Thinking about joining a Medicare Advantage plan. Don’t make the decision between Original Medicare and Medicare Advantage before you read this new book.
When MedicareWire.com founder, David Bynon, retired from the U.S. Navy in 2007, he put himself on a new mission to make Medicare easier for people to understand. Frustrated by the health insurance industry's practice of abusing seniors by forcing them to give up their personal contact details to get information about Medicare, and then selling it to telemarketers, Bynon vowed to make Medicare more transparent and accessible for America’s growing population of seniors.
On his warpath to transparency, Bynon released his first book, "Why Medicare Advantage Plans are Bad", in a new Amazon.com series called "Survive Medicare". The book underscores both the advantages and disadvantages of the U.S. Medicare program's private health insurance option. The book is available in paperback and for download to Kindle book readers.
I picked up an editorial copy of the book from Amazon.com to review. What I learned opened my eyes.
Medicare Advantage is an option to traditional Medicare, which has two parts. Medicare Part A is how beneficiaries get their hospital insurance coverage. Funded by Medicare taxes collected during the years a beneficiary works, Part A only covers about 80 percent of all Medicare-approved costs. The remaining 20 percent is paid through additional insurance, called Medigap, or directly out of the beneficiary's pocket.
Medical insurance coverage is what Medicare Part B provides. It pays for about 80 percent of doctor visits, lab tests, diagnostics, durable medical equipment, and medical supplies. And it will pay for medications used in an inpatient setting, but it won't cover a patient's regular prescriptions. For that, there's another part called Medicare Part D.
One of the benefits of a Medicare Advantage plan, says the book's author, is that it combines all of the beneficiary's benefits into a single plan that may cover additional benefits that are not included in Original Medicare. Readers also learn about the similarity of Medicare Advantage plans and the group health plans offered by many employers.
"Why Medicare Advantage Plans are Bad" digs into a highly controversial claim that what insurance carriers claim is a benefit is actually a double-edged sword. While it is true that most Advantage plans offer extra benefits, like prescriptions, and routine dental and vision, to name just a few, many people with chronic health conditions—diabetics for example—may end up paying a lot more for their coverage than they would if they stayed in Original Medicare.
The book also goes into great detail explaining who Medicare Advantage plans benefit and who they don't. The author explains that the most significant difference in the core health insurance coverage is when people pay. The book will help you understand how most of your costs are paid in advance, through monthly premiums, with Original Medicare and a Medigap plan. Bynon explains how this makes healthcare in retirement easier to budget and manage. Conversely, with a Medicare Advantage plan, most costs are paid when members use healthcare services. This makes budgeting more difficult.
If you love the details, "Why Medicare Advantage Plans are Bad" explains how Medicare Advantage plans are required to cover all of the same benefits as Medicare Part A and Part B, but the government allows them to cover the benefits differently. Specifically, plans are allowed to make their members get prior approval before getting treatment. This doesn't happen with Original Medicare. Also, plans can charge members copayments that are more or less than Original Medicare's flat-rate 20 percent coinsurance.
According to a recent Kaiser Famly Foundation report, nearly half of all Medicare Advantage plan members would pay more for a short hospital inpatient stay than people with Original Medicare and no additional coverage. This happens because plans are allowed to set their own copayment rates for inpatient care.
In Original Medicare, you pay a Part A deductible when they are admitted to a hospital as an inpatient. In 2021, the Part A deductible is $1,452 per benefit period. However, when a Medicare Advantage plan charges its members a copayment of $295 for the first five days, which is on the low end of the scale, the Medicare beneficiary ends up paying more.
The author claims that "The low monthly premiums tease many people into Medicare Advantage plans," and cites several examples. The book also helps readers understand that Medicare Advantage plans are not free, which is a common misconception. People who join a Medicare Advantage plan must continue to pay their Medicare Part B monthly premiums. Bynon claims that this is partly to blame for the confusion. People don't realize this and simply think they are getting free healthcare. Then the bills start showing up and reality sets in.
Throughout the book, the author highlights the rights you have as a Medicare beneficiary. The two most important rights people need to be aware of are Medigap protections, also known as the guaranteed-issue right, and the Medicare Advantage trial right.
The guaranteed-issue right is what allows you to buy a Medigap insurance policy at age 65 without answering medical questions. Once the right expires insurance carriers can ask questions, deny coverage, delay coverage, charge more for a policy, or offer a policy with lesser coverage. Even though Medicare Advantage plans can't deny coverage, Medigap insurance companies can. Technically Medicare supplements are a form of indemnity insurance, not health insurance, so the Affordable Care Act law does not apply.
Similarly, if you join a Medicare Advantage plan for the first time, Medicare grants you a trial right that allows you to go back to Original Medicare and buy a Medigap policy with limited Medigap protections. The trial right allows you to join a Medicare Advantage plan when you are first eligible and try it out for up to a full year. The problem is that most people allow the year to pass by thinking they can switch back anytime. When they do, they lose their trial right, can't get a Medigap policy, and might very well be stuck in Medicare Advantage, paying higher prices, for the rest of their lives.
In one chapter, you'll learn exactly why people with chronic health conditions should be in Original Medicare and supplement their coverage with a Medigap policy. The author tells a story about how sad it is when he gets requests for Medigap quotes from people with chronic health conditions who no longer have Medigap protections.
If you don't buy a Medigap policy during your guaranteed issue period, you could get stuck paying for 20 percent of your major healthcare costs or pay higher costs in a Medicare Advantage plan. However, there is a feature of Medicare Advantage that might help. Unlike Original Medicare, Medicare Advantage has a maximum out-of-pocket (MOOP) limit. The Centers for Medicare & Medicaid Services (CMS) raised the MOOP in 2021 to a maximum of $7,550, up from $6,700 in previous years.
If you join the plan with a $7550 MOOP you will stop paying copayments for your healthcare services when your in-network out-of-pocket costs reach $7,550 (for the calendar year). The MOOP does not include monthly premiums, deductibles, the cost of medications, or copayment for services that are not covered by Medicare, like dental, vision, and hearing. You keep paying these costs. The book's author covers this component of Medicare Advantage in detail, explaining how most people with Original Medicare and a Medigap policy are likely to pay less overall.
Another stark difference between the two coverage methods is how easy it is to compare Medicare Supplement coverage and how difficult it is to compare Medicare Advantage plans. This explains, in part, why most people with Medicare Advantage keep their plan for five or more years. The author dedicates two chapters to the subject to help guide readers through the process of choosing a Medicare Advantage plan if it is appropriate for their health and financial situations.
While explaining who can benefit from a Medicare Advantage and who won't, the book covers how people with low incomes can qualify for government benefits that assist with monthly premiums, copayments, and the cost of prescriptions. He outlines how people qualify, the benefits they can receive, and how to go about getting them. Bynon is quick to point out that people who can qualify for both Medicare and Medicaid should be in a Medicare Advantage Special Needs Plan where available, regardless of their health status. For these people, nearly all costs are covered.
The final chapter of the book explains the apparent bias the U.S. Government has for Medicare Advantage plans. He highlights, through a page-by-page review of the government's own Medicare & You Handbook, language that he feels is misleading and designed to persuade beneficiaries into the private health insurance option.
