Medicare Advantage Plans - Buyer Beware
Wouldn't it be wonderful if former NFL Quarterback Joe Namath took one of his trophy footballs and stuffed it into former actor Jimmie 'JJ' Walker's mouth and likewise, Jimmie 'JJ' Walker took some of his iconic 'Dyn-o-mite' and stuffed it into an orifice of Joe Namath!!! Or maybe better yet, they could join up with William Shatner (yep, the one and only Captain Kirk) on the Starship Enterprise and zoom off to fight the nefarious Klingons. I don't even have to ask how you feel about the incessant Medicare commercials that Joe and 'JJ' and Captain Kirk are spokespersons for. I already know the answer. We are sick of listening to the never-ending sales pitch these three are being paid to peddle on behalf of the behind-the-scenes behemoth insurance companies who offer Medicare insurance plans.
And why do these commercials persist? Oh, silly people. Need you even ask. It's all about the money, huge amounts of money, millions and millions of dollars worth of money, that a vulnerable segment of the population are being 'duped' into spending on Medicare Advantage plans that offer questionable health and medical coverage, under the guise of government-sponsored Medicare.
Now that I have that out of my system, let me take a step back and provide a basic outline of the Medicare program and where my previous rant fits into the picture.
Medicare is a government funded program that falls under the U.S. Department of Health and Human Services (HHS) and is administered and overseen by the Centers for Medicare and Medicaid Services, (CMS) an agency within HHS. Medicare consists of the following component parts:
Medicare Part A: Part A covers inpatient hospital stays, lab tests, surgery, care in a skilled
nursing facility, hospice care, and some home health care coverage if
you or your spouse paid Medicare taxes for a certain amount of time
Most people get Part A coverage for free, or 'premium-free'.
Medicare Part B: Part B covers 2 types of services:
Medically necessary services: Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice.
Preventive services: Health care to prevent illness (like the flu) or detect it at an early stage, when treatment is most likely to work best.
In 2021, for the majority of Medicare beneficiaries, the premium cost of
Part B was $148.50 per month. For 2022, the standard premium cost is
Medicare Part D: Part D (Drug Coverage) is a federal program administered through
private insurance companies. These companies offer retail prescription
drug coverage to Medicare beneficiaries.
The monthly premium costs for Part D will depend on the prescription
So what happened to the missing piece?
What is Medicare Part C?
Part C are private insurance plans referred to as Medicare Advantage Plans, offered by private insurance companies approved by Medicare. In order to enroll in a Medicare Advantage Plan, a person must already be a recipient of Medicare Part A and Part B coverage. An Advantage Plan is an all-in-one alternative to the standard Medicare Part A and Part B coverage. While Medicare Advantage plans include hospital (Part A), medical visits and procedures (Part B) coverage, and typically include drug (Part D) coverage, they can also feature extra benefits not offered by traditional Medicare, such as dental, hearing and vision coverage with no additional premium.
Sounds like a 'no-brainer', right? I can get the same Part A and Part B coverage, plus Part D (drug) coverage, plus extra benefits such as dental, hearing and vision at no additional premium. And on top of all this, home-delivered meals and extra money in my social security payment each month. And rides to doctor appointments. Woo Hoo, sign me up!
And that is exactly what the paid pitch-men (and women) are there to do, get you to sign up for one of the myriad of Advantage Plans offered by private insurance companies. And sign up they do. It is estimated that over 27 million Medicare participants are enrolled in Advantage Plans, with that number growing each year. So, can that many people be 'wrong' in the decision they have made? No, of course not. While the Advantage Plans themselves are perfectly legal and may be absolutely fine for many of these millions of older Americans, the Advantage Plans often fall short of delivering all the extra benefits touted by the hired spokespersons and have costs that are not clearly identified.
Basic Medicare (Parts A & B) can be confusing to begin with. Add to it another layer of decisions for optional (Part D) coverage or alternate Advantage Plan (Part C) coverage, and confusing can quickly become very muddy waters to navigate. The following outline is intended to highlight some of the issues that often don't get considered by Medicare recipients when decisions are being made on coverage options, and which are not addressed by the paid spokespersons in their promotional sales pitches:
For recipients of Basic (Traditional) Medicare (Parts A & B), we make monthly premium payments (currently $170.10) into the Medicare system for the coverage we receive;
If we have chosen an optional Part D drug coverage plan, the premium is paid directly to the private insurance company offering the plan;
If we have chosen an alternate Advantage Plan rather than Basic Medicare, our monthly premium payment (same as for Basic Medicare coverage - $170.10) gets paid to the private insurance carrier who is offering the Advantage Plan;
In addition, Medicare pays over $1,000 every month to the private insurance carrier for your care. This payment is compensation to the insurance company for taking on the risk of your health and medical needs.
While these insurance companies must follow rules set by Medicare, they are free to design the Advantage Plans as they see fit and charge whatever deductible amounts, office visit co-pays, and maximum out-of-pocket costs they want.
It is important to stop here and make a very important distinction between premiums and costs. Premiums are the payments made for Basic Medicare (Parts A & B) coverage and for Part D drug coverage if that option is selected. While many of the Part C Advantage Plans are offered at no additional premium, some of the Advantage Plans do charge a supplemental monthly premium. In addition to these premiums, the Advantage Plans then charge subsequent costs to cover deductibles (which vary by Plan), co-pays for office visits or for specialists (which vary by Plan), and have varying out-of-pocket costs resulting in additional costs before recipients are eligible for full Plan coverage/services.
Keep in mind that insurance companies are not in business to lose money. Their Advantage Plans are designed to be profit making, and if the Medicare payments they receive from the Federal government do not generate a sufficient profit, they will make that profit off of the Plan participants (from the additional costs charged), by limiting the level of service offered through the Plan, by limiting services available by physical location, and/or by limiting the payments made to the service providers.
Whether it is Joe, Jimmie, William or some other spokesperson, they urge you to call an 800 number to get a 'FREE Medicare Part C Review', or to check your County zip code (to verify which private insurance companies have a network that services your area, which then determines which Part C Advantage Plans can be offered to you);
And who will you be speaking to? The graphic above says it all. You will be warmly greeted by a Licensed Insurance Agent who you can rest assured, has been highly trained to close a sale and get you enrolled into an Advantage Plan, whether that Plan is in your best interest or not. You see, these Licensed Insurance Agents, and the companies they work for, receive a commission on each sale they make, not on whether the Advantage Plan they are recommending to you actually meets your health/medical needs or financial situation. While on the phone with you they will be your BFF, that is until they are done with you and move onto their next BFF.
Am I making it sound like these Medicare Advantage Plans are a scam which should be avoided at all costs? My intent is not to portray such a picture. However, what I am trying to convey is that anyone considering enrolling in one of these Advantage Plans needs to be informed about what these Plans are, what they are not, what the total cost could potentially be to you over the course of a year, whether the coverage they offer actually meets your needs, and the list goes on. Is this asking too much of a member of our senior population? No. It's a desire to see them being smart and savvy buyers and looking out for their own best interests. Unfortunately, the reality is quite different.
There is big money behind the never-ending commercials we are subjected to and they are designed to accomplish one thing - generate even bigger money (profits) through the sale of the Advantage Plan products. Do they use a script that gives you a sense of urgency and leads you to believe that if you don't call the 800 number, you are missing out on something you are entitled to? Yes! Do they use particular colors (Red, White & Blue) to elicit a subtle emotional appeal (American Flag, Apple Pie, Motherhood) as a call to action? Yes! Do they use individuals who have achieved a certain level of notoriety in their careers as spokespersons (snake-oil salesman???)? Absolutely, Yes! After all, would these well known figures intentionally mislead us? Do I need to answer this question?
In conducting research for this blog, I came across a blog on the medicarefaq.com website which does a nice job of summarizing the concerns about the Joe Namath Medicare commercials. A portion of the blog is reprinted as follows:
"Some of the claims in the Joe Namath Medicare commercials are very attractive. However, you’ll want to do your research about individual plans before choosing Advantage coverage.
Claim #1: Additional Benefits
In the advertisements, Joe Namath claims Medicare Advantage plans include a bundle of benefits like dental, vision, and hearing coverage, a prescription drug plan, and home-delivered meals. He proceeds to claim you can receive these features at no additional cost.
While it is true that Advantage plans can include these extra benefits, said benefits vary by plan, and plan availability depends on your location. Also important to note is that not every Advantage plan offers the option for home-delivered meals. Further, even if your plan offers home-delivered meals, you must personally qualify to receive them.
Claim #2: Eliminating Copays
Joe Namath Medicare Advantage ads claim that these policies wipe out copays. In reality, your copayments depend on the plan you choose.
Your plan may require copays for visits to doctors and specialists, as well as for prescription drugs. Yet, for your Advantage plan to pay at all, your providers must be in your plan’s network. Additionally, your medications and dosages must be on the formulary of your Medicare Advantage prescription drug plan to receive coverage.
Claim #3: Coverage for No Additional Cost
An attention-getting claim Joe Namath makes in several of his Medicare Advantage commercials is that the extra coverage is available to beneficiaries for no additional cost. But, no premium doesn’t mean cost-free.
It’s important to understand that no Medicare plan is actually free. The truth is that while some Advantage plans don’t come with a monthly premium, many do require payment of a premium, and all include other costs.
Advantage plans still involve out-of-pocket costs, including deductibles and copayments. So, while a zero-dollar plan in your area might seem enticing, it may not even be the best choice for your finances – let alone your health.
There is a maximum out-of-pocket amount for each Advantage plan, but it can be high. Meaning, you’ll likely spend thousands of dollars in a year before reaching full coverage on your plan.
Claim #4: Money Added to Your Social Security Check Each Month
In his Medicare Advantage commercials, Joe Namath says that beneficiaries can receive extra money in their Social Security check every month. While some Advantage plans include a give-back feature, it isn’t standard for all Advantage plans.
Further, the availability of plans with the give-back or premium-reduction feature is dependent on your location. The amount the plan reduces your premium can be as much as the standard amount, or it could be less."
In closing, consider the following warning from Kathy Stokes, the director of fraud prevention at AARP Fraud Watch Network, via an email:
“Making decisions about Medicare can seem daunting.” “A lot of bad actors are out there looking to take advantage of people’s uncertainty. Be skeptical of ads, mailings, and emails offering discounted prescription drug plans or supplemental Medicare coverage.”