New enrollees rethinking Medicare Advantage plans
For years, Medicare Advantage plans have been big business for private insurers offering one-stop shopping, low premiums and extra benefits to an aging Western Pennsylvania population.
But there are signs lately that the plans are losing some luster, as more retirees choose traditional plans with a Medigap supplement that sidestep concerns about access to providers and may represent better value in the long run.
“I’ve definitely seen a huge drop-off in Medicare Advantage,” said Shari Leckenby, with Medicare Specialists of Pittsburgh in Mt. Lebanon. In the past six months, she estimates the mix for new enrollees has been 70-30 for a supplement plan. Just a few years ago, it was 70-30 for Medicare Advantage.
Now when she describes the options to clients, she said, “Most people are like, ‘Why wouldn’t everyone take a supplement?’”
Bill McKendree, coordinator for Allegheny County’s Apprise program, which helps seniors choose a Medicare plan, says the staff at the program has noticed a similar pattern.
“When individuals new to Medicare are presented with balanced, objective and comprehensive descriptions of both Medigaps and Advantage plans, there is a better than a 60 percent likelihood that they will select coverage through Medicare parts A and B supplemented with a Medigap,” he said.
If new Medicare recipients want to go that route, they need to jump on the supplement option quickly. Rules governing the plans can make it impractical to switch to traditional Medicare once someone has coverage through a Medicare Advantage plan for more than 12 months.
Federal law does not require private insurers to offer Medigap supplement plans to someone who has had Medicare Advantage coverage for more than a year — and Affordable Care Act-like protections for pre-existing conditions do not apply. Insurers can decline to issue Medigap coverage or charge higher premiums for pre-existing medical conditions.
Without that supplement coverage, Medicare beneficiaries are left with Parts A and B but without high-end limits on their out-of-pocket costs. In general, Part A covers hospital care, skilled nursing facility care and hospice. Part B covers outpatient services such as physician office visits, home health care and some preventive care.
Another draw for straight Medicare plus Medigap may be a fear of losing access to certain doctors.
Despite last year’s state Supreme Court ruling giving Pittsburgh-based insurer Highmark’s Medicare Advantage members in-network access to UPMC physicians and facilities through June 2019, Mr. McKendree said, a seed of uncertainty has been planted in many people’s minds about whether they will be able to keep seeing the providers they want.
“Essentially all” of Apprise clients already in a Medicare Advantage plan “expressed a concern in being able to access their physicians and health care facilities given the Highmark-UPMC dispute,” he said.
More than half chose a plan based on which system their current doctors were affiliated.
“Even after the court’s ruling,” he said, “clients expressed a reluctance to trust any guarantee any longer.”
To be sure, Medicare Advantage plans have appealing features — notably low premiums and a $6,700 yearly limit on out-of-pocket costs.
Precise estimates for how many local seniors have chosen a Medicare Advantage plan are difficult to pin down, said Mr. McKendree, and range from a low of 30 percent to 60 percent or higher.
The plans typically include Parts A and B, prescription drugs and may also include vision and some dental and hearing aid coverage. Some will even throw in a gym membership.
“The people who are in generally good health and they’re fit, they don’t blink when it comes to taking a Medicare Advantage plan,” said Glenn Wells, owner of Single Source Benefits in Upper St. Clair. He estimates the lower-premium Medicare Advantage plans comprise 95 percent of his Medicare business.
“If they have an episode in five years, they’ve saved a ton of money in premiums and you don’t even know if that $6,700 is going to come into play.”
Mr. McKendree agreed it can work out that way for some people, but there’s a risk. “It’s the same reason you go to a casino: You believe you’re lucky. If everything goes right, you’ve saved the cost of the premiums.” If it doesn’t, there is still the $6,700 limit safety net.
But, he added, that also underscores the gravity of any initial decision to forgo a Medicare supplement plan. If, years later, medical problems start to mount, “You may never have the same access to a Medigap again.”
Dealing with more plans
Getting coverage under traditional Medicare with a supplement does take work.
Instead of having one Medicare Advantage plan, you have three plans — traditional Medicare Parts A and B, a choice among multiple Medigap supplement plans and a prescription plan.
If that seems daunting, Ms. Leckenby points out that seniors can have the Medicare portion taken from their Social Security check and auto-deduct the Medigap premium to the insurer.
Mr. McKendree said he considers having a separate Part D plan a plus because people can shop for the best deal each year rather than being restricted to whatever comes with a Medicare Advantage package.
Ms. Leckenby said many clients are finding the Medicare-Medigap package is simply a better value.
One recent client was able to purchase a Medigap supplement plan that offered no out-of-pocket costs for $135 a month, or $1,620 a year.
The client did have to pay extra for prescription drug coverage but still “that’s 100 percent [coverage] for chemo. That’s 100 percent for everything. You go into a hospital and you don’t pay a dime.”
Her speculation is that many beneficiaries in the past have opted for Medicare Advantage “because they were on Highmark all their working lives and they just went to Highmark. It’s all they knew.
“Now people are a little more savvy.”