Medicare doesn't pay for everything, so seniors often choose Medicare Advantage (MA) private insurance plans because they think Medicare Supplement (Medigap) policies are too expensive. MA plans seem like a sure bet since many of them have zero or low monthly premiums, and usually include prescription drug, vision, hearing and other benefits, .
But all MA plans are laden with hidden out-of-pocket charges that can cost patients thousands of dollars. Free and cheap MA plans use medical gatekeepers and doctor/hospital networks like HMOs or PPOs* that manage care.
Disadvantages of Private Medicare Advantage Plans
There are many disadvantages to private Medicare Advantage plans, including the following:
- Serious illness or accident may trigger high MA out-of-pocket costs, as much as $4,000 to $10,000. It can vary widely. An independent website helps estimate annual costs for MA plan participants based on projected health status, good, fair or poor.
- Planning or budgeting for future health events is all but impossible for individuals on a Medicare Advantage plan. Unexpected co-insurance, co-pays and deductibles can be surprisingly large and inconsistent. A study by the Medicare Rights Center titled "Too Good to be True: The Fine Print in Medicare Private Health Plan Benefits" uncovered the cost of care for a 70-year old man with colon cancer and found that his out-of-pocket charges were $7,100 in one plan, $6,550 in a second plan, and $1,990 under a third plan.
- Doctor and hospital choices are limited in Medicare Advantage plans which usually require their members be treated within a restricted network of providers where they live. For example, the Mayo Clinic or Sloan-Kettering Cancer Center may not be "in-network" and thus off-limits without incurring an out-of-network penalty.
- Without pre-certification to go to a particular specialist or hospital, a plan may not cover the expense. Some plans have even denied payment for emergency and urgent care that's not authorized.
- The Medicare Advantage plan–not patient and doctor–may decide what tests and procedures are allowed and paid for, and permit or deny coverage accordingly. Care that's not a permitted plan benefit may have to be paid out-of-pocket.
- A private MA plan may not pay for services away from home, outside the plan's service area (except in emergency), thus denying coverage to snowbirds.
- Promised extra benefits, like vision and dental care, may be limited and not cover much. Even Part D prescription drug plans (PDPs) rolled into many MA plans may be of dubious value since a prescription plan for only $15 a month is available from a national organization. Seniors can save on Rx costs and get the drugs they need using several cost saving strategies.
- Care can cost more than it would under simple Medicare. For example, bare-bones "straight" Medicare covers 100% of the first 20 days in a nursing home (after a hospital stay of at least three days not counting the discharge day). Some private MA plans make their members "cost share," i.e., pay for some of this skilled nursing facility cost from day 1.
- Private MA plans can, and sometimes do, change the benefits package from one year to the next, including what benefits they offer. These changes are outside members' control, but they can affect access to the care they need.
- MA plans can be cancelled and can terminate their members.
- MA plans sometimes interfere with "continuity of care," forcing patients to change doctors or hospitals in the midst of treatment. This can happen when a plan ends a contract with a doctor or hospital, a provider exits the network, or a member is allowed to get initial treatment out-of-network, but not followup care.
- Emergency care outside the USA may not be covered.
- An MA's schedule of services–called "Summary of Benefits"–that spells out in-network and out-of-network providers, co-pays, deductibles and co-insurance, may be confusing and bewildering. The schedule typically is 50 to 75 pages long and It doesn't list every limitation or exclusion.
- Private MA plans have a strong incentive to limit access to benefits. The less their members actually use doctor and hospital services, the greater are profits for insurers (who are paid a set amount per year by Medicare for every member they enroll in their plan).
Advantages of Medgap Policies
Medicare standardized 10 Medigap policies (plans A, B, C, D, F, G, K, L, M, N) in June 2010. Medigaps plug the deductible, co-pay and co-insurance gaps in Medicare Parts A (hospital) and B (medical).
The "Cadillacs" of these are Plan F which boasts zero annual out-of-pocket for all Medicare-approved services, and Plan G that covers all but $155 a year (Medicare Part B deductible).
Features of Medicare Supplement Policies
The features of Medicare supplement policies include the following:
- There are no surprises with Medigap plans F and G. Enrollees can budget for a known total out-of-pocket–the annual premium–which ranges from about $1,200 to $2,500 for most seniors based on age, zip code, sex, tobacco use and often health status.
- Medigaps uniformly have no networks or service areas. Enrollees can visit any doctor or hospital in the USA that accepts Medicare, without pre-certification or pre-authorization.
- Many plans have zero out-of-pocket for up to 100 days in a skilled nursing facility (nursing home), which otherwise would be up to $137.50 a day.
- All plans have zero co-insurance for hospital stays up to 365 days.
- Most plans have zero physician co-insurance and co-pays.
- Medicare's $1,100 hospital deductible is waived under all plans but A, K, L, M.
- All Medigap plans pay for Medicare Preventive Care Part B co-insurance charges (usually 20%) for a variety of tests and screenings.
- Coverage cannot be canceled, except for non-payment of premium.
- Many plans cover 80% of emergency care outside the USA
- Medicare seniors can often get coverage during open enrollment and guaranteed issue periods, regardless of health status.
Compared to MA plans, Medigap plans are cost-competitive and participants are freer to choose providers anywhere without gatekeeper interference.
*PFFS (private fee-for-service) plans also use networks but generally not gatekeepers. Unless it is repealed or modified, the 2010 Healthcare reform bill promises to eventually kill all MA plans. PFFS plans are the first to phase out, many leaving the market beginning January, 2011.
George Daleiden - I was a science major in college and later a career member of the Institute of Food Technologists. I worked in the processed food and ...
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