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Why I only sell Medicare Supplements and not Medicare Advantage

Medicare Advantage plans, also referred to as Medicare Part C, may sound enticing. As one plan, it combines Medicare Parts A and B benefits and may cover prescription (Part D) and other benefits. Many offer $0 premiums, but the devil is in the details. You will find that most have unexpected out-of-pocket expenses when you get sick, and most importantly you have to choose from their list of contracted doctors and hospitals. Compare that to a Medicare Supplement where you can go to any provider that accepts Medicare.

The Devil Is in the Details

Wendell Potter author of "Deadly Spin" explains how many Medicare Advantage enrollees don’t find out about the limitations of their Medicare Advantage plans until they get sick:

“Although Mom saw her MA premiums increase significantly over the years, she didn’t have any real motivation to disenroll until after she broke her hip and required skilled care in a nursing facility. After a few days, the nursing home administrator told her that if she stayed there, she would have to pay for everything out of her own pocket. Why? Because a utilization review nurse at her MA plan, who had never seen or examined her, decided that the care she was receiving was no longer ‘medically necessary.’ Because there are no commonly used criteria as to what constitutes medical necessity, insurers have wide discretion in determining what they will pay for and when they will stop paying for services like skilled nursing care by decreeing it ‘custodial.’”

With Medicare Advantage (MA), the Insurance Carrier "manages" your health care. With Medicare Supplements, Medicare is Primary and your Supplement is secondary. In my opinion, I would rather have the standardized requirements of Medicare decide my healthcare procedures versus an Insurance Company making those choices. Yes, with most plans MA plans you have little or no Office Visit copays. However, to give you an example of the types of co-pays and coinsurance you may run into; here are some details of in-network services from a popular Humana Medicare Advantage Plan in California, Gold Plus H5619-023 (HMO):

  • Hospital stay - $330 per day for the first five days, every admittance
  • Outpatient Hosptial Surgery - $250 copay, each surgery
  • Diabetes supplies - up to 20% co-pay
  • Diagnostic radiology - up to $250 co-pay
  • Outpatient x-rays - up to $100 co-pay per visit
  • Radiation Therapy - up to 20% co-pay depending on the service (this includes Chemotherapy)
  • Renal dialysis - 20% co-pay
  • Medical Equipment/Supplies - 20% coinsurance
  • Mental Health Inpatient - $900 per admittance
  • Ambulance - $265 copay per use
  • Air Ambulance - 20% coinsurance (that is 20% of the actual cost!)
  • Emergency Room - $90 copay, every visit
  • Annual Out-of-Pocket Maximum - $5900

As this non-exhaustive list of co-pays demonstrates, out-of-pocket costs will quickly build up over the year if you get sick. The Medicare Advantage plan may offer a $0 premium, but the out-of-pocket surprises may not be worth those initial savings, the possibilty exsists that you could hit the $5900 Annual Out-of-Pocket maximum. “The best candidate for Medicare Advantage is someone who's healthy," says Mary Ashkar, senior attorney for the Center for Medicare Advocacy. "We see trouble when someone gets sick."  After 35 years in this business I have seen a lot of clients go from healthy to unhealthy very quickly and unexpectedly.

Comprehensive Coverage

The most comprehensive coverage, which will likely result in the fewest unexpected out-of-pocket expenses, is a traditional Medicare plan paired with a Medigap aka: Medicare Supplement policy. Medigap policies vary, and the most comprehensive coverage is offered through Medigap Type F. With Medigap Type F, all co-pays and deductibles are covered, and you even get some coverage when you travel outside the country. With this combination, you can go to any doctor who accepts Medicare. Note: With traditional Medicare and Medigap, I recommend you purchase a stand-alone Part D prescription drug plan. I can advise you how to secure that coverage. Premiums start at around $13/month and go up from there.

What is the primary downside of Medicare Supplements? You have to pay a premium. Supplements are not for everyone

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