MEDICARE ADVANTAGE- SIMPLE, INEXPENSIVE to ENROLL
Complicated and Costly to Use
Medicare Advantage Plans are a very popular choice for many over 65 consumers. The plans are aggressively marketed for 3 reasons
1. These plans remove risk and lower costs to the federal government, risks are absorbed by the insurance carriers.
2. Insurance carriers are in the business of making money. Medicare Advantage Plans must be approved by the Centers for Medicare Services, however, all insurance plans (Health, Life, Homeowners, Auto) are designed to make money for the insurance company offering the plan. Risks versus rewards for each plan offered have been carefully researched by the insurance carrier.
3. Sales agents push Medicare Advantage because the commission rates for Medicare Advantage plans are double the commission rates for Medicare Supplement policies, also known as Medigap policies.
Original Medicare offers 80/20 coverage to Medicare beneficiaries. There is no maximum or cap that Medicare will pay annually for any one beneficiary. In other words, the cost per beneficiary has no limit. When a Medicare beneficiary enrolls in a Medicare Advantage Plan, that beneficiary is now fully insured by United Healthcare, BCBSNC, Humana or any other approved insurance carrier. The government limits risk by paying a fixed amount per enrollee in a Medicare Advantage Plan. This allows the government to reduce their costs and more effectively budget each year. The risk for the individual Medicare beneficiary is also not capped; there is no out of pocket maximum for the Medicare beneficiaries in Original Medicare. Medicare Advantage Plans and Medigap policies do offer the protection of out of pocket maximums. This why it is important to have either a Medicare Advantage Plan or a Medigap policy. I recommend Medigap plans as a preferred choice for many reasons.
All Insurance Carriers play a game of averages. Each Medicare Advantage Plan has been carefully designed with the goal of providing service to each enrollee at a profit. Each Medicare Plan offered must meet strict guidelines and be approved by CMS, the Center for Medicare Services. However when a plan ceases to make a profit for the insurance company, the plan is terminated by the insurance company. Remember, CMS pays a fixed amount for each member of a plan. If a plan, over time, enrolls too many members who have a high need for medical services, the plan may no longer be profitable. Since the insurance company only receives a fixed amount for each enrolled member the incentive is to limit care, especially expensive care from specialists. Medicare Advantage Plans, like Medicare, are also 80/20 plans. The out of pocket maximum is still relatively high in most MA plans, usually between $4500-$6700 per year. Other disadvantages of Medicare Advantage Plans include limited networks that may drop a favorite doctor or hospital, high copays and limited access to Specialists as well as coverage which is only local or regional. Many MA plans require a referral from a designated Primary Care Physician (PCP) before the plan will pay for the member to visit a Specialist. If the member is allowed to visit a Specialist, the Specialist is chosen by the PCP not by the member. As stated above, commission rates are much higher for Medicare Advantage Plans providing a large incentive for agents to promote these plans rather than Medigap policies.
Medicare Advantage Plans are marketed as having everything you need in one simple plan. The policies operate very similarly to the major medical plans offered to under 65 consumers. Offering low premiums, these health plans are attractive and seem familiar to enrollees. However, many beneficiaries do not understand the richer benefits of Medigap policies. Although the premiums for many Medigap policies are higher than many Medicare Advantage Plans, there are many superior benefits. Any doctor who accepts Medicare will accept any Medigap policy; there are no network restrictions. The plans are good nationwide and several plans even include Foreign Travel insurance. There are currently 10 levels of Medicare Supplements. The benefits of each level are established by CMS and are the same from each insurance carrier. Plan F, for example, will pay all the beneficiary’s portion of the costs of any Medicare approved service from a doctor or facility which accepts Medicare in the USA for the rest of one’s life. Plan F even covers 80% of most foreign travel emmegencies. All Medigap policies are guaranteed renewable if premiums continue to be paid. Original Medicare pays the first 80%, these supplemental policies fill in the gaps of Medicare. Medigap policies are surprising affordable ($37-$211/month) for the amount of coverage offered. Even the lower level Medigap offer richer benefits including lower annual out of pocket costs, ease of use and nationwide coverage rather than local or regional coverage compared to Medicare Advantage plans with similar premiums. Medicare Supplement Plans offer a great way to budget for future medical needs at a reasonable monthly cost.
Advice from a respected independent agent is invaluable in helping a Medicare beneficiary choose the best plan at the lowest cost. An independent agent can also offer advice on purchasing a prescription plan that offers the prescriptions needed at the lowest annual cost. Many new Medicare beneficiaries make the mistake of calling or visiting an exclusive agent who sells plans from only one company, believing the name of the insurance carrier is an important consideration. Actually, because the benefits of Medigap plans are established and regulated by the government, the brand name of the Medigap carrier should be only a minor factor in choosing a Medigap policy. It is best to shop around or visit a trusted advisor, rather than an exclusive sales agent representing only one insurance company.
The optimal time to purchase a Medigap Policy is during the period just before or after one’s 65th birthday or the date one qualifies for Medicare Part B. When purchased in the 6 month window immediately after enrolling in Medicare, no health questions are asked. Acceptance is guaranteed.
There is another guaranteed issue period of 63 days following the termination of an enrollee’s Medicare Advantage Plan. Again, in this period, no health questions will be asked. This is a great opportunity to move into a Medicare Supplement. Currently, NC (where I live) has the 3rd highest number of Medicare beneficiaries affected by Medicare Advantage Plan terminations. Other guaranteed issue periods may be triggered by specific events. Send me a private message or call Sherry Eason at 910-750-2605 if you have further questions. (This time of year, I am not on the BBS much at all.)
Complicated and Costly to Use
Medicare Advantage Plans are a very popular choice for many over 65 consumers. The plans are aggressively marketed for 3 reasons
1. These plans remove risk and lower costs to the federal government, risks are absorbed by the insurance carriers.
2. Insurance carriers are in the business of making money. Medicare Advantage Plans must be approved by the Centers for Medicare Services, however, all insurance plans (Health, Life, Homeowners, Auto) are designed to make money for the insurance company offering the plan. Risks versus rewards for each plan offered have been carefully researched by the insurance carrier.
3. Sales agents push Medicare Advantage because the commission rates for Medicare Advantage plans are double the commission rates for Medicare Supplement policies, also known as Medigap policies.
Original Medicare offers 80/20 coverage to Medicare beneficiaries. There is no maximum or cap that Medicare will pay annually for any one beneficiary. In other words, the cost per beneficiary has no limit. When a Medicare beneficiary enrolls in a Medicare Advantage Plan, that beneficiary is now fully insured by United Healthcare, BCBSNC, Humana or any other approved insurance carrier. The government limits risk by paying a fixed amount per enrollee in a Medicare Advantage Plan. This allows the government to reduce their costs and more effectively budget each year. The risk for the individual Medicare beneficiary is also not capped; there is no out of pocket maximum for the Medicare beneficiaries in Original Medicare. Medicare Advantage Plans and Medigap policies do offer the protection of out of pocket maximums. This why it is important to have either a Medicare Advantage Plan or a Medigap policy. I recommend Medigap plans as a preferred choice for many reasons.
All Insurance Carriers play a game of averages. Each Medicare Advantage Plan has been carefully designed with the goal of providing service to each enrollee at a profit. Each Medicare Plan offered must meet strict guidelines and be approved by CMS, the Center for Medicare Services. However when a plan ceases to make a profit for the insurance company, the plan is terminated by the insurance company. Remember, CMS pays a fixed amount for each member of a plan. If a plan, over time, enrolls too many members who have a high need for medical services, the plan may no longer be profitable. Since the insurance company only receives a fixed amount for each enrolled member the incentive is to limit care, especially expensive care from specialists. Medicare Advantage Plans, like Medicare, are also 80/20 plans. The out of pocket maximum is still relatively high in most MA plans, usually between $4500-$6700 per year. Other disadvantages of Medicare Advantage Plans include limited networks that may drop a favorite doctor or hospital, high copays and limited access to Specialists as well as coverage which is only local or regional. Many MA plans require a referral from a designated Primary Care Physician (PCP) before the plan will pay for the member to visit a Specialist. If the member is allowed to visit a Specialist, the Specialist is chosen by the PCP not by the member. As stated above, commission rates are much higher for Medicare Advantage Plans providing a large incentive for agents to promote these plans rather than Medigap policies.
Medicare Advantage Plans are marketed as having everything you need in one simple plan. The policies operate very similarly to the major medical plans offered to under 65 consumers. Offering low premiums, these health plans are attractive and seem familiar to enrollees. However, many beneficiaries do not understand the richer benefits of Medigap policies. Although the premiums for many Medigap policies are higher than many Medicare Advantage Plans, there are many superior benefits. Any doctor who accepts Medicare will accept any Medigap policy; there are no network restrictions. The plans are good nationwide and several plans even include Foreign Travel insurance. There are currently 10 levels of Medicare Supplements. The benefits of each level are established by CMS and are the same from each insurance carrier. Plan F, for example, will pay all the beneficiary’s portion of the costs of any Medicare approved service from a doctor or facility which accepts Medicare in the USA for the rest of one’s life. Plan F even covers 80% of most foreign travel emmegencies. All Medigap policies are guaranteed renewable if premiums continue to be paid. Original Medicare pays the first 80%, these supplemental policies fill in the gaps of Medicare. Medigap policies are surprising affordable ($37-$211/month) for the amount of coverage offered. Even the lower level Medigap offer richer benefits including lower annual out of pocket costs, ease of use and nationwide coverage rather than local or regional coverage compared to Medicare Advantage plans with similar premiums. Medicare Supplement Plans offer a great way to budget for future medical needs at a reasonable monthly cost.
Advice from a respected independent agent is invaluable in helping a Medicare beneficiary choose the best plan at the lowest cost. An independent agent can also offer advice on purchasing a prescription plan that offers the prescriptions needed at the lowest annual cost. Many new Medicare beneficiaries make the mistake of calling or visiting an exclusive agent who sells plans from only one company, believing the name of the insurance carrier is an important consideration. Actually, because the benefits of Medigap plans are established and regulated by the government, the brand name of the Medigap carrier should be only a minor factor in choosing a Medigap policy. It is best to shop around or visit a trusted advisor, rather than an exclusive sales agent representing only one insurance company.
The optimal time to purchase a Medigap Policy is during the period just before or after one’s 65th birthday or the date one qualifies for Medicare Part B. When purchased in the 6 month window immediately after enrolling in Medicare, no health questions are asked. Acceptance is guaranteed.
There is another guaranteed issue period of 63 days following the termination of an enrollee’s Medicare Advantage Plan. Again, in this period, no health questions will be asked. This is a great opportunity to move into a Medicare Supplement. Currently, NC (where I live) has the 3rd highest number of Medicare beneficiaries affected by Medicare Advantage Plan terminations. Other guaranteed issue periods may be triggered by specific events. Send me a private message or call Sherry Eason at 910-750-2605 if you have further questions. (This time of year, I am not on the BBS much at all.)
