Posted on August 26, 2021 by Christopher Clark
Posted on August 26, 2021 by Christopher Clark
Modern healthcare protects the most primary aspect of life: living itself. Although doctors take oaths to heal all who call upon them, and though their goal is noble, the reality quickly sets in when it’s you who needs that protection. The world around us doesn’t stop turning despite our bodies succumbing to injury or illness. Rather, we have to do that much more just to keep up, regardless of what ails us.
Sometimes the most daunting aspect of Medicare has less to do with the ability of expert doctors to heal us, and more to do with the costs of their expert treatments.
By the time you’re thinking about Medicare, you’re likely in a position of reconciling your present health needs and costs with those of the future. Although we can’t always predict our future health needs, we can absolutely lay out a plan to deal with the daunting aspect of costs.
To begin, let’s compare the overall plans of action so you can weigh in on what might suit you best.
We can’t broach the topic of Medicare options without mentioning its alternative: Medicare Advantage. But, what’s meant by “alternative”?
Essentially, Medicare provides healthcare through the government, and even sets the prices that a doctor and other healthcare providers can charge. To handle the paperwork involved in making sure the right person pays the right amount, the government hires its own organizations. Right now, the government employs only 12 regionally based organizations to serve the entirety of the Medicare population of about 63.5 million beneficiaries using hundreds of thousands of participating doctors. Without a doubt, the workload is both vast and expensive.
Enter: Medicare Advantage. With this option, also known as Part C, rather than a dozen thinly-spread government contractors, many established insurance companies share that workload.
Medicare Advantage plans are offered by established insurance companies.
There are several advantages to Medicare Advantage. In two main ways, the private carriers create efficiency beyond the capabilities of the 12 government-contracted organizations.
First, they save money by bundling together hospital, medical, and often prescription benefits into one plan as opposed to separate Parts. According to Kaiser Family Foundation, 89% of Medicare Advantage plans build in your Part D prescription benefits. Additionally, analysis of CMS’ 2021 Enrollment files shows that 65% of Medicare Advantage plans that bundle in your Part D require no extra premium whatsoever.
Secondly, these health plans save time by dividing the claims and reimbursements workload across more widespread personnel. A good handful of well-established insurance carriers offer Advantage plans, many of which have presence all over the country. All the while, each participating carrier can only offer plans that meet or exceed Medicare’s standards. In turn, benefits are more manageably administered, which effectively shortens the queue for processing health claims made by Medicare Advantage members.
While efficiency is all well and good, for some, the issue of whether to use Original Medicare or a Medicare Advantage plan boils down to their choice of doctors. Medicare recruits healthcare providers all across the U.S., but Medicare Advantage divides that nationwide network into local selections of providers in a way that still guarantees the availability of all types of specialists within reasonable and customary travel distances.
People generally prefer to use local doctors anyway, so the networks of Medicare Advantage plans accommodate that preference more than they impose on it. In fact, there are even different types of provider networks, so you’re likely to find a suitable match without much compromise on the doctors you want to see.
Although Original Medicare receives praise for casting a wide net of doctors in the U.S., another type of net is sorely lacking: a financial safety net. Getting your Medicare benefits through the government means paying about 20% of your health costs. To put this in perspective, one of the most common medical emergencies today is a heart attack with a cost of hospitalization and treatment ranging around $760,000. Original Medicare has you pay 20% of whatever amount your treatment costs. In this case, paying 20% of treatment for a heart attack amounts to a staggering $150,000 or more. This lack of a safety net can devastate your financial plans for retirement without careful consideration.
In stark contrast, Medicare Advantage plans always include a built-in safety net that resets every year. This “maximum out-of-pocket” means that no matter the costs of Medicare-approved services or supplies required for treatment, the plan begins to pay fully on your behalf after hitting that maximum amount. On average in 2021, these maximum out-of-pocket safety nets kick in after about $5,000.
Medicare Advantage plans always include a built-in safety net that resets every year. This “maximum out-of-pocket” means that no matter the costs of Medicare-approved services or supplies required for treatment, the plan begins to pay fully on your behalf after hitting that maximum amount.
What’s more, you’ll more slowly reach this annual “worst case scenario” dollar amount in many cases because Medicare Advantage plans tend to replace percentage-based payments with dollar-amount payments called copays. As we saw with heart attack treatment, medical attention can quickly become expensive, but Medicare Advantage plans take on the full payment once your copays reach the threshold.
Not only does this aid members, but the healthcare providers as well. Unpaid medical debt places a hefty burden on doctors, facilities, and other healthcare professionals. If a patient can pay an affordable, well-defined amount to get the care they need, it makes them more likely to consistently do so, breaking the financial stagnation caused by daunting medical bills.
Although we’ve seen so far that Medicare Advantage plans typically come with built-in protection that Medicare won’t provide, what other advantage is there in Advantage?
Far from complete on its own, the “comprehensive coverage” of Medicare only aims itself at the most costly aspects of healthcare: inpatient hospitalization and outpatient medical services or supplies. Realizing that Original Medicare offers virtually no help with your teeth, eyes, and ears comes as a frustration to many. The Commonwealth Fund analyzed that only 25% of Original Medicare recipients who need a hearing aid actually buy one, and 70% who reported trouble eating due to tooth-related problems did not actually see a dentist in the last year. Meanwhile, less than half of beneficiaries with vision problems had an eye exam during the entire last year. While it’s true that the care surrounding hospitalization and medical attention is essential, benefits for dental, vision, and hearing are necessities of their own.
Although not every Medicare Advantage plan covers routine or emergency dental, eye exams and eyeglasses, or hearing aids and tests, in 2021 at least 94% of plans cover all of these. In fact, hundreds of plans include these types of benefits without paying any extra premiums for the built-in benefits. More than that, a wide array of plans offer types of benefits that compliment healthcare needs, like rides to and from the doctor and home-delivery of prescription medications.
In 2021, 94% of Medicare Advantage plans covered routine or emergency dental, eye exams and eyeglasses, and hearing aids and tests.
When it comes to getting a Medicare Advantage plan, the main requirement is having Parts A and B. Apart from that, the time of year factors into your opportunity to actually enroll. What this means indirectly, is that your health history doesn’t impact your eligibility for Medicare Advantage. In fact, some plans are made to suit the courses of care needed to treat chronic health conditions, and others accompany income-based help programs, like your state’s Medicaid, to take advantage of its combination with your Medicare Parts A and B. Other types of Medicare health plans, like the Medigap supplemental policies, do weigh in on your health history if you don’t apply right away when you start Medicare. Across the board, this makes Medicare Advantage much more accessible for many more people, especially those who already have Medicare but are reevaluating their benefits.
Nonetheless, on the way to deciding what suits your situation best, let’s not only consider the strengths, but the shortcomings of Medicare Advantage as well.
As mentioned earlier, the networks of Medicare Advantage plans are relatively small when pitted against the vast provider list of Original Medicare. For folks who travel throughout the year, one caveat of using a Medicare Advantage plan is that you must live in the county where your plan is offered for at least 6 months out of every year. Even still, emergency services remain available anywhere in the country when using Medicare Advantage. Unless you live close to your state’s border, Medicare Advantage won’t usually cover doctors’ visits in other states.
With that said, our snowbirds may find that they prefer to use the flexibility of Original Medicare’s nationwide network, often coupled with the protection of a Medigap supplemental policy to cover medical and hospital expenses normally paid out of their own pocket. However, Medigap policies always impose a monthly premium anywhere between $100 and $960 every month, whether or not you actually use its coverage. Supplement premiums, of course, stack on top of your premiums for Part B, and Part A if it’s not premium-free.
Another mentionable hurdle of Medicare Advantage is simply the vastness of its plan choices. In 2021, 41% of all Medicare beneficiaries have a selection of over 35 Medicare Advantage plans where they live. Even though offerings are county-based, choosing from your local selection takes hefty comparison and forethought about the benefits and costs that matter most to you. To the contrary, Original Medicare with or without Medigap essentially offers one-size-fits-all coverage, but only for approved hospital and medical needs.
Ultimately, the decision of whether Medicare Advantage is right for you involves a few common factors for most Medicare members. To get a handle on the right kind of plan for you, you’ll benefit by asking yourself a few basic questions about:
It’s great that you pointed out how health history doesn’t impact one’s eligibility to get Medicare advantage. I should look for Medicare Advantage plans in my area.
It’s great that you mentioned how there are several advantages to Medicare Advantage. We definitely need to get Medicare insurance for our grandparents, however, we mostly don’t know how insurance exactly works. We should probably look into the available Medicare insurance plan options and see if we could find one that fits our grandparent’s needs.
As a licensed Medicare benefits advisor, Chris spent years working directly with Medicare patients to help them get the most of their coverage. Now, he dedicates his experience and understanding of Medicare to helping countless others become Medicare savvy themselves.