Do You Need A Medicare Supplemental (or Advantage) Policy?

[Lis]

I'm researching various Medicare supplemental or Advantage plan options, and I came across the following article, written in 2013: "Medicare Supplemental Policies: Do You Need One?":
http://www.huffingtonpost.com/david-belk/medicare-supplemental-policies_b_3901861.html

The author makes the case in the article, with examples, for "no", and concludes by saying that unless you get a Medicare supplemental policy for free from an employer, it is the equivalent of throwing money away. "But Medicare coverage goes far beyond what almost anyone would ever need so buying a Medicare supplemental policy amounts to little more than giving an insurance company your money so that they can keep it."

Is the article correct? Are there any current or future considerations that might contradict what he said in the article? And would the same logic apply to a Medicare Advantage plan?

 

[Mack]

Medicare Part B pays 80%. The supplement policy picks up the rest. The 20% can be very expensive. If you don't go to the doctor much, and can afford the 20% when you do, then by all means do not buy a supplement policy. However a major illness with tens (or hundreds) of thousands of dollars of medical bills means that the 20% amounts to many thousands of dollars. If you can afford to pay it out of pocket, then by all means do not buy a supplement policy. I guess it depends on how much of a gambler you are.

Of course you could go with Medicare Advantage instead, but you are limited to the doctors and hospitals in their network so if you travel much this won't work for you. Or if your doctors aren't in the network then you will need to change doctors. Also I have seen doctors stop taking patients from certain insurance companies, which would also mean a doctor change. You won't have that problem with original medicare plus a supplement policy.

 

[Lis]

Thank you for your quick reply. Just trying to figure this all out, not sure why it struck a nerve ("then by all means do not buy a supplement policy")?

I agree that supplemental plans offer some advantages vs. Medicare Advantage plans, but I was also looking for some feedback regarding the article specifics. Quoting from the article again,

"For example, if you’re hospitalized at least twice a year, every year, then buying a supplemental policy might be worth it. A supplemental policy would also be a good deal if you get:

— 20 MRIs every year, or

— 25 CT scans, or

— You visit your doctor at least 100 times a year (twice a week), or

— You get between 500 and 1,000 standard blood tests

You buy insurance to cover what you don’t expect. Most Medicare patients only see a doctor about 2 to 4 times a year (if that) and get maybe a few blood tests before each visit. If you need at least 20 times more medical care than that every year, a supplemental policy might be a good deal."

A supplemental plan (F) in my zip currently costs approximately $150/month or $1,800/year. The combined Medicare Part A and B deductibles are $1,454.

I'm not sure why, but the article omits any discussion of treatments for chronic conditions like CKD, diabetes, etc., nor does it discuss treatment for acute conditions like cardiac arrest. I have no idea what the 20% of Medicare-approved amounts would represent, since I don't have any experience in that area.

 

[Mack]

It did not strike a nerve, I am not in the insurance business, I am just a layman like you. I was just saying that if you aren't sick much, and are a gambler, go the self insurance route!

I did not buy a supplement policy because of possibility of hospital costs, but for the possible high cost of doctors and the expensive tests they order. At least with the insurance I KNOW what my costs will be per year, without insurance your cost could be from $0 to many thousands. So decide what your comfort level is and again, it depends on if you are a gambler or not. If we could predict when we would be sick, or in an accident, then it is a no brainer, we could buy or not buy depending on our predictions.

One other thing, if you delay in buying until you get older (and possibly sicker), you may be paying a higher premium at that time than you would if you got with an insurer now and stayed with them. Just a possibility, like I said I am not in the insurance business.

 

[MBSC]

The same can be said for homeowner's insurance and auto insurance. You pay the premiums and hope you never use it.

The Part A deductible of $1288 is misleading in several ways. First, it is not an annual deductible but a "per benefit period" deductible. The benefit period resets once you have been out of the hospital 60 days. So, in theory one could have 5 separate hospital stays each separated by 60+ days within the span of a year. Instead of $1,454 in combined Part A and Part B deductibles, it could be ($1288*5)+$166 = $6,606.

The article also has another misconception about the Part A deductible. With a hospital admission, the inpatient facility fees are processed under Part A and the professional bills (surgeon, anesthesiologist, etc.) are processed under Part B. This creates both Part A and Part B cost sharing. The article fails to mention the Part B deductible and 20% coinsurance on the professional charges of an inpatient stay.

I believe Medigap High Deductible Plan F (HD-F) is the sweet spot. Medicare still pays first and you pay the remaining Part A and B deductibles and coinsurance until you hit the $2,180 HD-F cap. For the $40-60 premium, you are protected against the high cost of a chronic illness.

 

[Lis]

I believe Medigap High Deductible Plan F (HD-F) is the sweet spot. Medicare still pays first and you pay the remaining Part A and B deductibles and coinsurance until you hit the $2,180 HD-F cap. For the $40-60 premium, you are protected against the high cost of a chronic illness.

MBSC, thanks for the information. When Plan F is closed to new enrollees in 2020, I'm guessing that the premiums for existing subscribers will go up at a faster rate for Plan F, compared to other plans, because there will be no new younger subscribers in the risk pool. Not sure what is going to happen with Plan HD-F, although the same thing would be happening - no new, younger subscribers. Haven't fully thought this through but assuming there is a $90 premium price difference between plan F and plan HD-F ($160 - 70), multiplied by 48 months = $4,320; plus the annual HD-F cap amount (or whatever the individual thinks his/her OOP will be), not sure if it wouldn't be better to get a plan G now. Thoughts?

 

[MBSC]

You are correct that Plan F premiums are expected to rise at a faster rate after 2020 for the reasons you gave. A decision on whether HD-F will also be closed has not been made yet, but if it is the $2180 cost share is expected to insulate it from similar premium increases. If HD-F is closed, an identical HD-G will be created in its place.

Plan G is a better value in most markets than Plan F.

 

[Daryl]

I have the HD-F plan. I would be very surprised if it is discontinued along with Plan F. The reason for discontinuing Plan F is a push for manditory deductibles, so that users have more "skin in the game". The concern is that people with Plan F see doctors more than necessary, because there is no cost. Plan HD-F along with some of the other newer plans are deliberately designed so the user has to pay some deductible.

I think the HD-F plan is the best choice in most cases. The premiums are low enough that you will save money almost every year over Plan F. I think it also addresses the complaints described in the original post of this thread, in reference to David Belk. Buy insurance for the worst case scenario, the situation that would bankrupt you, but pay a low premium that saves more than enough for some occasional medical costs.

 

[MBSC]

I have the HD-F plan. I would be very surprised if it is discontinued along with Plan F.

State insurance commissioners and insurance companies are requesting that HD-F be replaced by an identical HD-G in 2020. The reason is people in 2020 may find it confusing they can buy this 'F' but not that 'F', CMS is taking the request under consideration but has not made a final decision yet.

This is how the benefit chart would look in 2020 if HD-G is adopted. http://www.naic.org/documents/commi..._exposure_medigap_plans_sold_after_200101.pdf

 

[JC]

I'm researching various Medicare supplemental or Advantage plan options, and I came across the following article, written in 2013: "Medicare Supplemental Policies: Do You Need One?":
http://www.huffingtonpost.com/david-belk/medicare-supplemental-policies_b_3901861.html

The author makes the case in the article, with examples, for "no", and concludes by saying that unless you get a Medicare supplemental policy for free from an employer, it is the equivalent of throwing money away. "But Medicare coverage goes far beyond what almost anyone would ever need so buying a Medicare supplemental policy amounts to little more than giving an insurance company your money so that they can keep it."

Is the article correct? Are there any current or future considerations that might contradict what he said in the article? And would the same logic apply to a Medicare Advantage plan?

Like with all insurance you are hedging your bets. To answer your first question "Do you need to buy one" Then answer to that is NO!! No one is required by Medicare to purchase a supplemental plan. However I would seriously look into what you would be responsible for if all you had was straight Medicare. If you delay purchasing the supp program until later on in life, like some are suggesting, you may not be eligible to join at that point. There are only certain times when you can buy one guaranteed. Most times you have to qualify medically to get one.

My belief is that you are better off under a Medicare advantage program then having just A and B with nothing to back it. I have several examples of why I say that but each individual person needs to discuss for themselves and decide what programs are right for them.