Best Ways to Save: November 2022

5 Common Complaints About Medicare Advantage Plans And What Can Be Done About Them

Medicare Advantage plans are a popular choice for 48% of all Medicare beneficiaries — many of whom select their plan out of the need to keep healthcare costs in check.  Nearly 7 in 10 Medicare Advantage enrollees are in plans with no premium, and plans may provide additional benefits such as eye or hearing exams that aren’t covered by traditional Medicare.  But Medicare Advantage plans aren’t the best choice for everyone.  The oldest and sickest Medicare Advantage enrollees are particularly at risk of the highest annual out-of-pocket spending.  Even worse, it’s not until plan enrollees develop health problems that they learn how much they may need to spend out-of-pocket, which often comes as a big surprise.

Here are 5 of the most common complaints about Medicare Advantage that we’ve heard over the years and some tips to deal with unpleasant surprises:

1. Plans make changes every year. Medicare Advantage plans are administered by private insurers who contract with the government to provide Medicare benefits. Medicare sets coverage parameters annually, and plans are given leeway in what to charge for co-pays and coinsurance, their provider networks, how they impose prior authorization for services, and the drugs covered as well as other benefits.

Avoid surprises:  Comparing plans is one of your most effective tools for saving money in the following year.  You can learn how your costs will be increasing in 2023 and whether other plans in your area may soon be a better choice for you.  During Medicare Open Enrollment, October 15 - December 7, check your Medicare Advantage plan benefits costs and provider networks for 2023.   Get trained, unbiased help with this task.  Find free one-on-one counseling through State Health Insurance Assistance Programs, many of which operate through Area Agencies on Aging.  Get help here:  Click the “SHIP Locator” button to find contact information for your state program.  Make an appointment for counseling now, by saying you need help comparing your Medicare Advantage plan options.  Don’t wait.  Medicare Open Enrollment ends soon.

2. Zero premium Medicare Advantage plans are not “free.” Far from it, even zero premium Medicare Advantage plans still cost plenty when you get sick. For starters, you must have Medicare Part B which in 2023 will cost $164.90 a month for most beneficiaries.  Some plans may help pay all or part of the Part B premium, but Medicare Advantage plans charge co-pays and coinsurance for most services that you receive.  Unless you are in a Medicare/Medicaid plan for low-income seniors, you will still pay about 20% of the cost of the care that you receive up to the annual maximum.  If you are sick and need more visits to doctors and health services, the more likely you will pay out -of-pocket.  Thus, you will need to budget more for your healthcare as you get older, even though most retirees have less savings and resources to spend as they age.

Avoid surprises:  Figure out how much you spend out-of-pocket annually, and that means organizing your receipts.  Keep track of medical expenses, the health care services you receive, and prescriptions you fill.  (You may already do this if you pay income taxes since medical expenses might potentially be deductible.)  In your records, note the number of visits to doctors, hospital, or other healthcare providers and what you currently spend on copays and co-insurance.  Keep a list of all your prescription drugs and co-pays.  Keep track of what isn’t covered now or what cost more than you thought it would.  Check the notice of changes for 2023 booklet from your health plan and compare your costs in 2022 with what your estimated costs will be in 2023.  Once you have an overview of your annual spending now, you will be better able to compare plan options to determine if you can find a better Medicare Advantage Plan during Medicare Open Enrollment.

3. You may have multiple co-pays for the same visit. When you visit your primary care physician, you may be asked for a modest co-pay at the time of service. But depending on the extra services that you require, there could be more co-pays.  For example, your doctor may refer you to a specialist.  When you visit a specialist, the co-pay often is higher than your usual primary care physician co-pay.  If your doctor or specialist orders lab or diagnostic tests, you may have co-pays or co-insurance for each of those.  In addition, because the healthcare providers send the bill directly to Medicare Advantage plans and not to Medicare, your plan might deny claims that Medicare would otherwise approve.  While the reasons can vary, denials often occur because the doctor’s office did not receive pre-authorization for the service.  That leaves you with the choice of going through the hassle of appealing the claim (which may be worth doing if the bill seems incorrect or too high) or paying the unanticipated additional co-pays if they check out as correct.

Avoid surprises:  Visits to the doctor can sometimes mushroom into more services than anticipated, especially if your doctor finds new symptoms.  Keep track of the services provided in each visit.  Record notes on your phone or carry along a log for medical records.  Learn all you can about how your plan works ahead of time, ask about pre-authorization and when it is needed.  Find out what preventive services your plan might cover with no-copays, and when to expect additional cost sharing.  If you have questions about pricey services such as CT scans or other tests, call the customer service number of your health plan and ask for an estimate of the cost prior to getting the service.

4. Hospitalization costs more. Nearly 17% of Americans 65 and up are hospitalized at least once during the year. According to a recent study by the Kaiser Family Foundation, half of all Medicare Advantage enrollees would incur higher costs for a 5-day hospital stay than beneficiaries in traditional Medicare who have a Medicare supplement (Medigap) plan.

Avoid surprises:  When comparing Medicare Advantage plans during Medicare Open Enrollment, the cost of hospital stays are an important factor to consider, particularly if you have a serious health condition, such as a history of heart disease or diabetes.  You may need to contact your current health plan for help getting an estimate of this cost.  To make sure you aren’t low-balled, ask the average cost of hospitalization for other enrollees who have health conditions similar to yours.

5. High out-of-pocket annual maximums. In 2022, the federal government allows Medicare Advantage plans to set annual out-of-pocket limits as high as $7,550 for in-network care, and up to $11,300 for both in and out-of-network services (but plans have the option to set lower limits). The limits are increasing to $8,300 for in-network care and $12,450 for in and out-of-network services in 2023.  Please note:  Out-of-pocket limits do not include what is paid for premiums.  Out of pocket refers to the amount that enrollees spend in a year before their health plan picks up 100% of the cost of services.  Maximum out-of-pocket limits are determined by Medicare and tend to climb annually.

Avoid surprises:  While having a reasonable limit — preferably a low one — is very important, don’t fall for the claim that an out-of-pocket limit will “protect you from bankruptcy,” as insurance sales staff may tout.  Make that determination yourself.  How many years could you afford to be spending $8,000 - $12,000 a year for healthcare (not counting premium costs) if you were to develop a very serious condition or require a very expensive drug?  For many middle-income seniors who don’t receive low-income assistance, not very long.  For those who do have savings, hope for the best but plan for the worst.  Your goal might be to set aside enough for premiums and your total out-of-pocket maximum for the year ($8,000 - $12,000).  Depending on your situation, you may need to allow more if you have costs that aren’t covered by Medicare.  This is especially the case for long term care services and supports.



Sources: “Medicare Advantage in 2022: Enrollment Update and Key Trends,” Meredith Freed, Jeannie Fuglesten Biniek, Tricia Neuman, Kaiser Family Foundation, August 25, 2022.  “Medicare Advantage in 2022: Premiums, Out-of-Pocket Limits, Cost Sharing, Supplemental Benefits, Prior Authorization and Star Ratings,” Meredith Freed, Jeannie Fuglesten Biniek, Tricia Neuman, Kaiser Family Foundation, August 25, 2022.