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AND SO IT BEGINS again—trying to figure out the mess that is Medicare.
A 132-page book from the Department of Health & Human Services arrived in the mail recently. “Medicare & You 2022” is four pages longer than the 2021 edition I received earlier this year, when I was turning age 65. I could barely bring myself to pore through the pages of that one, as I endeavored to understand the myriad choices facing me as I hit that magic milestone. Does this task really need to be so complicated and potentially expensive?
Last time around, I spent many hours on the subject and, even then, I was just barely comfortable making my Medicare choice. All of you who hit 65 this year will also know that the “official U.S. government Medicare handbook” is among a mountain of mail you received from insurers, many hoping to sell you a Medigap or prescription drug policy.
A volunteer from the nonprofit program SHINE (short for “serving health insurance needs of elders”) was of considerable help during the three sessions I attended. But just two months into the plan, I’m now questioning my choice. I selected a Humana HMO—a Medicare Advantage plan, instead of traditional fee-for-service Medicare—because all my doctors were in in the plan, and the copay for one of my major prescriptions was relatively low. The Humana plan also offers zero copays for all office visits, including specialists.
My first annoyance came right away: The plan chose a primary care physician (PCP) for me who wasn’t my doctor for the past eight years. I spent an absurd amount of time on the phone getting that corrected.
My current frustration is obtaining authorization from Humana for specialists I need to see. Others had warned me against Humana for this reason. Now I know why.
Why should health care for seniors—or really anyone—be this hard to understand? Why should there be so many pitfalls?
I could have chosen traditional Medicare. But experts recommend you add a Medigap policy. If you don’t, there’s no ceiling on what you might owe, and you will need a drug plan, too. That adds up. By contrast, the Medicare Advantage plan I chose has no premium, other than for Medicare Part B, and there’s an annual $3,400 out-of-pocket maximum.
I was exhausted today trying to determine whether my PCP, Humana and a specialist were communicating correctly. Through calls and online chats, I learned there’s a difference between a referral and authorization. But I’m unsure either of the doctors’ offices understands what’s needed and when, so I’m facing delays getting an appointment and the procedure that the specialist recommended. I didn’t expect this nonsense.
I have the option to change plans before Dec. 7, but that means more research and sessions with the SHINE volunteers. This is already my third health care plan in one year. After retiring at 64, I continued my employer’s plan under COBRA. I paid $800 a month for COBRA coverage for four months, and then switched to an Obamacare plan for $400 a month for another four months. Do I want to change again—and possibly not end up with something better?
I don’t care to use up brain cells figuring out all this. If it’s confusing for me at 65, what will it be like when I’m 85?
Ron Wayne spent 26 years working for newspapers in Pennsylvania and Georgia before becoming the editor in the University of Florida’s main news office. During his 10 years working there, he earned his master’s degree in mass communication and taught as an adjunct in the College of Journalism and Communications. Since retiring last fall, he’s enjoyed a simple life, including reflecting on his experiences on Medium.com. His previous article was Losing at Cards.
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I spent five years after turning 65, and being in a Medicare Advantage Plan, learning about a “part-time” Medicare Plan business that I was to start at 70, when I retired. What I found was that understanding distinctions between a PPO and an HMO are critical for newly Medicare Eligible. You need to find an agent who starts each appointment with a Medicare 101 discussion which clarifies all nuances of Med Supp vs Medicare Advantage decision-including the HMO/PPO differences. If you do work with an independent agent who is focused upon your making a right plan/carrier/HMO/PPO/Med Supp decision, they will answer all of your questions before you make a decision. I’m three years into this incredibly satisfying business, and every client meeting I leave is one laced up with a smile from my new client. I enjoy a business where what I sell doesn’t cost them anything, yet provides them security of knowing they’ve made their right decision. Find an independent agent who isn’t a “carrier captive” agent, and who specializes in Medicare Advantage Plans…..they are thoroughly trained and licensed by each carrier they are contracted with. Oh, and Just One More Thing….I’m a total failure at retirement, and I’m loving every minute of it in my Medicare space.
I went through this nonsense a year ago. Being a snowbird I needed a portable plan. Only original Medicare checks this box. Added G high deductible for $64 a month and a $7 silverscripts for part D.
All Medicare advantage plans are scams. Most will find this out at the worst possible time.
Interesting. But the article says “If you don’t [get Medigap], there’s no ceiling on what you might owe”.
Do you think this is true, and if so is there any alternative to put a ceiling on costs? Can a private catastrophic plan be used at 65+?
Edit: Whoops. I guess that’s what the “G high deductible for $64 a month and a $7 silverscripts for part D” does for you, correct? It’s all Greek to me. I’m a few years out.
Thanks for the terrific and very informative article, Ron. And thanks as well to all who provided additional insights with your comments. One of the reasons I keep delaying retirement is because of my trepidation of navigating the Medicare maze. It sounds like traditional Medicare with a Medigap Plan G and a Part D plan is a good way to go.
I was initially confused by the SHINE acronym and did some searching. It turns out that it in my state – and most states – it goes by SHIP. I think this is a very valuable resource. If you received a Medicare & You handbook it is referenced on page 9 (first bullet). And the number is on the back cover.
Like another poster I have decided to go with original Medicare. All the mailings and advertisements I see on Medicare Advantage seem further evidence of money chasing (my) money.
Mike
Florida. The sunshine state in case anyone forgot!! https://www.floridashine.org/
Also Massachusetts and South Dakota use SHINE.
And some states call is HICAP. And a few other acronyms in yet other states.
I too am 65. I have read all the comments to date because I find others’ experiences helpful. I’ve begun with a Medicare Advantage PPO from Aetna. And so it begins. One problem I’ve noted for my mother-in-law, who was switched by ExxonMobil to another Aetna Medicare Advantage PPO for 2021, is that seeing someone out of network may mean submitting all the bills for reimbursement ourselves–a real hassle, for sure.
Word of warning, or perhaps a question, on Medicare Advantage plans. I take an expensive medication, and when I checked the Medicare Advantage plans available on my ex-employer’s benefits website (we get a subsidy if we use it) the annual out of pocket maximum does not seem to cover drug costs.
Medicare Advantage would have saved me money when I first signed up for Medicare, but it doesn’t look like it would now, and switching to a Medigap plan would be complicated by medical underwriting which I would certainly fail (sometimes it’s waived, but you can’t count on it).
From what I understand (which might not be much), you don’t need underwriting if you switch to traditional Medicare within 1 year of being in an Advantage plan. It’s another box we seniors should not have to face.
I have a Humana Advantage Medicare plan, and it works well. But mine is a PPO. I don’t need referrals, and chose my already existing PCP, whom I like very much. I had a major health issue last year with 2 weeks in the hospital, and it all worked well. I personally wouldn’t use an HMO if there are other options. YMMV
I think that the issue is with the insurer rather than Medicare Advantage. The health insurance market here in Rochester NY is dominated by two regional insurers, both non-profit. Like you, I have a Medicare Advantage plan with zero premium beyond the standard Part B. The plan includes all the local hospitals and 99% of the local physicians. No referrals are required for specialists, I didn’t even have to designate a PCP.
There seem to be big differences between the states, and even within them.
Henry Hoyle and GaryW –
I agree that PPO Advantage Plans can be very good options. And I agree that the issue is with the insurer not Medicare Advantage.
However, things outside the patient/insured’s control change which might make a Medicare Advantage Plan (PartC) less desirable.
(1) Preferred provider networks change.
(2) Regional insurers change (e.g. one regional insurer is bought out by or merges with another regional insurer).
(3) Patients (insureds) change — they move out of one network and into another network.
(4) Patients/insureds may decline in cognitive abilities and their Agent named in the Power of Attorney control health care decisions, including understanding the local Advantage Plan. That might not be a challenge when there are just two regional insurers to choose from — but that might not be the case in NYC, suburban Chicago, or Dallas.
From a macro point of view, Medicare is paying insurance companies for every individual they sell an Advantage Plan to — to get off the risk (cost) of providing Medicare benefits. Insurance companies are in the business to make money. One of the ways they do that is in HMOs and PPOs, the insurance company decides what’s medically necessary.
So yes, I agree that the issue is with the insurer not Medicare Advantage.
The National Council on Aging has an excellent write up on 2022 Medicare Part D drug coverage here:
https://www.ncoa.org/article/donut-hole-part-d
Even though the hated Donut Hole disappeared in 2020, there are still limits about how generics and brand name drugs are covered.
I was fortunate to save enough in a Healthcare Savings Account (HSA) before I retired. I use the HSA to cover the gaps on some meds that I take. I use the Vanguard Wellington fund (VWIAX) to invest the balance in the HSA.
One logical conclusion you might draw from the tons of junk mail arriving in your mailbox is that these plans must be really profitable to the companies sponsoring them. Why else would they be trying to get everyone to sign up?
Anyone who chooses Original Medicare can always switch to a Medicare Advantage plan. However a senior in a Medicare Advantage plan will pay an upcharge to switch to Original Medicare or could be rejected eliminating this option. The logical conclusion is Original Medicare is the better plan.
I find this post quite timely. My employer dropped our coverage this year and 4-5,000 of us retirees had to select Medicare supplemental coverage after having group coverage since the dawn of Medicare.
Given the desire to save money many chose a Part C plan. I’ve recently been surveying them via several Facebook groups. I was quite surprised that with few exceptions they seem very pleased with their MA choices – at least so far.
On the other hand, many are used to dealing with networks and pre-cert given that’s what they had before retirement and even with our group retiree plans.
FROM THE COMMENTS HERE can we assume many people never were involved in an HMO, PPO or other plan with networks?
Health care costs have exploded over the past 4 decades and employers have utilized shifting costs onto employees, HMOs, and PPOs to manage employee benefit costs.
See this from Kaiser Family Foundation
https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#item-start
Here is a quote from that article:
“Health spending totaled $74.1 billion in 1970. By 2000, health expenditures reached about $1.4 trillion, and in 2019 the amount spent on health more than doubled to $3.8 trillion. Total health expenditures represent the amount spent on health care and related activities (such as administration of insurance, health research, and public health), including expenditures from both public and private funds.”
I think before they retired that many/most individuals were in some sort of a PPO (and in some areas an HMO). There are similarities between an employer offering a PPO plan and Medicare Advantage Plans. However, to me a big difference with a Medicare Advantage Plan is that the individual insured/patient on his or her own (with no ability to negotiate anything) versus the insurance company. And the individual has to do that every year.
By contrast, it would not be unusual for large employers to negotiate with PPOs on behalf of their employees to get the best “deal” possible.
Also, I would assume that the need for accessing health care increases as one ages. So I’m not all that surprised that especially that a “young” cohort of retirees (say age 65-75) are very please with their Advantage Plan. It seems to me that 65-75 year olds have fewer chronic, expensive, and complex health care related issues than say 75-85 year olds.
Advantage Plans were first offered in 1997. They have gained in popularity especially in the last decade. See this from KFF (Enrollment in Medicare Advantage has double over the past decade):
https://files.kff.org/attachment/Fact-Sheet-Medicare-Advantage#:~:text=In%202019%2C%20the%20majority%20of,to%2022.0%20million%20in%202019.
However, if Advantage Plans cover a younger, healthier group, they should appeal to younger healthier retirees. And premiums for Advantage Plans should be low (as low as zero). Might it be the case that most Advantage Plan insureds are under the age of 75?
I get that those covered are, at this time, very pleased with their Advantage Plan.
However, that doesn’t mean over the LONG term, people in Advantage Plans might be better off with a Medicare Supplement Plan.
Dick, I had my wife and 4 kids on private insurance for decades, both PPO and HMO plans, so I’m painfully familiar with them.
A couple of years ago, before she was eligible for Medicare, my wife had major back surgery. The numerous authorizations/pre-approvals we had to get along the way were a major headache. And of course we paid thousands before meeting the deductible. I never want to go back to that if I can avoid it.
So far at least, Medicare + Medicare Supp. + Part D have been a huge improvement.
I think everyone feels that way, including me, but not so many want to pay for that privilege and fewer realize that Medicare can work as it does because the real costs are shifted to the private sector, when Medicare reimburses below costs. Then there is the fact Part A is underfunded.
Medicare is not cheap. I checked my records. While working I paid $196,000 in taxes for a total of $492,000. Given I’m subject to IRMAA – thanks to RMDs, my total monthly premiums to Part B, D and Medigap are nearly $800 a month.
One of the reasons Medicare costs what it does is because there is virtually no claims pre or post review like private insurance – the stuff everyone hates.
I don’t understand this comment.
Are you saying you paid $196K in Medicare payroll taxes?
How did that total out to $492K?
In preparation to help our mothers enroll, my wife read “10 Costly Medicare Mistakes You Can’t Afford to Make” by Danielle Roberts. She said it was really helpful in highlighting some of the major pitfalls of the enrollment process. Along with “Medicare for Dummies,” she gained a pretty good understanding of the process. Both books are on my reading list this winter.
If the books don’t include a section on MACRA (Medicare Access and CHIP Reauthorization Act effective 1/1/2020), they are out of date. Probably OK for a general overview of Medicare Parts A&B (original Medicare), Medicare Supplement (AKA MediGap) Plans, Medicare Advantage Plans (Part C), and Medicare Part D prescription drugs.
That seems to affect payments. How does it affect patients?
My understanding is that MACRA impacts individuals in Advantage Plans. It is a long and complex law. https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs
The Medicare Access and CHIP Reauthorization Act (MACRA) is a law that changed Medicare Supplement plans in all states and became effective on January 1, 2020. This new rule affected who can buy Medigap Plans F, High F, and C. As of 2020, only beneficiaries that are not newly eligible are able to keep Plan F, High F and C.
https://www.senior65.com/medicare/article/medigap-plan-f-2020-macra
Thanks. I knew those plans were closed, I didn’t know the acronym. Certainly means you need an up to date edition.
Important article and it, and the many comments, explain why my wife and I went with traditional Medicare, a Medigap Plan G, and a Part D plan. We may pay a little more than with a MA plan, but, as others have noted, the much greater access and fewer hassles make it well worth it.
One small lesson I recently learned: The premium on my Plan G from Mutual of Omaha jumped a good bit and so I started shopping for a new policy, even though I knew I’d have to pass medical underwriting. I kept getting letters from a different subsidiary of Mutual of Omaha promoting lower Plan G rates than I was paying. I called an agent who told me those are “new customer” rates and I don’t qualify since I was already with Mutual of Omaha. But I talked to a second agent who said that I would be considered “new business” if I went with a different Mutual of Omaha subsidiary. Turns out he was right, medical underwriting was a breeze (I’m in good health), and I was able to stay with Mutual of Omaha (which has pretty good customer service) and benefit from a significantly lower rate from the different subsidiary.
Reminds me of back in the day, when different divisions of IBM used to compete with each other for the same account. Or maybe when Warner Records rejected Yankee Hotel Foxtrot, cancelled Wilco’s contract and gave the album back to the band, and they placed it with another Warner Brothers subsidiary and it became a big hit.
Strange are the ways of giant companies.
In order to “get off the risk” of providing Medicare benefits (Part A and Part B) the federal government (Medicare) pays insurance companies for every individual who enrolls in a Medicare Advantage Plan. https://www.forbes.com/sites/forbesfinancecouncil/2021/02/24/why-are-medicare-advantage-plans-so-heavily-advertised/?sh=7f0da95267a0
Agents who sell Medicare Advantage Plans (including the $0 premium plans) are well compensated. https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/AgentBroker
How much can agents earn selling Medicare Advantage Plans? Search “How much to agent earn in commissions for selling Medicare Advantage Plans”.
I’ve been with United Health Care’s Advantage Plan since I turned 65 a couple years ago. I’m switching to a Medicare Supplement Plan and a Part D prescription drug plan for 2022.
Check out a national independent agency that specializes in Medicare. Good ones have informative videos that explain – in pretty clear terms – how Medicare works and what your options are. Two examples: https://medigapseminars.org/about/ and https://www.abtinsuranceagency.com/
I should have gone with a Medicare Supplement Plan and Part D to begin with. I have to “pass” medical underwriting now to get back in. Why switch? Because under Medicare, my doctor and I decide what’s medically necessary. And once you’ve got a Medicare Supplement Plan, it’s guaranteed renewable. I’ll need to shop a Part D plan annually. With Medicare Advantage, the insurance company not only decided what’s medically necessary, it also can change network providers at while and can drop policies annually.
Why do you feel you need to shop Part D annually?
While Part D automatically renews, an insurance company’s formulary and tiers that company has for each drug in their formulary can change each year. And Part D Plans have networks of preferred pharmacies that could change from year to year. You don’t have to shop Part D annually, but it is prudent to do so (I think).
Actually with 60-day notice plans can make changes anytime. The safest route is to stick with national drug chains, CVS, Walgreens, etc. if possible. The Part D plans squeeze the independents.
I concur with Dave’s comments above but would add one other national broker Boomer Benefits. I just signed up for a Plan N from Omaha Insurance Co. with them.
I’m documenting my journey of Getting Ready for Medicare with a playlist on my YouTube channel.
As for why shop for Part D annually? Same reason you want to look at your Advantage every year. Insurers can change these plans every year! Kaiser Family Foundation reports that less than a third of Medicare beneficiaries look at their options.
But they could be leaving hundreds and thousands of dollars in the hands of their insurers each year. That’s this week’s video, which will come out later today.
I’m Jim and I was Retired nearly six years ago and just turning 65 in a couple months.
Ah yes, the joys of Medicare. People think that reaching Medicare eligibility means free health care when it emphatically does not. After the megacorp I worked for discontinued retiree medical coverage I spent hours deciding what to do, including meeting with a SHIP counselor (my state’s version of SHINE).I wound up with traditional Medicare and United Health Plan F. I was recently able to switch to Humana Plan G without medical underwriting, as I expect Plan F to become increasingly expensive since Congress has disallowed new members. I have been very satisfied with the combination, and have always thought that Medicare Advantage was the Republicans attempt to get more people on private insurance, with government subsidies.
I highly recommend the book “Medicare for Dummies” for those reaching eligibility.
“Medicare for Dummies” is a very good book. Make sure you buy an edition that includes a discussion about MACRA (The Medicare Access and SHIP Reauthorization Act, which was effective 1/1/2020).
Given ongoing changes that happen with Medicare, accessing up to date videos and websites from national independent agents/brokers is also beneficial.
Said another way, buying an excellent book about Medicare that is “old” might be problematic.
The Medicare Access and CHIP Reauthorization Act (MACRA) is a law that changed Medicare Supplement plans in all states and became effective on January 1, 2020. This new rule affected who can buy Medigap Plans F, High F, and C. As of 2020, only beneficiaries that are not newly eligible are able to keep Plan F, High F and C.
https://www.senior65.com/medicare/article/medigap-plan-f-2020-macra
I am going through the Medicare decision process as I am eligible in January. One point I found troubling is that if I chose an Advantage plan, I may have to go through medical underwriting to move to a Medigap plan later. Good luck on your journey.
Choose your Medigap plan with care because you will likely face medical underwriting if you want to switch. I believe that California allows you to switch to a “lesser” plan around your birthday, but I certainly can’t do that. Yes, Medicare rules and policies are state-specific, sometimes the plans are county-specific. Sigh.
You mention the “$3400 lifetime out of pocket limit”. Is that annual or lifetime? Reading this article is why I always say original Medicare with Medigap Plan G. Many people are happy with their “free” Advantage plans but other than the price I rarely hear of the Plan G crowd complain.
Thanks for catching that!
I checked with Ron. It is indeed annual, so I fixed the story. Thanks for raising the issue.
thanks!
With Advantage Plans, my understanding is that the out of pocket is based on the calendar year. I concur — original Medicare A&B, with a Medicare Supplement (and I’m between G and N), along with Part D.
I made the decision to choose the traditional Medicare route with a supplemental Plan G a few years back and have been happy with my choice. For me, buying and reading PBS’s Philip Moeller’s book “Get What’s Yours for Medicare” was instrumental for making an informed decision.
You have learned the “something for nothing” of health care coverage. It doesn’t exist.
Don’t blame Medicare, blame the quest for free coverage and little out of pocket costs.
When a person enrolls in a MA plan they are expected to understand and accept the limitations and restrictions- that’s how such plans can deliver all the free and extra benefits, that and possibly too generous subsidies from the feds.
All you describe is the same in the pre-Medicare world, all failed efforts to manage health care costs by shifting costs to patients in the misguided effort to make them consumers.
On the other hand, I have Medigap Plan G which covers all my out of pocket costs except the Part B deductible. I can go to any doctor or facility anywhere, nobody asks to approve anything in advance and rarely questions anything after. There is a price to pay. In my case $233 a month. Some pay much less, some more, a lot depends on location.
I could have enrolled in a MA plan this year when my former employer dropped our retiree coverage, could have saved money too, but for me and my wife freedom of access was key.
The less one pays for their coverage and for OOP costs, the less freedom they will have when it comes to obtaining health care. That’s been the tradeoff since the idea of HMOs was first embraced fifty years ago and always will be.
Now, if you want to talk about a real incomprehensible mess, it’s Medicare Part D Rx, which despite my fifty years designing and managing health plans, I’m still trying to decipher. My fellow retirees are going through hell trying to cope with their new Part D coverage, because of the many variables.
Extremely helpful, thank you Ron. Sorry for the hassles – my Dad went through similar issues with Humana’s Medicare Advantage plan. He was a Humana fan because he’d made so much money on its stock over the years. Obviously not a great selection screen. : )
Seems like there’s a market opportunity here for a company that will tell the truth and support their plan with the kind of customer service older folks need. In my Dad’s case we handled the hassles for him and it was still a long, frustrating struggle that ended up with some self-pay events just to get things done correctly and on time.
You’ve certainly provided an additional head’s up for me when the decision comes in a few years.