And Medicare Advantage Plans Are Not Free
By Catherine Blackburn, Attorney at Law
I have been a lawyer nearly 40 years. During almost all of those years, I have represented people who suffered an unexpected illness or injury. I have experienced unexpected illness myself, and my family has experienced unexpected illness and injury.
As an elder law attorney, I am called to help when senior medical expenses outpace their income and assets – especially when seniors need skilled rehabilitation and/or long term care in a nursing home.
These experiences give me a unique perspective on Medicare and Medicare Advantage Plans. During this 2019 Medicare open enrollment period, let me share some of my observations, and even some personal opinions.
First, some myths about Medicare:
MYTH #1 – MEDICARE IS FREE.
Medicare is NOT free. Medicare has 4 essential parts – Part A (hospitalization insurance), Part B (doctors, outpatient services, and laboratory services), Part C (Medicare Advantage), and Part D (prescription drugs).
If a person over 65 paid into Social Security for 40 quarters (10 years), they pay no premium for Part A. If they did not pay into the system for 40 quarters, the Part A premium costs up to $437 per month.
Everyone must pay a premium for Part B. Most people pay $135.50 per month for Part B but some pay less and some pay more.
Everyone must pay a premium for Part D. Premiums range from $13 per month to more than $100 per month and benefits vary widely.
Medicare Part C is called “Medicare Advantage.” These plans replace Part A, Part B, and usually Part D. All require the insured to pay the Part B premium but some refund a portion of that premium.
MYTH #2 – MEDICARE PAYS FOR EVERYTHING.
No Medicare plan pays for everything! No matter the plan, Medicare pays only for “covered services.” What is covered by Medicare is beyond this article and is very complex.
Even if a service is “covered,” no Medicare plan pays 100% of everything. At the end of this article is a chart that compares how the various Medicare plans pay. Suffice it to say that “original Medicare” (Part A and Part B only – without a supplement or “Medigap” plan) and Medicare Advantage plans have some combination of deductibles, co-insurance, and/or co-pays. None of them pay 100% of everything, all the time.
Both Original Medicare (Part A) and Medicare Advantage plans have deductibles, co-insurance, and/or co-pays for HOSPITAL care. These charges can easily cost 100’s of dollars per day.
MYTH #3 – MEDICARE PAYS FOR NURSING HOME AND ASSISTED LIVING CARE.
NO Medicare plan pays for “long term care.” Original Medicare does not pay for long term care in a nursing home or assisted living facility. Medicare Advantage does not pay for long term care in a nursing home or assisted living facility.
Original Medicare (Part A) and Medicare Advantage pay for skilled rehabilitation in a nursing home. HOWEVER, they pay 100% of the cost for only 20 days. After 20 days, BOTH Original Medicare and Medicare Advantage plans have co-insurance or co-pays that exceed $150 PER DAY.
Original Medicare and Medicare Advantage do NOT pay for assisted living care. Medicare Part B and Medicare Advantage may pay for some limited “in home” services, such as physical therapy, occupational therapy, or nurse visits, but none of them pay daily or monthly charges for assisted living.
Well then. If Medicare is not free, and it does not pay for everything, what does it cost and what does it pay for? Here is a chart that summarizes the costs of plans and what they pay for.
|wdt_ID||Original Medicare Only (Parts A, B, & D)||Original Medicare with a Medicare Supplement (Medigap) Policy||Medicare Advantage|
|2||Premium required for Part B||Premium required for Part B||Premium required for Part B|
|3||Premium required for Supplement plan ($78/mo - $505/mo)|
|4||potentially HUGE deductibles & co-insurance with no maximum||beginning in 2020, pay Part B deductible ($197/yr) & then Supplement pays all or a portion of deductibles & co-insurance (depending on the plan)(people who purchased Supplement Plan F prior to 2020 do not pay the Part B deductible)||deductibles & co-pays differ between plans;|
|5||all plans have a maximum out of pocket cost ranging from $1,500/yr to $10,000/yr|
|6||choose any hospital, doctor, laboratory, therapist, etc. who accepts Medicare||choose any hospital, doctor, laboratory, therapist, etc. who accepts Medicare||hospitals, doctors, laboratories, therapists, etc. limited to those within the plan’s network|
|7||choose any nursing home for rehabilitation||choose any nursing home for rehabilitation||nursing home rehabilitation limited to nursing homes within the plan’s network|
|8||Part D plan required for prescriptions (premiums range from $13/mo to more than $150/mo) but drugs costs vary widely||Part D plan required for prescriptions (premiums range from $13/mo to more than $150/mo) but drug costs vary widely||Part D plan not usually required but drug costs vary widely|
|9||Cost before 100% of services are covered: NO CAP. Deductibles and co-insurance are not capped.||Cost before 100% of services are covered for 2020 plans: $1,940 - $2,320 (Part B deductible of $197 & must pay monthly premium, commonly $145.27 to $176.95)||Cost before 100% of services are covered for 2020 plans: $1,500 for lowest maximum out of pocket to $10,000 for highest maximum out of pocket|
|10||Prescription drugs vary depending on Part D plan|
|11||Prescription drugs vary depending on the plan|
Yikes – this is complicated! Yes, it is. So, how do you decide what to do?
Here are Cathy’s personal opinions about various plans. These are my personal opinions – other people have different opinions. Insurance representatives certainly have different opinions.
PERSONAL OPINION #1 –
Do NOT rely on Original Medicare only. The risks are HUGE, and I have seen many people run into bankruptcy and Medicaid with deductibles and co-insurance.
PERSONAL OPINION #2 –
If you can afford the monthly premium for a comprehensive Medicare Supplement policy, choose Original Medicare with a Supplement.
Why do I have this opinion?
- You have complete freedom to choose any provider who accepts Medicare. There are no networks.
- You know exactly what you will pay, and no more than that. With a comprehensive Supplement plan, you will pay the Part B deductible of $197/yr and premiums – somewhere between $1,940 and $2,320 per year total – no matter how much care you need (so long as it is covered by Medicare).
- If something catastrophic happens (you break your hip or suffer a stroke), you still pay only the Part B deductible and premiums. A comprehensive Supplement will pay all of the co-insurance – even hundreds of dollars per day for hospital or skilled rehabilitation care.
- If you need a lot of care (such as for diabetes or heart disease or kidney disease, etc.) you still pay only the Part B deductible and premiums.
PERSONAL OPINION #3 –
If you are well and not likely to need much care, and paying the premiums for a comprehensive Supplement policy is challenging, and you are satisfied with the providers in the plan’s network, consider a Medicare Advantage plan.
Even then, be sure you have the funds to pay the maximum out of pocket cost under your Advantage plan, just in case something bad happens.
Why do I have this opinion?
- Many of my clients came to me because they suffered a catastrophic event and could not pay the co-pays or co-insurance for skilled nursing home rehabilitation. Remember, Medicare Advantage plans pay 100% of nursing home rehabilitation for only 20 days (as does Original Medicare – but, Medicare Supplement plans pay the co-insurance for rehab days after 20). If the person cannot afford the maximum out of pocket cost under their plan, they must disenroll from the Advantage plan and seek Medicaid benefits. To qualify for Medicaid, a person must have extremely limited assets and income or hire an elder law attorney to help them qualify.
- Providers are limited to the Advantage plan’s network. Often, the list of available specialists is very small. The list of available nursing homes for rehabilitation is also very small in my experience. Thus, even if a person is happy with the primary doctor on their plan, they often experience difficulty finding an acceptable specialist or nursing home.
- Medicare Advantage is “managed care.” The insurance company decides what services are covered and what services are not covered. For example, the insurance company decides when the beneficiary should be discharged from a hospital, when the beneficiary should receive rehabilitation, where the beneficiary will receive rehabilitation (in an acute care hospital or nursing home), and when services must be discontinued. With Original Medicare, the doctor decides these matters. Insurance companies sell Medicare Advantage plans because they make money on them! They are for-profit businesses.
PERSONAL OPINION #4 –
Paying for prescription drugs is a complete crap-shoot.
Why do I have this opinion?
- When choosing a Part D or Medicare Advantage plan, you have no choice but to enter all of your regular prescriptions into an online system that will check exactly how much you will pay for each drug under each plan. You have to add up the drug costs and premiums and then decide which plan works for you. They are very complicated.
- Do NOT assume that the price you pay under your plan is the cheapest available. Don’t just pay what your plan says to pay.
See if the pharmacy provides the drug for free. Some pharmacies charge nothing for some antibiotics.
Check the pharmacy’s “no insurance” price. It is sometimes cheaper than your plan’s price or co-pay.
ALWAYS check GOOD RX. Good Rx is a premium-free service that will check the cheapest price available in pharmacies near you and give you a code to get that price on any drug. In my experience, this price is OFTEN LESS than the co-pay on insurance. (Beware, however. If you are trying to hit your plan’s deductible, paying out of pocket on Good Rx usually will not count toward your deductible)
That’s it, folks. These are my thoughts on the 2019 Medicare open enrollment.