Medicare

October 22, 2024

I don’t know if you have noticed the ads on television recently for the various Medicare Advantage Plans,but it is that time of the year when there is “open enrollment” for Seniors, eligible for Medicare.

There are two types of coverage available for Seniors, Medicare Advantage and Original Medicare.

With Medicare Advantage, you must use the network established by the insurer or you are subject to having to pay for healthcare services, if your provider is not in their network. There are also limitations in coverage. Over 50% of Medicare recipients are enrolled in Medicare Advantage plans. These plans have been extremely profitable for the insurer, and their selling point is that they offer dental and eye coverage while Original Medicare doesn’t. If you are healthy and their network works for you, this may be the plan of choice.

With Original Medicare, you can use any healthcare provider that accepts Medicare. It is rare today that a provider doesn’t. There is no coverage for dental or eye care. If your eye issues are because of diabetes or other health conditions then your physician will be covered but not eye glasses. With Original Medicare, the healthcare provider bills Medicare and Medicare determines whether what they are being billed for is applicable, and then determines what their payment is for that service. At this point, Medicare will normally pay 80% of their approved amount. The Medicare recipient is responsible for the other 20%.

Medicare will send the Medicare recipient, summaries of the charges and their payment, and what amount you are responsible for. You can buy a Medicare Supplemental plan that will cover that amount or you can self-insure.

That is the quick and dirty analysis of the two programs. Whichever plan that you choose, make sure that you review all the details prior to selecting one.

My wife and I have stayed with Original Medicare. I recently decided to review the cost for this current year. I have more health issues than my wife so my costs are greater. We both have Supplemental Plans. As long as we use a provider that accepts Medicare, we have no out of pocket costs. Of course, dental is not covered nor are our eye glasses.

We receive statements periodically from CMS-Medicare which outlines each claim that our various healthcare providers submits. This statement also indicates what Medicare approves, how much they pay and what our remaining obligation is. If you have a supplemental plan, they forward the claim to that Supplemental Insurer.

As I mentioned previously, we both have supplemental plans. My plan is with Cigna and my wife’s plan is with United Healthcare. The insurer is allowed to “rate” each person and charge different rates based upon their health conditions. My plan costs $519.51 per month while my wife’s plan is only $288.30 per month.

In looking at the results for the period January through October 11, 2024, I paid $4,743.57 in premiums and Cigna paid out $2,456.93 or 51.8% of what they collected. My wife paid $2,729.55 in premiums and United Healthcare paid out $277.10 or 10.2% of what they collected. I would say that Supplemental plans are very attractive for the insurer.

I have recently seen a number of articles discussing some of the major healthcare insurer’s financial results this year. It appears that many are missing their projected profit results, and are blaming it on Medicare Advantage and Medicaid rates not adequately covering their costs. Both of these programs are significant in their overall operations. However, during the past few years, these insurers have benefited from the rates they have been paid, versus the costs they have incurred. I wonder whether they have really managed the folks in their programs. Having been involved in Medicaid for a number of years, I know that you can both serve your members and be profitable but you must approach this program with supervision and innovative programs.

If you are a senior and considering changing your program, please do your own due diligence or have someone who is independent assist you.

Good Luck!

Jess Sweely

Madison, Va.

October 22, 2024