I just spend two and half hours on the phone with 1-800-Medicare. It was NOT fun. A friend signed up for a Medicare Advantage plan last year and it’s turned into an epic, if predictable, disaster. I was trying to help clean up the mess. So why am I telling you? As our regular readers know, we are committed to sharing the best information that we can with all of you. Open enrollment is going on from October 15th to December 15th so now is the perfect time to be talking about the kind of insurance choices you should be making for the year ahead.
One of the biggest choices you will make is whether or not to sign up for a Medicare Advantage plan.
For those of you new to the game, a Medicare Advantage plan is a private insurance replacement for Medicare Part A, i.e. hospital coverage, and Medicare Part B, also known as out-patient coverage. The private insurance company takes over your coverage and promises to cover everything that traditional Medicare would cover and lower your out of pocket costs.
Sounds too good to be true… and well for 98% of us, it is.
You see a Medicare Advantage plan works like any other HMO – you have to use in network physicians and get referrals for everything. They also may require you to use lower cost options or deny access to certain high cost medications.
So what happened to that friend of mine –two years ago, she started losing the feeling in her right arm. She went to a chiropractor and treatments were helping. Everything was covered under her traditional Medicare plan. Then she signed up for the AARP United Medicare Complete HMO plan. When the same problem came back this year she discovered the dark side of Medicare Advantage.
Although United claimed to provide coverage for chiropractic services, there were ZERO doctors in her area that accepted her insurance – no one within 50 miles!! Can you believe it! And because she had an HMO the insurance wouldn’t pay for any out of network coverage.
So now she is paying thousands of dollars for medical treatment that is supposed to be covered. That’s why I spent so much time on the phone – I was racking my brain trying to figure out how this was even legal, and then after much research I understood.
An Advantage Plan is required to cover everything that traditional Medicare covers but there are no rules that govern how much they have to pay doctors. So if Medicare would normally pay $10, the Advantage Plan can say they will only pay $4 for the same service. Doctors that can’t afford to provide that service for $4 opt out of accepting the insurance plan.
That’s exactly what happened to that friend of mine. The AARP United Medicare Advantage Plan was offering chiropractors so little money that they had to opt out of accepting that insurance plan. Doctor’s offices are businesses too and they need to at least break even.
The stunning thing here – all of this is completely legal; possibly unethical, bad business, bad for patients and completely legal.
Now, I don’t want you to think that all advantage plans are terrible. For patients who are in excellent health and do not have any chronic conditions, they can be a good choice. Think of it like a bet. You are betting on whether or not you will need more or less coverage than the policy provides. The insurance company bets you will need less – that’s how they make money. If they’re right you both save some money. If they’re wrong, you’re the one footing the bill, not the insurance company.
So now that open enrollment is right around the corner, take a long hard look at your options for healthcare coverage for 2016. You have three choices:
- Traditional Medicare
- Traditional Medicare & a Medi-Gap plan or
- Medicare Advantage
My only caution is this – Before choosing any Advantage plan be sure to read all the exclusions in your contract. Don’t be blinded by advertisements offering $0 co-pays. If it sounds too good to be true – it probably is!
We’ll be taking a detailed look at Medi-Gap plans in another bonus edition of Understanding Your Insurance. Until then – let us know if we’ve missed anything or share your insurance horror stories in the comments below.