Mistake #8: Not Reviewing and Understanding Your Coverage

In Medicare Mistake #5 we talked about why the best plan for your spouse or friend might not be the best plan for you. In this Medicare Mistakes article, we’ll address the importance of reviewing and understanding your coverage to make sure you’re getting what you need.
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• Medicare Advantage and Medigap are easily confused, but they are very different.
• Medigap works with Original Medicare to pay some of the deductibles, coinsurance, and copayment out-of-pocket costs.
• A Medicare Advantage plan completely replaces Original Medicare with private health insurance that’s approved by Medicare.
• If you join a Medicare Advantage plan you pay the plan’s deductibles and copayments out of pocket until you reach the annual maximum out-of-pocket (MOOP) limit.
• In Original Medicare, a Medigap policy provides out-of-pocket cost protection.

[keytakeaways]

In the mad rush to get enrolled at age 65, far too many people choose a plan or policy based on the monthly premium without taking the time to fully understand out-of-pocket costs. And many people get wooed into a plan based on the recommendations of a friend or what they read in the Medicare & You Handbook. Both of these situations can result in a costly mistake if not reversed in time.

Don’t Confuse Medicare Advantage Plans with Medigap Policies

In Medicare Mistake #4 we talk about who should be in a Medicare Advantage plan and who shouldn’t.  It’s important to understand if you are a good candidate for private Medicare insurance because if you aren’t it will save you a lot of headaches when comparing plans.

Original Medicare and Medigap coverage are easy to understand. Medicare Part A covers your hospital inpatient care and Medicare Part B covers your medical care, including doctor visits, lab work, tests, and medical supplies. Both Part A and Part B have deductibles and coinsurance out-of-pocket costs. That’s where Medigap comes in.[mfn referencenumber=1]Medicare.gov, ”What Part A covers”, Accessed January 15, 2022[/mfn][mfn referencenumber=2]Medicare.gov, ”What Part B covers”, Accessed January 15, 2022[/mfn][mfn referencenumber=3]Medicare.gov, ”Medicare costs at a glance”, Accessed January 15, 2022[/mfn]

In all but three states (Minnesota, Wisconsin, and Massachusetts) Medigap coverage is standardized into 10 lettered plans (A, B, C, D, G, F, K, L, M, and N). There are also high deductible versions of Plan F and Plan G. Standardization means that a Medicare Supplement Plan F sold by AARP is exactly the same as a Plan F policy sold by Humana. The only difference is the monthly premium and how the premium is determined.[mfn referencenumber=4]Medicare.gov, ”How to compare Medigap policies”, Accessed January 15, 2022[/mfn]

Medigap coverage is easy to understand because you can look at a simple Medigap Plans Comparison Chart to see what a plan covers:

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Unfortunately, Medicare Advantage plans are not as cut-and-dry as Original Medicare and Medigap. Even though all Medicare Advantage plans must offer the same coverage as Medicare Part A and Medicare Part B, they are not required to provide hospitalization and medical care the same way as Original Medicare.[mfn referencenumber=5]Medicare.gov, ”Medicare Advantage Plans cover all Medicare services”, Accessed January 15, 2022[/mfn]

Confusing, right?

What that basically means is that each Medicare Advantage plan has the flexibility to determine its shared costs. You see, Medicare is an 80/20 system. Medicare pays about 80 percent of all major medical costs and beneficiaries pay the remaining 20 percent. Medicare Advantage plans are no different, and that causes people a lot of confusion.[mfn referencenumber=6]CMS.gov, ”The 80/20 Rule: Providing Value and Rebates to Millions of Consumers”, Accessed January 15, 2022[/mfn]

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In Medicare Mistake #1 we go over Medicare costs in detail, so we won’t go into it again here. But, it is important to point out that Medicare Advantage plans are not free, even though a zero-dollar monthly premium makes it appear as if they are. Many people join a low-cost Medicare Advantage plan and later discover they can’t afford the deductibles or copayments.[mfn referencenumber=7]Medicare.gov, ”Costs for Medicare Advantage Plans”, Accessed January 15, 2022[/mfn]

This is why MedicareWire offers a PDF download on all of its Medicare Advantage plan pages. Our basic summary of benefits PDF documents will help you see what your costs will be when you use different healthcare services.

If you have chronic health issues and see your doctor or specialist frequently, or you use medical supplies, you need to know your out-of-pocket costs. There’s no other way to get this information than to gather the deductible and copayment information and do the math.

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Failing to Understand Provider Networks

One of the best features of Original Medicare and Medigap coverage is that you are not restricted by provider networks and prior authorization approvals. Provider networks are a feature of Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) private health plans.[mfn referencenumber=8]Medicare.gov, ”Doctors, providers & hospitals in Medicare Advantage Plans”, Accessed January 15, 2022[/mfn]

Original Medicare is a private fee-for-service (PFFS) system. Beneficiaries are allowed to use any healthcare provider that accepts Medicare-assignment. In other words, if a healthcare provider you want to see will give you an appointment, you can see them and Medicare will pay its share. No prior approval is required.[mfn referencenumber=8]Medicare.gov, ”Doctors, providers & hospitals in Medicare Advantage Plans”, Accessed January 15, 2022[/mfn]

This is not the case with most Medicare Advantage plans. Most of these plans are HMOs or PPOs.[mfn referencenumber=9]Medicare.gov, ”Medicare Advantage Plans”, Accessed January 15, 2022[/mfn]

HMO and PPO plans are managed care health plans. This simply means that the insurers negotiate care agreements with providers for their member’s care. Contracted providers make up the plan’s provider network.[mfn referencenumber=8]Medicare.gov, ”Doctors, providers & hospitals in Medicare Advantage Plans”, Accessed January 15, 2022[/mfn]

If you join an HMO Medicare Advantage plan you are required to use providers in the network. If you go outside of the network you pay all costs yourself. Don’t worry though, if you have an emergency and can’t make it to a provider in your plan’s network, you’re still covered (in the USA and its territories only). Also, most plans have pre-authorization rules that require members to get authorization to see a specialist, get a test, etc.[mfn referencenumber=5]Medicare.gov, ”Medicare Advantage Plans cover all Medicare services”, Accessed January 15, 2022[/mfn]

PPO plans are similar, but with a PPO you can go out-of-network if you choose. However, you will pay higher copayments.[mfn referencenumber=8]Medicare.gov, ”Doctors, providers & hospitals in Medicare Advantage Plans”, Accessed January 15, 2022[/mfn]

Before joining a Medicare Advantage plan it’s important that you fully understand the plan’s rules and restrictions. A plan’s extra benefits might look really enticing, but if they keep you from seeing your preferred doctor or getting the care you want, it may not be your best option.

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Failing to Verify Drug Coverage

Most Medicare Advantage plans include a Medicare Part D prescription drug plan as an additional benefit[mfn referencenumber=10]Medicare.gov, ”How do Medicare Advantage Plans work?”, Accessed January 15, 2022[/mfn]. Original Medicare does not cover prescriptions, but you can add a stand-alone Medicare Part D plan[mfn referencenumber=11]Medicare.gov, ”How to get prescription drug coverage”, Accessed January 15, 2022[/mfn]. In most states, Medicare prescription drug plans start at around $20.

Unfortunately, you can’t assume that every plan covers all medications. They don’t. And you can’t assume that medications cost the same in each plan, either.

Isn’t our pharmaceutical system wonderful?

Why is this? Simply put, every Part D plan negotiates its own costs and preferred pharmacies. And, every plan organizes medications into several tiers on a list called a formulary. The formulary is what determines your costs when you pick up your prescription at the pharmacy.[mfn referencenumber=12]Medicare.gov, ”Costs for Medicare drug coverage”, Accessed January 15, 2022[/mfn]

Can you see how this might complicate choosing a Medicare Advantage plan?

If you have regular prescriptions that you take, it is critical that you compare Part D plan coverage and costs to make sure your medications are covered at the overall best cost to you. Medicare.gov has an online tool that makes this a simple task.

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Failing to Review Coverage Annually

Yet another significant benefit of Original Medicare and Medigap is that coverage does not change. In fact, the last time Original Medicare had a significant change was when the Affordable Care Act was signed into law.[mfn referencenumber=13]HHS.gov, ”What is the Affordable Care Act?”, Accessed January 15, 2022[/mfn]

Unfortunately, this isn’t true with Medicare Advantage plans.

Each year Medicare Advantage plans are allowed to submit changes to the Centers for Medicare & Medicaid Service (CMS) for approval. Plans must send an Annual Notice of Changes (ANOC) to all plan members at least 15 days before the start of Open Enrollment on October 15. The ANOC outlines changes in the plan’s benefits, coverage, formulary, premium, and out-of-pocket costs that will take effect on January 1.[mfn referencenumber=14]Medicare.gov, ”Plan Annual Notice of Change (ANOC)”, Accessed January 15, 2022[/mfn]

If you’re in a plan and ignore the plan’s annual notice, you might be in for quite a surprise the next time you see your doctor or have an inpatient stay in the hospital. With health care costs on the rise, one of the many ways plans remain profitable is to increase copayments, particularly those for inpatient and emergency care. In fact, a Kaiser Family Foundation study found that the inpatient out-of-pocket costs in many plans are higher than Original Medicare alone.[mfn referencenumber=15]KFF.org, ”Cost-Related Problems Are Less Common Among Beneficiaries in Traditional Medicare Than in Medicare Advantage, Mainly Due to Supplemental Coverage”, Accessed January 15, 2022[/mfn]

If you join a Medicare Advantage plan, it’s important to review your coverage every year. If you stay in Original Medicare and purchase Medicare supplement insurance to cover the gaps, you should compare rates each time your policy has a rate increase.

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When to Make Changes

There are several periods when Medicare lets you change your Medicare Advantage coverage each year. The most well-known period is the Annual Election Period (AEP). This is in the Fall from 15 October through 7 December. During this period you can join a plan, switch plans, or go back to Original Medicare.[mfn referencenumber=16]Medicare.gov, ”Joining a health or drug plan”, Accessed January 15, 2022[/mfn]

There is a second enrollment period for people who are in a Medicare Advantage plan. This is called the Medicare Advantage Open Enrollment Period (MA-OEP). It starts 1 January and ends 31 March. During this period you can change plans or disenroll from a plan and go back to Original Medicare. Changes you make take effect on the first day of the month after you make the change.[mfn referencenumber=16]Medicare.gov, ”Joining a health or drug plan”, Accessed January 15, 2022[/mfn]

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