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Medicare Advantage Plans

| November 16, 2018
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If you are nearing 65, or are 65 or older, you are probably receiving call after call and receiving ad after ad for Medicare Advantage Plans. Let me guess—it will save you A LOT of money, you may not even have to pay anything on a monthly basis…? They even may include dental or optometry services.

Remember, the big print giveth and the little print taketh away. Medicare Advantage Plans are not for everyone and you need to know why.

They may save you money up front, but they may cost you thousands of dollars on the back-end. They may or may not let you see the doctor you want or keep the doctor you have. They may discontinue services with a current provider you have. And if you travel or snow-bird, you may find yourself without any coverage at times.

This is a real story published from Investopedia:

“Although Mom saw her MA premiums increase significantly over the years, she didn’t have any real motivation to disenroll until after she broke her hip and required skilled care in a nursing facility. After a few days, the nursing home administrator told her that if she stayed there, she would have to pay for everything out of her own pocket. Why? Because a utilization review nurse at her MA plan, who had never seen or examined her, decided that the care she was receiving was no longer ‘medically necessary.’ Because there are no commonly used criteria as to what constitutes medical necessity, insurers have wide discretion in determining what they will pay for and when they will stop paying for services like skilled nursing care by decreeing it ‘custodial.’”1.

Medicare Advantage Plans want you when you are healthy. They don’t want you when you are not, so they design these plans for out-of-pocket costs to meet their goal. So then you have a new problem. Switching back to a Medicare Supplement (Medicare Gap) policy isn’t easy and sometimes not cost effective when you are no longer healthy.

A comprehensive Medicare Supplement coupled with a drug plan usually averages somewhere between $100 and $250 per month. But the thing is, it is exactly what it says it is. Don’t take it just from us. Here is what Dr. Brent Schillinger, former president of Palm Beach County Medical Society Services Foundation said about the potential hidden dangers in an Advantage Plan:

 Care can actually end up costing more, to the patient and the federal budget, than it would under original Medicare, particularly if one suffers from a very serious medical problem.

 Some private plans are not financially stable and may suddenly cease coverage. This happened in Florida in 2014 when a popular MA plan called Physicians United Plan was declared insolvent, and people were called by doctors who canceled their appointments.

 One may have difficulty getting emergency or urgent care due to rationing.

 The plans only cover certain doctors, often drop providers without cause, breaking the continuity of care.

 Members have to follow plan rules to get covered care.

 There are always restrictions when choosing doctors, hospitals and other providers, which is another form of rationing that keeps profits up for the insurance company but may limit patient choice.

 It can be difficult to get care away from home.

 The extra benefits offered can turn out to be less than promised.

 [Plans that include coverage for Part D prescription drug costs] may ration certain high-cost medications. 1.

The maximum out-of-pocket charges are said to be $6,700. So let’s imagine the best case scenario as you get older and have more health issues. The Advantage Plan covers everything you thought it would - and you pay $6,700 per year. This is far from a zero-cost plan.

We aren’t proposing that there aren’t certain situations in which an Advantage Plan doesn’t make sense. Quite the opposite—there are. However, it doesn’t fit the majority of retirees.

We recommend educating yourself. Listen to Life Planning 101 for more details. Learn about the basics of the Medicare System in our Learning Center—Understanding Medicare. Get your facts—the devil is in the details. Let a trusted advisor (not a salesman) help you through the process. And finally, remember to make your decision based on these three things:

  1. Cost—Assess higher premiums today versus higher costs in the future. What can I afford in a worst-case scenario. Am I willing to continue to pay potentially substantial out of pocket costs in the future to save money today? How will this affect my family?
  2. Flexibility—Is it important that I have choices of who will provide my care? Would it be okay if I had to change doctors because my Advantage Plan no longer worked with my current choice of care?
  3. Lifestyle—Do you travel? Do you snow bird? How will this work with your plan? Will there be potentially unexpected out-of-pocket costs?

Remember that if it sounds too good to be true, it probably is—especially in the world of Medicare.

  1. https://www.investopedia.com/articles/personal-finance/010816/pitfalls-medicare-advantage-plans.asp

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