(Updated, 2023) So I recently went on Medicare, and wanted to put down some thoughts in case they are of assistance to anyone else. I suggest that anyone who’s doing this consider their own specific circumstances very carefully; I am not a licensed insurance broker, and I am not making recommendations here — rather, I am telling what I did and why.
First I chose government Medicare, not Medicare Advantage (the private version of the public one). This is essentially choosing “Lyndon Johnson’s Medicare” rather than “United Healthcare’s Medicare.” I did this on the advice of a friend who pointed out that many privately run Medicare Advantage plans have added baubles (transportation, vision) but narrower networks.
She was very ill a couple of years ago, and feels that if she’d been on Medicare Advantage, she’d be dead because of denials.
Medicare Advantage is part of a wider move to give the for-profit insurance companies footing in the market previously served only by governments. Medicaid, too, is increasingly being served by for-profit insurance companies with big contracts to manage states’ Medicaid programs. The for-profit companies will do what they can to serve their stockholders, rather than doing what they can to serve patients. That includes narrow networks, smaller drug formularies, denials, “step therapy” and lack of authorization for procedures and practices recommended by your doctor. We don’t oppose for-profit business structures, but we do think people looking at their Medicare choices should be clear about the differences.
How does it work? “Medicare Advantage is a health insurance program in which private health insurers are reimbursed generously by the federal government for providing insurance coverage, sometimes with additional benefits, to retired Americans,” writes Wendell Potter, the former insurance company executive turned whistleblower and reporter. “This incentivizes insurers to sign up as many elderly folks as they can. While many Medicare Advantage plans provide some coverage for dental, vision and hearing and discounts on gym memberships, their ads obscure the often-life-threatening restrictions and bank-account draining demands that are common in Medicare Advantage plans.”
We know there are some excellent Medicare Advantage plans out there, but there have been a raft of problems reported with Medicare Advantage. So I went with Lyndon Johnson’s Medicare.
Dave Chase, the health care entrepreneur, says he’s glad his dad had Medicare Advantage. And a new Medicare Advantage plan is being founded by Todd Park, the former chief tech officer of the Department of Health and Human Services, who I respect a lot. But we have heard a number of Medicare Advantage horror stories, and that’s why I picked Lyndon Johnson’s Medicare. (See details below.)
Also: Give yourself some lead time on this — don’t wait until the month before your birthday. I didn’t, and I felt dumb about it. Also: Turning 65 might give you other options as well — senior tickets on transportation, a senior discount on your property taxes, that sort of thing.
Worth noting: If you work for an employer with fewer than 20 employees when you turn 65, your employer can require you to go onto Medicare. If you work for a large employer, your employer must treat you the same as other employees, offering you (and your spouse, if that applies) the same medical insurance that younger employees can get. There are several wrinkles about supplemental plans. Here’s a good explainer of the nooks and crannies.
Part B
I picked a “Part B” plan to cover the 20 percent of charges that basic Medicare (also known as Part A) does not cover. This came also from the government.
Some people think you don’t need any supplemental Medicare plans. Here’s a doc from California who’s quite versed on the money in medicine, and he has big questions about this. Nevertheless, I took Part B. It costs $135.50 a month.
Part D
I don’t use a lot of prescription medications, so this one was not high on my list. But! If you don’t get Part D for drugs as soon as you’re eligible for it, you will incur a surcharge when you do pick it up, a surcharge that can really add up.
Which Part D? The folks at our State Medicare advice hotline (see below) used their calculator to do a personalized quote for me for the several Part D options in my area, and I chose the one they recommended. It costs $34.80 a month; most of them were around this price.
For calendar 2021, the price went down to $7, though the deductible went up. It is a network plan via Aetna, giving incentives for using CVS drugstores.
Part G
There are several other supplemental Medicare plans. It is bewildering, honestly: Part F? Part G? Part N?
Again on my friend’s recommendation, I took Part G. It covers things that are not covered by Part A (Lyndon Johnson’s Medicare) and Part B. That includes “excess charges,” which can indeed happen. You see, participating doctors and hospitals are supposed to take the Medicare assignment. But they can impose things called “excess charges,” and Part G covers that.
Part F, which was the other close competitor, is being phased out; my friend says that since it is no longer accepting new (read: healthier, younger) enrollees, the premiums will certainly go up.
So, Part G. I picked the only one in this area that also gives free gym membership at several local clubs, so that is a clear benefit. (Yes, I go to the gym. A lot.) It costs $270.14 a month from Empire Blue Cross and Blue Shield.
Again, I’m not recommending anything to you — your circumstances and your risk tolerance are certainly different from mine. This is what I did, and why.
What is IRMAA?
For high-income Medicare beneficiaries, Part B and Part D premiums include an additional charge based on your modified adjusted gross income, the income-related monthly adjusted amount (IRMAA).
There is no surcharge or Part A for anyone. But people with high incomes (in 2023, that’s over $97,000 for a single individual) pay higher premiums for Medicare Part B and Medicare Part D.
If your modified adjusted gross income as reported on your IRS tax return from
2 years ago is above a certain amount, you’ll pay the standard Part B premium and
an income-related monthly adjustment amount. Monthly premiums can go up to $560.50, depending on income; a chart is here. Both Part B and Part D are represented on this medicare.gov page.
If you get Social Security, these payments will be deducted from your Social Security check; if not, you will be required to pay to Social Security.
If you have questions about your Part B premium, call Social Security at 1-800-772-1213. TTY users can call 1-800-325-0778. If you pay a late enrollment penalty, these amounts may be higher.
Medicare vs. Medicare Advantage
Keep in mind that Medicare Advantage is essentially a network, and you will need to stay within the network or have treatment denied. With traditional Medicare, you can go to any provider that accepts Medicare. (See chart below.)
Medicare Advantage plans generally require pre-approval for services — and those services can definitely be denied. Traditional Medicare generally does not require pre-approval.
Many Medicare Advantage plans also offer drug coverage as part of the plan, meaning you don’t have to have Part D. On the other hand, my Part D premium went down to $7 a month, so it’s not a huge burden.
Do you travel? Read the fine print. Medicare Advantage plans don’t generally cover anything but emergencies outside of the United States. If you have a Part G plan, you can choose one that has extra coverage outside of the U.S.
Related: Medicare Advantage insurers are frequently accused of fraud and overcharging the government for their services, as this New York Times article explains.
Pro tip: When you are searching, if you put your name, email address and phone number into an online form saying you’re shopping for Medicare plans, you’re probably asking for trouble. I have a friend who did that, and she was inundated with spammy come-ons for weeks and weeks. She’s not sure who her information was sold to after that, either. So: Think carefully if you want to sign up on an online form. I would not.
When I was doing this research, if I found an online option that seemed appetizing, I called them and did not give them detailed information. I quickly decided that online forms were mostly ways for salespeople to connect lists of leads that they would use and then sell on to someone else. No thanks! (Your mileage may vary.)
An orthopedic surgeon’s view of Medicare Advantage
In an online discussion group recently, an orthopedic surgeon of my acquaintance wrote about Medicare vs. Medicare Advantage:
“I joined the ranks of Medicare enrollees a year ago. I did my ‘research’ online and consulted with my broker/consultant friends and ultimately went with an MA plan. I chose one with the broadest in-network panel which of course is the most expensive. It’s been interesting. Much like commercial insurance, perhaps even more so, it is highly restrictive and still limits choice. Every provider and medication is tiered which dictates co-pays. I don’t use much in the way of healthcare resources but if I did, this would be aggravating for me and my physician (who would face ‘denials’).
“From my patients’ perspective, it is also far easier for me to manage my straight Medicare patients experience. If they need a CT scan, it gets done without a peer-to-peer and the usual obstacles. If they do need an ECF after surgery, no problem.
“I had a 92 year old widow last month on Medicare Advantage who had a total hip replacement. She lives alone with NO local family support. Our request for short term [extended care facility] placement was denied since ‘living alone’ does not qualify for ECF post-op care — seriously. I was able to reverse the denial after a peer-to-peer. This is our system.
“In short, what I have learned is that when you are relatively healthy and don’t use much resources from 65 – 75, MA plans despite their hassles may save you some out of pocket costs. From 75 on, it might be better to go with straight MA and a supplement.
“All of the above is spoken from an orthopedic surgeon’s experience for sure…might be wrong for others.”
Another acquaintance, Mary O’Connor, MD, wrote: “Every open enrollment I have numerous convos with my (now) 92 year old Mom telling her that she needs to keep her traditional Medicare as she is barraged with salespeople trying to get her on a MA plan. I have been home with her during the open enrollment and the calls are incessant, bordering on harassment. I tell the caller to please take her off their call list permanently. She is old, frail and has memory difficulties.
“She gave up her Part D plan because she thought she didn’t need it because she paid so little for her medications. She did not understand what Part D did for her, and I discovered that she dropped her coverage too late. Now, of course, she is paying hundreds of dollars more, and I must wait till this open enrollment to get her back on a Part D program. I simply couldn’t manage her medical issues and deal with the hoops that MA would make her/me go through.
“That is the orthopedic surgeon daughter who knows the system with a 92 yo Mom on traditional Medicare perspective ????.”
A consultant’s view on Medicare and Medicare Advantage:
Another acquaintance, George Claassen, an independent employee benefits consultant at Class Insurance Consulting, wrote: “As someone who has helped hundreds of people pick their Medicare Supplement or Advantage plan and their Part D plans, I can summarize it as follows.
- “For people who are in pretty good shape when they go to Medicare, Advantage plans work fine and they can save about $200 per month by getting a $O per month PPO plan that includes Part D. But they might be turned down for a supplement plan later because of pre-existing conditions when they try to enroll in the future in many states.
- “There is also the Medical Savings Account plan, or MSA, which works like original Medicare (even though it is an advantage plan), but members take on some risk. In a full year, they are given $3,000 into their MSA account (which is like a HSA for Medicare recipients with a qualified advantage plan) each year and they can use the money to pay for their expenses that Medicare covers but doesn’t pay (the 20% roughly). Members can go to any doctor or facility that accepts Medicare, they can’t be balance billed for amounts higher than the approved Medicare rates. People can build up a little nest egg for later in life. Invest the money into money market accounts etc as well. Their annual out of pocket is $8,000.00. So their risk is $5,000.00 per year. If they roll the dice and don’t need expensive care, they win. If they do need expensive care, and they reach their out of pocket max, all other covered services are covered at 100% by the plan and Medicare. They need to buy a stand alone Part D plan and they are all set. Part D plans are between $6 per month all the way up to almost $200 per month depending on what someone needs etc.
- “Part D is a nightmare for many folks. The formularies can be cruel to people who were on drugs their previous health plan might have covered and Medicare Part D formulary from the carrier they choose might not cover the brand name drug or it has massive cost sharing. This is where a lot of research needs to be done before someone enrolls because it can cause a lot of financial hardship for people.
- “My recommendation for people who can afford an additional $200 per month is to stay with original Medicare and get a Supplement plan with a stand alone Part D plan. This gives members the best access and freedom. They can go anywhere Medicare is accepted and they are not subject to physician referrals or their secret internal networks where they refer to such as the case with Medicare Advantage in many cases. Their out of pocket costs are also super low and they get 100 days of skilled nursing in a facility they choose.
- “Not all plans are created equal and neither are the carriers. It is important to work with a knowledgeable adviser because if this is done wrong, it will cause financial hardship for many and a lot of access issues when people can’t deal with it, such as when they are very sick etc.
- “In many states Medicare Supplement plans are underwritten unless people have certain qualifying events. Such as becoming eligible for Medicare for the first time or dropped their employer plan to go to Medicare. Then they can enroll no questions asked. If they have pre-existing conditions and want to enroll into a Supplement plan later, they will most likely get declined and will have to go to an Advantage plan or stay with original Medicare. They could go with a MSA plan as well then if they like (better access than Advantage plans).
- “Part D is the most profitable for carriers. They pay double the commissions to agents to sell those. They dictate care and control as much of the access as possible and are responsible for a ton of red tape and denials and appeals etc. This creates real barriers to care on the patient and physician levels. The government gives the carrier a bunch of cash to pay the healthcare expenses for the members, what they don’t spend they keep, so it doesn’t take a genius to figure out the incentives aren’t exactly aligned here.
To summarize, it is complicated, and people should get help from good advisers. There are a lot of sharks swimming in those waters. [The Centers for Medicare and Medicaid Services] is cracking down on those companies that run those sleazy Medicare Advantage ads on TV promising people free money. Most of those are call centers that will instantly enroll someone who calls in into a shitty advantage plan without their knowledge.
“They ask for basic information to ‘check their eligibility’ and next thing you know, they are in a new plan without even giving consent. I have helped many people who this happened to. And nothing is free! That should be a red flag! But they are still in business! Shameless!”
Reassess your coverage every year
Also, you should check every year during open enrollment to see if the plan you have is the best one for next year. There could be little surprises all over the place.
In my case, my Part D plan for next year has a deductible that’s almost double this year’s, and the premium is going up by $4. Also, the tiering system for medications has changed: The “Tier 3” medications are now not a fixed copay but instead a percentage of the price. That can add up to a huge amount of money, as Cheryl Clark writes in this piece for Medpage Today. (Note: Cheryl emailed me about her plan, which is similar to mine, and that’s how I was aware of this change. Apparently they are supposed to send a warning about plan changes in September, but I must have missed mine — but I did get a warning in late October.)
“For example, a common Aetna SilverScript plan in California is nearly doubling its annual deductible from $250 to $480. It also is changing the pricing structure from a flat fee to a percentage for commonly prescribed Tier 3 drugs, which includes several brands of generic statins such as rosuvastatin and ezetimibe,” she writes.
“Instead of $104 for a 90-day supply of each of those two drugs, the plan will charge 17% of $925, or $157 for one, and 17% of $800-plus, or $136, for the other, according to this reporter’s conversation with a plan supervisor about her own plan.
“Those prices could increase in 2022, the supervisor said.
“Additionally, a brand of an inhaler that now costs $105 for a 90-day supply will cost 17% of nearly $1,900, or $324.”
Medicare Advantage: An irrevocable choice
It’s worth noting that the Medicare Advantage plans run by private insurers are increasingly coming under fire for failing to cover some of the most basic things, or for having extremely narrow networks, or for denying coverage. There has been a great deal of news coverage of this; here’s one article that is fairly detailed. The headline is “Medicare’s Private Option Is Gaining Popularity, and Critics.”
Mark Miller at The New York Times wrote this piece, pointing out “one of the least understood implications of selecting Advantage when you enroll in Medicare: The decision is effectively irrevocable.”
He adds: “Most enrollees in traditional Medicare buy supplemental coverage to protect them from potentially high out-of-pocket costs. In 2016, out-of-pocket spending in the program averaged $3,166, excluding premiums, according to the Kaiser Family Foundation.
“Supplemental coverage sometimes comes from a former employer, a union or Medicaid, although many people buy a commercial Medigap plan. But the best, and sometimes only, time to buy a Medigap policy is when you first join Medicare.
“During the six months after you sign up for Part B (outpatient services), Medigap plans cannot reject you, or charge a higher premium, because of pre-existing conditions. After that time, you can be rejected or charged more, unless you live in one of four states (Connecticut, Massachusetts, Maine and New York) that provide some level of guarantee to enroll at a later time with pre-existing condition protection.”
So if you’re not in one of those four states, and choose to switch out of Medicare Advantage and into traditional Medicare with a Medigap plan, that Medigap plan can and will use a health assessment to see if you have a pre-existing condition and charge more.
We hear frequently that people sign up for Medicare Advantage because the premiums are lower (even free!) and plan to switch to traditional Medicare when they’re older and sicker. That is often not possible without a significant charge.
A friend called from Colorado the other day to say that his Medicare Advantage plan wasn’t serving him well, so he wants to sign up for a supplemental plan — Plan G. He said that the “Level 1” Plan G premium is $132 a month, but he is being bumped to “Level 2” because of what he regards as an anomalous test. That Level 2 premium is $375 a month. Because he does not live in one of those four states allowing a bail-out, then, he is being given a higher premium because of this pre-existing condition. He is fighting the decision, though it’s anyone’s guess if he will win.
Here’s some New York Times reporting about how it’s hard to know what doctors participate in Medicare Advantage.
Here’s a piece by Wendell Potter about his mother’s Medicare Advantage experiences, which were hair-raising.
(Update: I saw an online piece about people desperate to leave Medicare Advantage that noted one unexpected point. If you move to another state, you can reportedly jettison your Medicare Advantage plan and enroll in traditional Medicare. Note that I am not recommending this, or saying that it will work, but it does seem to have the ring of truth. Please consult authorities like SHIP (the State Health Insurance Program) — see below — before doing anything. And please report back.)
Resources
Your state or city should have a SHIP hotline. Use it. Ours in New York City is great; one in our suburban Westchester locale did not return a call. Some states use a different name for this umbrella program; in New York it is HIICAP.
From the SHIP website: “SHIP is a free health benefits counseling service for Medicare beneficiaries and their families or caregivers. SHIP’s mission is to educate, advocate, counsel and empower people to make informed healthcare benefit decisions. SHIP is an independent program funded by Federal agencies and is not affiliated with the insurance industry.
“SHIP Counseling is FREE of charge. State Health Insurance Assistance Programs (SHIPs) provide free help to Medicare beneficiaries who have questions or issues with their health insurance. You can call a counselor or attend a workshop/presentation in your area.”
The Senior Medicare Patrol may be of assistance. From their website: “Senior Medicare Patrols (SMPs) empower and assist Medicare beneficiaries, their families, and caregivers to prevent, detect, and report health care fraud, errors, and abuse.”
A friend recommended a website, one of many that exist to serve this function. But I found they referred me to a Florida insurance broker whose local knowledge was skimpy on some issues and just plain wrong on other issues. As the guy at my SHIP said: “They’re in Florida looking at a computer screen. We’re here in New York with deep market knowledge. Which would you pick?”
Medicare Savings Programs, a series of little-known programs, help Medicare beneficiaries in the low- and middle-income brackets pay premiums, such as your Part B premum, and other costs. They are joint federal-state programs, so they have different guidelines by state. The savings could be substantial — allowing someone to get on traditional Medicare with or without Medigap, rather than going for Medicare Advantage. Learn more here and here. States vary widely: New York, for example, recently expanded eligibility.
Similarly, the federal Qualified Medicare Beneficiary (QMB) program pays Medicare Part A and B premiums and cost-sharing for older people with low incomes. This is managed at the state level, and a lot of people don’t know about it — both people who qualify and doctor’s offices sending bills. Read more here.
Want to go deeper? There’s a book for that: “Get What’s Yours for Medicare,” by Philip Moeller. It’s part of a series including “Get What’s Yours for Social Security,” by Moeller, Laurence J. Kotlikoff and Paul Solman.
There’s a hotline at the Medicare Rights Center: Call (800)-333-4114.
There’s a lot of data on the Medicare Plan Finder, the government website that posts Medicare, Part G, prescription drug and Medicare Advantage plan offerings. I did notice that once when I clicked through to an Emblem Health Medicare page, looking for Part G, the link defaulted to Medicare Advantage.
