Open Enrollment for Medicare is October 15 through December 7.
My father passed away in July of 2022 at the age of 86. He didn’t know much about health insurance except for the fact that between Medicare and his retiree medical benefits, he had excellent coverage. A few years ago, his retiree medical benefits changed from a generous policy administered by Cigna to a flat $2,500 reimbursement per year. The change required negotiation of a new system and new plans, not easy for an elderly person. Luckily, my health care and finance background allowed me to handle this for him.
My Dad took care of himself and was blessed with a good set of choppers. When he went for his usual checkups, the provider always remarked how lucky he was to have his own full set of teeth! I think he was very proud of that. When we had to choose a private plan, I decided that dental coverage was not worth it after analyzing the cost and benefits and given the fact that he hadn’t had many dental issues.
After the change, he was upset every time he went to the dentist and had to pay out of pocket. This really bothered him, and we spoke about it regularly.
I was my dad’s primary caregiver from 130 miles away. When I would visit, he would always be in his recliner with the tv on. His favorite channels were either old westerns or movies on the Turner channel. As I sat with him, I was amazed at the number of advertisements for Medicare Advantage Plans. A frequent ad featured Joe Namath….and my dad was a HUGE football fan.
Joe Namath pitched Medicare Advantage plans with benefits that included no-cost additional features, such as home meal delivery, transportation to appointments, fitness memberships and cash.
The commercial also claims that Medicare Advantage plans eliminate copays and that beneficiaries may be entitled to additional funds added to their Social Security checks monthly.
One of the most enticing claims in the Joe Namath Medicare commercial pertains to the overall out-of-pocket costs of Medicare Advantage plans. Joe Namath claims that extra coverage is provided at no extra cost because Medicare Advantage plans don’t require monthly premiums.
While all the claims in the Joe Namath Medicare commercial are true to a point, it's the way these claims are worded that causes confusion. The details are more complicated, but what sticks in the viewers mind are “no premiums”, additional funds for you”, “free dental and vision” etc. There is no doubt that this is an aggressive sales approach.
So of course, my dad focused on dental coverage, and despite my warnings about calling the “hot line”, he proceeded to do just that. He never heard the end of it. They continued hounding him for months, multiple times a day, despite hang ups and threats to report them, they continued to call.
Let’s look at the economics of Medicare Advantage plans to understand more. Private companies are paid a “capitated” or flat rate per enrollee to manage an individual’s care. By doing this, CMS (Centers for Medicare and Medicaid) offloads the “risk” to the private carrier.
No surprise, the private companies need to make a profit for their shareholders, and the way they do it is often by limiting care, so their costs are under the cap paid by Medicare. Thus, the economic incentive is to tightly manage care and minimize costs. My belief is that all the company’s systems are built around this central goal. In fact, a recent investigative study by STAT +, showed that United Health Care pushed employees to strictly follow an AI algorithm which routinely denied care, saving hundreds of millions of dollars every year on patient care, and increasing profits.
This is why some of these providers that are public companies may have seen their stocks rise, while many of their clients are unhappy and complaints are rising.
Let’s queue some recent headlines:
- “Feds crack down on Medicare Advantage Marketing” (AARP 04/20/23)
- “The troubled sales Insurance firm behind those Joe Namath ads for Medicare Advantage” (The New Republic 12/13/21)
- Deny, deny, deny': By rejecting claims, Medicare Advantage plans threaten rural hospitals and patients, say CEOs. (ABC news, 10/31/23)
- Hospitals are dropping Medicare Advantage left and right: 13 updates. (Beckers Healthcare 10/23/23)
- Report: Medicare Advantage plans cost more, provide less (Cornell Chronicle 11/2/23)
- U.S. to rein in technology that limits Medicare Advantage care (Washington Post 10/1/23)
- The Cash Monster was Insatiable: How Insurers Exploited Medicare for Billions” (New York Times, 10/8/2022)
Well, you get the point. Here is what you need to know about Medicare Advantage Plans
- Economic incentives favor limiting care. I’m not suggesting that this happens 100% of the time, but understanding the economic incentives will help you to avoid aggressive sales pitches.
- Providers of Advantage plans market aggressively to persuade seniors to sign up or switch plans. A new US Senate report found that some Advantage plan practices are deceptive.
- Medicare Advantage plans appear simpler and less expensive.
- Most plans limit the provider network like an HMO. If you travel frequently, it is highly likely that your care may not be covered out of the plan’s network.
- Most procedures require prior authorization or approval in advance.
- You may be subject to underwriting procedures when you try to switch from Medicare Advantage to Traditional Medicare. You could be denied coverage or charged a higher premium.
Here are some steps to help you decide whether to enroll in Traditional Medicare or Medicare Advantage.
- Understand your options. The decision you make when you enroll at age 65 could have major health and financial consequences down the line. There are private consultants with expertise in Medicare and at least in Massachusetts, the SHINE Program (Serving the Health Insurance Needs of Everyone) provides free health insurance information, counseling, and assistance to all Massachusetts residents with Medicare. You can also call the Medicare help line directly at: 800-633-4227. If you are a client of ours, I often assist with understanding options, costs, and trade-offs.
- Do the Math. The route you take depends on several options including your financial risk tolerance. Many applicants are drawn to Medicare Advantage by the promise of overall low premiums and out-of-pocket expense caps. However, the plans often have more costly deductibles and co-payments. Medicare Part D and Medigap plans often have higher premiums than Advantage plans but cover more healthcare services. Be sure to check the fine print and compare options by running a cost-benefit analysis at Medicare.gov’s plan finder. Remember, there is no free lunch!!
- Understand the limits of your coverage. To what extent can you tolerate limits on your care? Most Advantage plans are HMOs with a restricted network of providers and less flexibility than a PPO plan, which offer access to out of network providers at a higher cost. They often require patients to obtain a referral to see a specialist, as well as prior authorization for certain drugs or services which generally isn’t required with traditional Medicare.
- Understand the limitations of agents’ recommendations. CMS toughened its oversight of third-arty marketing companies last year after a surge in consumer marketing complaints. One concern addressed by officials was that many consumers wrongly believed that agents were offering multiple plans from different providers when most represent a single insurer and receive commissions for ever policy they sell and on average the agents are paid a higher commission for selling Medicare advantage plans than for Part D plans.
- Know where to turn for help-and when to hang up. Once my dad engaged with the 800#, they wouldn’t leave him alone. The calls were constant. Use the Medicare.gov’s plan finder or check with your State Insurance Assistance Program (SHIP, SHINE in MA), which provides impartial information or an impartial consultant/advocate. If you enroll in a plan and have questions, call the provider directly. The phone lines are often routed to a call center, so my best advice (based on experience) is this “If you find someone who isn’t particularly helpful or knowledgeable, hang up and call again. You will likely get a different person who may be more helpful.”
1 Ochieng, Nancy, and Jeannie Fuglesten Biniek. “Beneficiary Experience, Affordability, Utilization, and Quality in Medicare Advantage and Traditional Medicare: A Review of the Literature.” KFF, Kaiser Family Foundation, 16 Sept. 2022.