One of the biggest points of confusion for seniors seems to be making a decision between a Medicare Advantage Plan and Medicare Supplement Plan. I receive phone calls on a daily basis from people either turning 65, moving from an employer plan to Medicare or just trying to decide what to do for the Medicare Annual Election period. Often they are confused and feel overwhelmed by the amount of information and plan choices available.
The reality is that it is actually very easy to learn enough to make an educated decision. This article is going to point out the basic differences between the plans and point out the strengths and weaknesses of each. With this info, anyone will be on their way to having enough information to make a confident decision on the best plan for them. (This Article is for people in Connecticut and NY- I will write one for other states in the next few days)
First, we need to break down the differences between the two types of plans and also dispel some myths about both.
Medicare supplement plans-
-They are secondary to your Medicare A and B (In other words, providers bill Medicare first and then your supplement covers some or all of the remaining costs depending on the plan you choose.
-They are for Medical only. You buy Rx coverage separately
-There is not a network. You can go to any doctor that accepts Medicare
-There are plans A-N available but only a few are popular. They Plan F, Plan N and High deductible F
-The plans are standardized in both Ct and NY. If a company offers a plan N, the benefits are identical regardless of the company offering it. Price is the only difference. Once companies plan N is not better than other companies. Just go by the price.
-There is no medical underwriting for them and in Connecticut and New York you can change them the first of any month at any time during the year.
Supplements are a good choice for people that do not want to have any network constraints. They also work well if you have doctors that do not take managed care plans (Medicare Advantage Plans) or if you travel to other states often.
Some clients like the fact that some of the supplements basically cover all of their costs for medical care. (Plan F and Plan C, Plan J for those whom still have it)
Finally, supplements work well for people that are very sick and receiving a high volume of care such as multiple injections at an outpatient facility or in the doctor’s office or people going to a number of physical therapy visits on a weekly basis. If you are on a plan F, you will not be billed for the services
I hear a tremendous amount of incorrect information being given out on a daily basis when it comes to Medicare Supplement plans. Here are some of the major areas where bad info tends to be most prevalent.
-” Such and such a company has the best Supplement plans”- In the world of supplements, there is no such thing as one companies supplement being better than the others. Supplements are mandated to have identical benefits. If United offers a plan F supplement, it has the EXACT same benefits as every other companies Plan F benefits. Supplement plans A-N are subsidized in Connecticut and New York. All plan benefits are the same. The only difference is the price that the company charges for them. If you have decided on a supplement and know which plan you want, take the company with the lowest cost for that supplement. (Example: You decide to take a plan N, Simply choose the lowest cost plan N being offered at the time.)
– “I can’t find all the companies offering supplements and the prices” – This is easy. Each state has a list of all companies in the state offering supplement plans and the prices of them. They can be found on the insurance websites of each respective state. Here is a link to Connecticut Supplement plans and prices for 2011
https://croweandassociates.com/images/stories/Medicare_Supplement_Rates_Connecticut_2011.pdf
“Supplements have underwriting outside of the guaranteed issue period”- There is no underwriting for supplements in Connecticut and NY. Both are guaranteed issue states even outside of the election periods.
“High Deductible F is not a good plan” – This could not be more off base. In Connecticut and Ny there are plans that have very low high deductible F plans. In fact, in Connecticut, Anthem BCBS offers a high deductible F plan for $39.00 a month. This math cannot be beat by any other supplement plan offered in CT. For more information on High Deductible F go to… https://croweandassociates.com/blog/?p=223 for NY
Although there are many good things about supplements, there is also a negative or two. First off is that they do not cover RX, you need to buy a separate drug plan if you want coverage. The going rate for Rx plans is about $32.00 a month. Secondly is the price of the supplements. The lowest cost plan F in CT is about $219.00 a month. When you add your Rx cost to that it brings you to about $250.00 a month for a plan. Keep in mind that you are going to be paying $3,000 in premium for the year no matter what. Even if you have a very healthy year you will have $3,000 less at the end of the year.
Medicare Advantage Plans
Medicare Advantage plans are managed care plans being offered by private insurance companies. They give you your A and B coverage, secondary coverage and Rx coverage all in one package. With a Medicare Advantage plan, your Medicare A and B is administered by the insurance company. As a result, when you go to the doctor you show them your Medicare advantage plan instead of your A and B card.
There are many positives and also negatives about an advantage plan. Here are the positives….
-They are included in your Medical and Rx in one package. You do not need to go and purchase a separate PDP plan.
-They are very inexpensive. All major carriers even offer $0 monthly premium* plans.
-They have out of pocket maximums.
-Preventative care is covered at no cost to the member.
*They can offer you a plan for $0 monthly premium because Medicare is paying the insurance company money to handle your enrollment and care for the year.
-Some carriers have national networks and plans with out of network coverage.
Some negatives about advantage plans…
-They have networks. If you take an HMO advantage plan (Which does not have out of network coverage) and you try to go to an out of network doctor, you will NOT be covered. Many people believe that Medicare will still cover them for the usual Medicare A and B amount if they go to an out of network doctor but it does not. You will need to pay the full cost.
-They have copays for services. You need to be aware of the copays on the plans you choose. Some plans cover certain services better than others. For example, one carrier may cover Major Radiology at 80% while the other covers it for an $80 copay.
-They have pre-certification requirements for some procedures. Your doctor is responsible for obtaining pre certs but they can hold things up at times.
Advantage plans tend to work very well for people in relatively good health that see a reasonable amount of doctors. You need to check to see that all your Docs and any hospitals you go to are in the network. There are now a number of plans with out of network coverage and national networks. This is good if you have a doc or two that is out of network.* The copays on most plans are reasonable and with $0 premium plans available, they can save the right person a lot of money for the year.
*Make sure your out of network doctor will bill your insurance company for you and not make you submit yourself.
Often clients get upset when they go on an advantage plan and incur a large copay. (For example, a CAT scan which is a $150 copay on some advantage plans) They will say “If I was on a supplement, I would not have paid anything”. They tend to forget that the supplement is costing them money every month when the advantage plan is not.
The math on advantage plans actually makes sense for the majority of people but not everyone. Make sure you review the benefits and check networks prior to enrolling. Do the math and see how much you will save in monthly premium vs. how much exposure you have to copays. In the end, the advantage plan will likely win out but a little time needs to be devoted to make a comparison before you make a final decision.
*Make sure your out of network doctor will bill your insurance company for you and not make you submit yourself.