Why Does Bob"s Medicare Plan Require No Copays While Mine Does?
Prior to the Balanced Budget Act, Medicare beneficiaries had a much simpler array of choices.
Since Medicare supplements were already standardized, the beneficiary was left with two main choices.
He could choose to enroll in only original Medicare, and take his chances with the cost-sharing for deductibles and co-insurance that were required of him.
On the other hand, he could choose one of the 10 standardized medicare supplements that most closely matched his needs to help him pay that cost-sharing when medical services were accessed.
However, after Medicare Advantage plans hit the scene, there was considerable confusion.
In addition to the regular medigap choices, now the beneficiary had private Medicare health plans available to him that often have much lower monthly premiums but required the use of networks and also required more cost-sharing for medical services than a comprehensive Medicare supplement would have provided.
All too often, though, the beneficiary makes a quick decision, either because there is too much confusing information, or because he bases his initial choice on what a friend has chosen, even though his friend has a different set of needs and health conditions.
He is still largely uninformed about his plan works.
Let's look an example: A beneficiary -- let's say his name is Ed -- enrolls in a $0-premium Medicare Advantage plan based on price alone, and then later develops a significant health condition requiring lots of treatment, and lots of co-pays according to the rules of his chosen plan.
Ed begins to feel the strain of the many copays and co-insurances due under his plan Naturally, he complains about this to some friends and neighbors.
One neighbor -- let's call him Bob -- shares that his own plan requires no copays at all.
In fact, when Bob goes to the doctor or hospital or an imaging facility, he pays nothing at all.
Ed is immediately incensed and suspicious.
Why does he have to shell out thirty bucks every time he sees his specialist when Bob doesn't? Why did Ed's MRI last week cost $250 when Bob said his MRI last year was fully covered by his plan? Ed starts making some phone calls and learns from an insurance agent about the reasons why his plan is different.
You see, Medicare Advantage plans have a much lower premium up front because the beneficiary agrees to 1) abide by plan's network rules and restrictions and enrollments periods and 2) share in some of the costs of treatment in the form of copays and co-insurances for medical services as he receives them.
Ed didn't question this up front when he first enrolled in his plan because he was healthy at that time and didn't want to pay anything for his coverage.
Later on, though, when a health condition appeared, he was surprised and disappointed to find out that his more frequent usage of his benefits cost him a pretty penny.
This is the time when agents see beneficiaries start to demonstrate adverse selection.
This means that they wanted the cheapest plan possible when they were healthy, but now that they are ill and having to pay lots of copays for his frequent treatments, they wish they had enrolled in the more comprehensive medicare supplement like Bob has.
Bob's Plan F medicare supplement costs more, but he will pay nothing out of pocket at the time of treatment for Medicare-covered services.
This illustration demonstrates why beneficiaries are often confused when they compare their own plan to someone else's plan.
The beneficiary was unaware of the potential consequences of greater cost-sharing in exchange for lower premiums when first enrolling in a Medicare Advantage plan.
Like Ed, this person was too focused on the idea of a $0 premium to really think through the fact that the lower premium is obtained because the individual has agreed to great cost-sharing on the back end of the plan.
Such uninformed choices can be avoided if the Medicare beneficiary, upon first becoming eligible for Medicare, ask questions and reads thoroughly about choices.
Consulting a good independent insurance agent will help the consumer to understand how various plans work so that he can decide what amount of cost-sharing he is willing to accept in years where more medical treatment is necessary.
In the end, people like Ed should fully understand their coverage and never be surprised by the cost-sharing at the time services are rendered.
Since Medicare supplements were already standardized, the beneficiary was left with two main choices.
He could choose to enroll in only original Medicare, and take his chances with the cost-sharing for deductibles and co-insurance that were required of him.
On the other hand, he could choose one of the 10 standardized medicare supplements that most closely matched his needs to help him pay that cost-sharing when medical services were accessed.
However, after Medicare Advantage plans hit the scene, there was considerable confusion.
In addition to the regular medigap choices, now the beneficiary had private Medicare health plans available to him that often have much lower monthly premiums but required the use of networks and also required more cost-sharing for medical services than a comprehensive Medicare supplement would have provided.
All too often, though, the beneficiary makes a quick decision, either because there is too much confusing information, or because he bases his initial choice on what a friend has chosen, even though his friend has a different set of needs and health conditions.
He is still largely uninformed about his plan works.
Let's look an example: A beneficiary -- let's say his name is Ed -- enrolls in a $0-premium Medicare Advantage plan based on price alone, and then later develops a significant health condition requiring lots of treatment, and lots of co-pays according to the rules of his chosen plan.
Ed begins to feel the strain of the many copays and co-insurances due under his plan Naturally, he complains about this to some friends and neighbors.
One neighbor -- let's call him Bob -- shares that his own plan requires no copays at all.
In fact, when Bob goes to the doctor or hospital or an imaging facility, he pays nothing at all.
Ed is immediately incensed and suspicious.
Why does he have to shell out thirty bucks every time he sees his specialist when Bob doesn't? Why did Ed's MRI last week cost $250 when Bob said his MRI last year was fully covered by his plan? Ed starts making some phone calls and learns from an insurance agent about the reasons why his plan is different.
You see, Medicare Advantage plans have a much lower premium up front because the beneficiary agrees to 1) abide by plan's network rules and restrictions and enrollments periods and 2) share in some of the costs of treatment in the form of copays and co-insurances for medical services as he receives them.
Ed didn't question this up front when he first enrolled in his plan because he was healthy at that time and didn't want to pay anything for his coverage.
Later on, though, when a health condition appeared, he was surprised and disappointed to find out that his more frequent usage of his benefits cost him a pretty penny.
This is the time when agents see beneficiaries start to demonstrate adverse selection.
This means that they wanted the cheapest plan possible when they were healthy, but now that they are ill and having to pay lots of copays for his frequent treatments, they wish they had enrolled in the more comprehensive medicare supplement like Bob has.
Bob's Plan F medicare supplement costs more, but he will pay nothing out of pocket at the time of treatment for Medicare-covered services.
This illustration demonstrates why beneficiaries are often confused when they compare their own plan to someone else's plan.
The beneficiary was unaware of the potential consequences of greater cost-sharing in exchange for lower premiums when first enrolling in a Medicare Advantage plan.
Like Ed, this person was too focused on the idea of a $0 premium to really think through the fact that the lower premium is obtained because the individual has agreed to great cost-sharing on the back end of the plan.
Such uninformed choices can be avoided if the Medicare beneficiary, upon first becoming eligible for Medicare, ask questions and reads thoroughly about choices.
Consulting a good independent insurance agent will help the consumer to understand how various plans work so that he can decide what amount of cost-sharing he is willing to accept in years where more medical treatment is necessary.
In the end, people like Ed should fully understand their coverage and never be surprised by the cost-sharing at the time services are rendered.