Admittedly Medicare Advantage plans do sound enticing. While many offer $0 premiums, the devil, as they say, is in the details. You will find that most have unexpected out-of-pocket expenses when you get sick and only want you as a customer when you’re healthy.
Also known as Part C, these plans, which private insurers provide as an alternative to traditional Medicare, must provide coverage required by Medicare at the same overall cost level. However, what they pay can differ depending upon your overall health.
Coverage Choices When You Qualify for Medicare
When choosing medical coverage at 65 years old and over, you can make one of three choices:
- Traditional Medicare, which has co-pays and deductibles.
- Traditional Medicare with Medicare Supplement Policy (or also known as Medigap) that covers Medicare’s co-pays and deductibles.
- Medicare Advantage, a private insurance plan that varies greatly depending on the policy you choose.
Most Comprehensive Coverage
The most comprehensive coverage, which will likely result in the fewest unexpected out-of-pocket expenses, is traditional Medicare paired with a Medicare Supplement policy. Medicare Supplement policies can vary, and the most comprehensive coverage is offered through Medicare Supplement Policy Plan G, which is sold by different insurers but must offer Medicare-specified coverage. Under Medicare Supplement Plan G, all co-pays and deductibles are covered, except for the initial $183 Part B Deductible. You also receive some coverage when you travel outside the country. With this combination, you can go to any doctor who accepts Medicare. Be aware that with traditional Medicare and Medicare Supplement, you will also need Part D prescription drug coverage.
The Devil Is in the Details
Medicare Advantage plans do not offer this level of choice. Most plans require you to go to their network of doctors and other health providers. Since Medicare Advantage plans can’t cherry-pick their customers because they must accept any Medicare eligible enrollee, they discourage people who are sick by the way they structure their co-pays and deductibles.
If considering a Medicare Advantage Plan, carefully review the summary of benefits for every plan you are considering. To give you an example of the types of co-pays you may find, here are some details pertaining to in-network services from a popular Medicare Advantage Plan:
- Ambulance – $300
- Hospital stay – $175 per day for first 10 days
- Diabetes supplies – up to 20% co-pay
- Diagnostic radiology – up to $125 co-pay
- Lab Services – up to $100 co-pay
- Outpatient x-rays – up to $100 co-pay
- Therapeutic radiology – $35 or up to 20% co-pay depending on the service
- Renal dialysis – 20% of the cost
As this short list of co-pays demonstrates, out-of-pocket costs will quickly build up over the year if you get sick. The Medicare Advantage plan may offer a $0 premium, but the out-of-pocket surprises may not be worth that initial savings if you get sick. The best candidate for Medicare Advantage is someone who’s very healthy, and intends to remain that way. If that’s you, may I please borrow your crystal ball?
Switching Back to Traditional Medicare
While you can save money with Medicare Advantage when you are healthy, if you get sick in the middle of the year, you are stuck with whatever costs you incur until you can switch plans during the next open enrollment period for Medicare. At that time you can switch to Traditional Medicare with a Medicare Supplement plan, but Medicare Supplement can then charge you a higher rate than if you had initially enrolled in a Medigap policy when you first qualified for Medicare.
The Bottom Line
Shop very carefully if you are thinking of using a Medicare Advantage plan. Be sure to read the fine print, and get a comprehensive list of all co-pays and deductibles before choosing one. Also, be sure to find out if all your doctors accept the plan and all the medications you take (if it’s a plan that also wraps in Part D prescription drug coverage) will be covered. If the plan doesn’t cover your current physicians, be sure that its doctors are acceptable to you and are taking new patients covered by the plan. Please let me know of any questions.