Does this sound familiar?
“Hi, I’m (Joe Namath, Jimmie Walker, George Foreman, William Shatner—pick your favorite celebrity.) Check your eligibility for a zero premium Medicare Advantage plan that includes rides to medical appointments, home-delivered meals, and money added back to your social security check every single month, plus extra benefits like dental, vision and hearing care, and prescriptions, all at no additional cost.”
Yep, it’s hard to watch television without being inundated by Medicare Advantage ads. So, here’s a little history about Medicare and then we’ll dig a little deeper to decipher MA plans.
First, there’s Original Medicare. Part A is hospital insurance; Part B is medical insurance that covers doctor visits and outpatient services, which covers 80% of Medicare-approved expenses. Anything beyond that you have to pay for or buy insurance policies to cover it—things like vision, dental, hearing, and prescription drugs.
Medicare Advantage plans are authorized by Medicare but issued and administered by private insurance companies. They’re referred to as all-in-one plans because they include all the parts of Original Medicare plus other benefits such as vision, dental, hearing, and prescription drugs. 42% of Medicare recipients choose Medicare Advantage plans, also known as Medicare Part C. Here are some of the parts of Medicare Advantage plans that cause confusion.
Zero Premium Plans
Some Medicare ads talk about zero premium MA plans. And that’s true. You pay nothing for those plans. How does that happen? Medicare pays the private insurance company some of the monthly premium you pay for Medicare Part B. Even though you pay nothing for zero-premium plans you still have to pay the Part B premium. So, you’re paying for that Medicare Advantage plan—you just don’t see it.
Zero Copay
If a Medicare Advantage plan says it has no copays, then there are no copays—for some things. For example, there’s no copay to see your primary care physician. But you will have a copay if you see a specialist, have an MRI or CT scan, diagnostic tests, or outpatient x-rays. There are also per-day charges if you have to go to the hospital.
Money Added Back to Your Social Security Check
Who wouldn’t want that? But the Give Back benefit is just that; it’s a benefit. When an insurance company decides which extra benefits to offer each year, it has to weigh costs and make choices. An insurer may drop one extra benefit, such as vision or hearing, in order to offer the Give Back benefit. Give Back is nothing more than a reduction of your Part B premium that the insurance company agrees to cover.
Some data suggests that extra benefits such as dental care, meal delivery, and transportation aren’t as common in plans that offer the Give Back benefit. And Give Back isn’t offered by all insurance companies and it isn’t available in all parts of the country. That’s why the commercials tell you to call and see if it’s available in your zip code.
Who Provides Your Care
Unlike Original Medicare, which allows you to go to any provider who accepts Medicare, Medicare Advantage plans usually require you to use doctors and facilities in their network. That’s often not a problem for people in urban areas, but it can be a problem in more rural locations where there are fewer healthcare providers. With a MA plan, you can use out-of-network providers, but your care will be more expensive and you’ll have to pay part of the bill.
Out-of-Pocket Costs
Even though MA plans are zero dollar, there can still be out-of-pocket costs. Most plans have an out-of-pocket range from $4900-$7500.
Treatment Approval
With MA plans, except for emergency care, there is often an approval process before you receive treatment. For example, if you need physical therapy, the plan has to approve the request for service and how many visits you’ll receive. Non-elective surgeries are another care item that requires pre-approval. Prior Authorization is about cost-savings, not care. Under Prior Authorization, benefits are only paid if the medical care has been pre-approved by Medicare.
Quality of Care
No matter whether Medicare recipients have Original Medicare or Medicare Advantage, a majority of both are satisfied with the care they receive. According to a survey by the Commonwealth Fund, Advantage plans did not substantially improve a beneficiary’s healthcare experience compared to Original Medicare. But MA plans did offer more care management.
That means the Medicare Advantage enrollees were more likely to have a treatment plan where someone reviews their prescriptions and handles medical concerns relatively quickly. The study says that by providing this additional help, Medicare Advantage plans are making it easier for enrollees to get the help they need to manage their healthcare conditions.
Of those with a health condition, a larger share of Medicare Advantage enrollees in the study said that a healthcare professional had given them clear instructions about symptoms to monitor and had discussed their priorities in caring for the condition.
Changing Plans
Is all this confusing? Yep! And you’re not the only one who thinks that way. In a MedicareAdvantage.com survey of over 1,000 beneficiaries, three out of four called Medicare “confusing and difficult to understand.” The good news though, just because you’re in a Medicare Advantage plan, you’re not stuck. You can move between plans.
During the Open Enrollment Period, October 15-December 7 each year, you can join, switch or drop a plan. Your coverage will begin on January 1 of the following year.
During the Medicare Advantage Open Enrollment Period, January 1-March 31 each year, if you’re enrolled in a Medicare Advantage Plan, you can switch to a different Medicare Advantage Plan or switch to Original Medicare (and join a separate Medicare drug plan) once during this time.
There could be a problem if you’re planning to go back to Original Medicare and buy a Medicare Supplement policy. You have to go through medical underwriting and if you’ve become ill since enrolling in Medicare Advantage, the Medicare Supplement provider may deny you coverage, or at the least charge you much more for the coverage.
Switching will require you to do some homework. According to the Kaiser Family Foundation, there are 54 Medicare plans, 766 Medicare Part D prescription drug plans, and 3,834 Medicare Advantage plans, and the number keeps increasing. Another problem, aside from so many choices, is that seven in 10 Medicare beneficiaries don’t compare coverage options.
Here’s a simple way to look at the difference between Original Medicare and Medicare Advantage plans? Do you want to pay upfront, or do you want to pay on the back end?
With Original Medicare, you pay a monthly Part B Premium and it covers 80% of Medicare-approved expenses. To cover the other 20% you need to purchase a Medicare Supplement Policy, for which you pay a premium. And if you want vision, dental, hearing, or prescription drug coverage, you pay a premium for policies that cover those items. You pay the premiums up front so the insurance will cover your health expenses when they occur.
If you have a Medicare Advantage plan, it may be a zero premium plan and it may cover vision, dental, hearing, and prescription drugs, but you’ll have to pay a copay to see a specialist, for diagnostic tests and other items, and you’ll pay a daily charge if you go into the hospital. You pay on the backend. Medicare Advantage plans work best if you don’t get sick.
If you have health conditions and take several prescriptions, then Original Medicare with a Medicare Supplement and other policies for dental, vision, hearing and prescription drug coverage may be the best.
There’s no right or wrong answer when it comes to choosing between traditional Medicare and Medicare Advantage plans. But you need to be well informed before you make the decision.