Common Mistakes People Make Selecting Medicare Advantage and Medigap Plans
Mistakes people make selecting Medicare Advantage and Medigap plan
- 1. Taking the advice of friends or family members, responding to TV ads (or mailers from insurance companies), selecting a plan because it has a low dollar monthly premium OR simply enrolling in the Medicare plan offered by your employer’s Group Insurance company WITHOUT first taking the time to understand:
Medicare
The differences between your choices
The differences in the coverages,
out of pocket cost for both your health care and prescription medications you take
AND
the use of ‘prior authorizations’ between plans.
Why this is important: Medicare-eligible people have several choices for health insurance and the costs can vary widely between plans. We see the monthly premiums between the 45+ insurance companies offering Medigap plans in Idaho vary by 160+ to over 300% for the exact same coverage (reference the Medigap rate chart published by SHIBA found here). We also see the annual out of pocket cost for prescription medications (monthly plan premium included) consistently vary by 300%+/- between your Idaho resident plan choices. Part C (Medicare Advantage) plans vary by the Idaho county where you live. Your premiums, choices of doctors/hospitals, and out of pocket costs vary between plans…and these often change every year.
Some people feel it is easier to just stay with the same health insurance company they had before they became eligible for Medicare. They know the people, are comfortable with the service and may be able to use the same doctors/hospitals. Their Part C (or Medigap) plan may be lower in cost than their pre-Medicare plan. What they may not know is how this company’s Medicare plan(s) compare to their other alternatives. If you are in this camp, we encourage you to learn about your other choices before you make a decision.
We see the market for Medicare health insurance plans (Part C, Part D, and Medigap) in Idaho change every year. Medicare itself changes, new companies enter our market, existing company’s change details of their plans that can affect plan member out of pocket cost and choices of doctors/hospitals, and some companies can either exit our market or drop specific plan(s) they have offered in the past.
Who you choose to work with on Medicare can make a big difference too. How? If you respond to a call, mailer, seminar from a specific insurance company will you learn how this particular vendor’s product compare to your other choices? If you work with an insurance broker that covers 100% the Medicare Advantage (Part C) and Medigap plans (and knows how to evaluate insurance companies offering them) you should be better off as insurance company and plan bias should be eliminated. We are such a company and are here to help you find the plan that fits your needs and retirement budget.
Mistakes people make selecting Medicare Advantage and Medigap plans
2. Paying more than $70 a month for a Medicare Advantage plan.
Why this is important: We feel a Medigap plan may be more suitable for people that can comfortably budget $70 or more for a Medicare Advantage plan. Medigap plans can offer lower out of pocket cost when Medicare-covered services are used (some plans cover most to all of the fees left over by Original Medicare) AND you do not have any network restrictions. This means you can see any doctor or use any hospital as long as they accept Medicare. Medicare Advantage plans are based on specific networks and if you use doctors or hospitals outside of their network you may have to pay more (or all of the fees) for the services you use. You will seldom run into ‘prior authorizations’ before you can get medical services. This is a common issue when you are a member of a Medicare Advantage plan.
Medigap policies and carrier differences are a must read for those interested in Medigap plans.
Mistakes people make selecting Medicare Advantage and Medigap plans
3. Not taking the time to understand the differences (and out of pocket cost) between Medicare Prescription Drug Plans. This includes the prescription drug coverage found in Medicare Advantage plans in Idaho as well as PDP available to people with Original Medicare. We see the annual cost of the same prescription medications vary by over 300% +/- between plans.
Why this is important: The details of individual plans are different. They can and do change annually. Some insurance companies are more aggressive about expanding their membership than others. They can do this by offering lower monthly premiums, have lower costs for medications and better coverage for people whose annual expenses push them into the coverage gap.
Before people sign up for any prescription drug plan (even if it is included in a Medicare Advantage plan) they should confirm the exact annual cost of the prescribed medications they take. Do NOT just confirm the medications you take are in the plan’s formulary. We see the cost of medications vary by over 300% +/- between prescription drug plans for the exact same set of medications.
If you plan to enroll in a Medicare Advantage plan we encourage you to think through how you will prioritize the annual cost of your medications in relation to the other potential out of pocket cost for the medical services covered by the plan. Your annual medication cost is a budgeted item; your annual medical expenses are dependent on your health and actual use of medical services (can you accurately budget for these?).
We feel it makes sense to compare the differences between prescription drug plans during the Medicare Annual Enrollment Period (AEP…October 15th to December 7th). We feel if people can save money and have their medications refilled at outlets convenient to them, they should switch plans.
Prescription Drug Plans in Idaho is a good read if you have an interest in this topic.
Mistakes people make selecting Medicare Advantage and Medigap Plans
4. Not taking the time to understand the differences between Medicare Part B and Part D drug coverage.
Why this is important
If you take or expect you will be prescribed medications covered by Medicare Part B (read the information found here for a description of Part B medications), the right Medigap plan could cover 100% or close to it of the cost of these medications. If you are unsure what Part B covered medications are, we encourage you to read this important information. Why? When we look at the cost of Part B covered medications, they can be ‘expensive’. If you have a Medigap plan that will cover most to all of this expense, people may be saving a noticeable amount of money. We recommend you confirm your out of pocket cost for any Medicare Part B medications you are currently/may be taking before you choose your Medicare health plan.
How does coverage between Medigap and Medicare Advantage plans (Part C) differ for this service? You have to check the Medicare Advantage plan’s ‘Summary of Benefits’ or the plan’s ‘Evidence of Coverage’ documents to see how that plan charges the plan member for these items. We can share with you how you can do this before you choose a plan.
Mistakes people make selecting Medicare Advantage and Medigap Plans
5. Not taking the time to understand the differences between Medicare Advantage and Medigap Plans. Some Medigap plans pay most/all of your costs that are not paid by Original Medicare.
Why this is important: Minimizing out of pocket costs for health care is important to most retirees living on a fixed income. Having the right plan in place can help you achieve this goal. Medicare Advantage (MA) plans have a feature which limits the member exposure to unlimited out of pocket costs for medical expenses. Medicare sets this limit at $7,550 per year (in some cases it can be $11,3000…this was raised in 2021). Insurance companies offering MA plans can adjust this figure to a lower amount if they choose to do so. They can also change this figure annually. Most Medicare Advantage plans also have over 70 services they charge plan members copays, coinsurance, or deductibles. Insurance companies can also change these figures annually. MA plans also have defined networks where people get their health care. Using doctors/hospitals not in the network can leave the plan member with a higher cost (in some cases, the member is responsible for all billed fees). People can change MA plans annually and the new plan has to accept your application (some exceptions apply).
There are 10 Medigap plans to consider. Each plan pays a different combination of copays, coinsurance and deductibles of Medicare-approved expenses that are not paid by Original Medicare. One plan has an out of pocket limit on these expenses. The other 10 Medigap plans pick up some combination of the expenses not paid by Medicare Part A and Part B. One plan pays 100% of all expenses not paid by Part A and B. Members of Original Medicare (with or without a Medigap plan) can use any doctor/hospital that accepts Medicare patients in the country (no networks). This can be important to some people that live in a rural area (few medical services available), travel to warmer climates during winter months, or prefer to use doctors/hospitals that specialize in certain types of care. Insurance companies are required by law to accept all applications during a specified window of time surrounding the applicants 65th birthday and enroll in Medicare Part B. There are some ‘special enrollment periods’ available too. People wanting to enroll in a Medigap plan outside of these special enrollment periods typically have their application reviewed by underwriting.
Learn more about the Medigap versus Medicare Advantage decision.
Mistakes people make selecting Medicare Advantage and Medigap Plans
6. Selecting Medigap Plan F or Medigap Plan C
Plan F has the highest enrollment of any of the 10 Medigap plans in Idaho and the rest of the US. Idaho has attractive premiums for Plan G and N AND both of these plans are growing at a faster rate (percentage wise) than Plan F. We like Plan F, however, it may not be right for everyone. We suggest people understand the differences in coverage between Plan F and Plan G (and Plan N) before they enroll. Idaho has competitive premiums on Plan G and N which, for some, may mean lower annual out of pocket costs for Medicare-covered services.
Mistakes people make selecting Medicare Advantage and Medigap Plans
7. Selecting the wrong insurance company for your Medigap plan.
Selecting the wrong insurance company for your Medigap plan can mean you end up paying $30+ more a month than necessary. There are over 35 insurance companies registered with the Idaho Department of Insurance that offer Medigap plans in our state. This group includes companies many people will recognize and some you may not have heard of. We feel people should put the company’s name aside and look at the criteria for evaluating the financial health of each company. Would you pay more than $30/month for the same coverage just because you recognize the name of a company? The items below are some of the factors we consider when building our short list of insurance companies we recommend:
how long the company has been in the Medigap business and in our state; we recommend avoiding companies that have been in our market less than 4-years;
the company’s medical loss ratio (MLR); we typically recommend avoiding companies with a ratio 1- 2 points above the national average, which is 72.3 the end of 2020 for individual policies (source here).
the company’s AM Best financial rating; we avoid companies with a rating less than A-;
the three-year history of rate increases in our state; we prefer companies in the 0 – 7% range;
the guaranteed time period before the initial premium can be increased should be 12 months;
where this company’s monthly premium sits in relation to other companies offering the same plan that pass our screening; we prefer companies with the lowest premiums;
we prefer companies whose ‘underwriting’ is tough; this means few people with health issues can get into the plan after their open enrollment period;
the size of this company’s customer base and if it is growing or contracting;
the number and type of complaints filed with a company and their resolution.
Should you change insurance companies after your application has been accepted? Yes, if the company’s monthly premiums are no longer competitive and you can get past underwriting.
Other thoughts….
If your pre-Medicare health insurance company offers Medigap plans, you may be comfortable with their service/coverage and like the current doctors and hospitals you use. Before you let your feelings about your current insurer influence your decision, remember all Medigap plans give you access to any doctor and hospital that accepts Medicare in the US AND the only difference between plans with the same letter (Plan G for example) is the plan’s monthly premium. In Idaho, the monthly premium for a Plan G varies by over 200% between insurance companies offering this plan. When you choose a Medigap plan, there are no networks, prior authorizations, and depending on the specific Medigap plan you choose, there can be no or few copays/coinsurance/deductibles.
When a company advertises on TV for Medicare Supplement (Medigap) plans, you are paying for these ads through your premium; the same can be true for any affiliations this insurance company has with other organizations.
When you get a call from an insurance company (or an agent knocks on your door), you may be getting a limited, and potentially biased view of your plan choices (not all companies offer all 10 Medigap plans nor have ‘competitive’ premiums nor do all agents represent all of the better insurance companies). Don’t forget the criteria outlined above on how to evaluate insurance companies offering Medigap plans. The cheapest plan nor the insurance company with a name you recognize/have done business with in the past may be the best choice for your new Medigap plan.
Current plans can change annually (affect your out of pocket costs); new plans come to the market (often with lower costs); you can switch to a Medigap plan too. Don’t forget about your prescription drug costs; your out of pocket costs can change annually. Work with a broker; they can explain how your current plan changed and advise you of other choices that meet your needs and budget.
Mistakes people make selecting Medicare Advantage and Medigap plans
8. Not taking the time to see how your current Medicare Advantage plan (or prescription drug plan) compares to other plans available next year. This should be done during the Medicare Annual Enrollment Period (AEP).
Why this is important: New companies/plans come into Idaho; some leave our market. Many insurance companies change their monthly premiums, copays, out of pocket limits and other variables with the intent of getting you to change to their plan. We feel if you can save money and use the same or better providers, you should strongly consider putting the savings in your pocket and change plans.
Most all Idaho Medicare Advantage plans change annually (drugs they cover, move medications to different tiers, drop/add medications, change their monthly premiums, change your share of copays, etc.). Some insurance companies change their business goals and this can be seen in how they change the details of their plans. Some plans want to expand market share; some plans want to maintain share, and some plans simply have higher costs and they have a hard time lowering their fees. Bottom line, some companies want your business more than others. Look for the ‘deals’, but know how to evaluate your options.
Medicare is changing (cutting back on subsidies they pay insurance companies and providers; this means your cost are going up). Plans have some discretion on how they implement these changes. You may be able to save money by changing to a different Idaho Medicare plan.
Plans have different cost structures that change annually. Part of this cost is based is based on plan member’s health and the costs to take care of them. Your plan’s cost to provide services can affect how much you pay for both monthly premiums and, with Idaho Medicare Advantage plans, your share of out of pocket costs. This means some Idaho Medicare plans charge higher premiums, copays, and coinsurance than others. It is quite possible for you to save money by changing plans during the AEP.
Learn more about the Medicare Annual Enrollment Period.
Mistakes people make selecting Medicare Advantage and Medigap plans
9. People with Original Medicare do not put a cap on their annual Medicare medical expenses. Some Idaho Medicare beneficiaries prefer to stay with Original Medicare because their choice of Medicare Advantage plans is poor, they don’t want the higher monthly premium found with Medigap plans, or they simply feel Medicare Part A and Part B is sufficient for them. For people preferring to stay with Part A and B need to remember Original Medicare does not provide a cap on their annual out of pocket medical expenses.
Why this is important: Add a Medigap Plan F Hi-deductible policy. It covers 100% of your Medicare-covered expenses after:
Medicare pays its share of your Part A and B expenses
and you when your share of the fees Medicare doesn’t pay exceeds the annual deductible (click here for this year’s figure). This figure can be adjusted by Medicare annually.
Mistakes people make selecting Medicare Advantage and Medigap plans
10. Not working with a licensed professional agent that specializes in Medicare. These people have to pass annual National certification tests and annual tests for each plan they wish to represent before they are permitted to work with Medicare beneficiaries. They are far better trained than most volunteers offering similar services.
Why this is important: A licensed professional agent specializing in Medicare insurance can help you avoid the above common mistakes. Your insurance carrier does not charge you more if you work with an independent agent. These people can help you get a better understanding of Medicare, your plan choices, and plan differences. If the independent agent you choose represents all plans available to you, the agent can compare the plan(s) being promoted by your group insurance carrier (or people calling you on the phone) to your other options. Having someone you can build up a trusting relationship with that keeps up with the changes in Medicare and points out better options for you (as your needs change) can be an asset.
If you want help and are a resident of Idaho (or have friends/family members that are Idaho Medicare beneficiaries), call us. We can perform this role for you.
Call us if you would like help
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