I’ll find the best value regardless of company. But both my wife and I have Original Medicare along with supplement plans. We value our health more than money.
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Medicare Supplement
Combined with Original Medicare there is no better access to physicians and hospitals than this combination. As long as the provider accepts Medicare one never has to worry about access.
Here’s How it Works:
Medicare Part A will pay 100% of the charges for inpatient services from the hospital after a per admission deductible. This changes annually and currently in excess of $1,550. The amount doesn’t matter as supplements will pay this. The deductible can be charged every 60 days.
Part B has an annual deductible which can change every year. For 2022 it is $223 and likely higher in 2023. After the deductible Medicare pays 80% of covered charges. With the exception of hospital billed costs for inpatient services, Medicare costs are generally Part B costs.
Most doctors (96%) will accept the assignment of your benefits for claim payment. The remaining 4% will accept Medicare but not assignment. These doctors can bill an additional amount but neither Medicare nor a supplement will pay them directly. Payment comes to the patient and then the patient pays the doctor. This is so unusual that in all my years working with Medicare not one of my many clients has ever experienced this issue.
According to Medicare, "all plans (below) of the same letter provide identical medical benefits." So look for a company with a track record of low price increases.
Let’s Talk About The Plans:
Plan F
For those eligible for Medicare prior to January 1, 2020 this plan is still available, along with its high deductible variant HDF. This plan covers 100% of Medicare out of pocket costs. While it seems great to have 100% coverage it comes with a high price. Rarely is it a good value.
Plan G
With the exception of not paying the Medicare Part B costs this plan is the same as Plan F. However, the premiums are usually $300-600 lower. So why pay an insurance company that much to avoid a $198 expense? More people are realizing this. Insurance needs to provide value.
Plan N
About 80% of my clients have chosen this plan as for most it is indeed the one with the best value. There are four items that the policyholder pays:
- Part B deductible ($223 in 2022),
- Up to but never more than $20 for some office visits. This will not include chemotherapy, lab tests, physical therapy, MRIs, etc.,
- Emergency Room visits that do not result in being admitted can cost $50,
- Excess charges. Discussed above that affects about 4% of all physicians.
That’s it. So why Plan N over Plan G? The annual savings can be quite high. It’s not unusual for clients to save $300 or more. I’ve seen savings over $1,000!
Again, value is all that matters. All plans cover the same items. The only difference is a potential share of cost for the patient.
HDF (HDG)
The high deductible Plan F (as of Jan 1, 2020 to be high deductible Plan G) requires the beneficiary to pay all out of pocket costs after Medicare pays until they reach $2,300 (2019). After that it has the same benefits as Plan F. Why would anyone want this plan? Mainly because the premiums are very low ($30-50) and in most years the share of cost for care won’t excess a few hundred dollars. For those used to company health care or coming from an individual plan this may make sense.
Part D
This is the Medicare prescription drug plans provided by private companies. While you can include this benefit with advantage plans you cannot add them to supplements. Prices range from around $15 to $100 per month depending on the medications you need.
It can be tricky making sure you choose the right plan as formularies differ along with potential other issues such as pre-authorization, step therapy, and quantity limits.