JB: And you don't pay more if you need care while you're not in your home state?
KT: You do not pay more if you need care outside of your home state. Medicare sets the amount a doctor or hospital can charge. Those amounts do not change if you leave your home state. So if Medicare is picking up 80% of this "set amount" that leaves 20% your supplemental plan will pick up and, remember, your supplemental plan or company does not approve or deny a claim. That's Medicare's job. Once Medicare has approved the claim, then your supplemental plan has to pay (based on the coverage levels of the plan) regardless of the state you live or the state you're visiting.
JB: That's a relief. We about done?
KT: Misconception #9: "Medicare Advantage is a supplemental plan."
Medicare Advantage falls under the category of Medicare Part C. Medicare Advantage plans are not supplemental plans. If someone chooses a Medicare Advantage plan, then it takes the place of Medicare as your primary plan and you will not need a supplemental plan and maybe not even a drug plan. The premiums can also be a lot lower compared to Medicare Part B premiums and supplemental plan premiums. That's sounds like a good deal but these plans differ from state to state, in the form of PPOs and HMOs, and you'll have to make sure your doctor and hospital accept Medicare Advantage plans. Here in Chicago, Northwestern or Loyola of Maywood accept Medicare but if you have Medicare Advantage, then you would be considered out of network. Also, even when your doctor or hospital accepts your Medicare Advantage, your "out of pocket" costs can still be higher compared to using traditional Medicare as your primary plan, along with a supplement plan and drug plan.
I may be missing some other misconceptions, but these are enough to help people avoid some mistakes when going on Medicare.
JB: This is terrific, Kevin. A lot to digest but all very helpful. Here in Illinois, I read that Blue Cross Blue Shield has a near monopoly for individual pre-Medicare health care policies. Is that also true for the various Medicare supplements? If so, do you think that's because people mistakenly think that if they pay more for a plan, then they'll get better service/more services/a larger proportion of the cost covered? It's a good reason for BCBS not to clarify matters because this myth definitely plays in their favor.
KT: I would agree that BCBS has a near monopoly for Medicare supplemental insurance. The main reason is that people are uneducated on Medicare supplemental insurance but they don't know they're uneducated. I hear it all the time: "I chose BCBS because my doctor accepts it," or "BCBS can be trusted to pay the claims," or "I have had other companies in the past but I haven't had any trouble with BCBS." I have BCBS myself for my primary insurance so all these issues or concerns are legitimate if you're under 65.
Once you hit 65, these misconceptions need to be corrected. People need to be educated when going on Medicare. The statements I just listed are not valid reasons when choosing a company because: The doctor accepts any plan as long as s/he accepts Medicare. The claim process is the same with every company and the plans have to pay if Medicare has already approved the claims. I can tell you that I haven't had any trouble with any company for supplemental insurance because they all work the same way.
It's certainly beneficial to BCBS not to clarify matters since it does play in their favor. I think it basically comes down to BCBS agents who only offer BCBS. They're going to push their product because that's the only company they have to offer. If you're a broker like me who isn't locked into one company, you shouldn't be pushing a company if it has a higher premium. Since BCBS has higher premiums, then I won't recommend that my clients sign up with their plans. You first want to decide on the plan (Plan F, G, N, etc.) and go with the company that has the lowest premium for that plan.
JB: That's a perfect segue to my next question. Most people have never even heard of Plan G and nobody I know has it. How is it different from Plan F and how can it save some people a fair amount of money? Also, why is it such a well-kept secret?
KT: As I said before, the Medicare supplemental plans cover varying degrees of what Medicare does not cover. What doesn't Medicare cover? Here are the main charges Medicare doesn't cover: Under Medicare Part A, there is a hospital deductible of $1,260 and under Medicare Part B there is an annual deductible of $147 and then Medicare only picks up 80% of the charges which leaves you with paying the 20%. Plan F covers everything Medicare says you're responsible for paying. Therefore, it would pickup the Medicare Part A and Part B deductibles and the 20% under Part B leaving the patient with zero out of pocket. Plan G also covers everything Medicare says you're responsible for paying, except it does not cover the annual Medicare Part B deductible of $147.
What makes Plan G more cost effective then Plan F is that Plan G's premium is about $30 less per month (or more, for the older ages) compared to Plan F's premiums. Although you're paying the one time deductible of $147 with Plan G, you're saving $360 or more over the course of the year in premiums. The cost savings with Plan G more than make up for paying the Part B deductible of $147 out of pocket. I would recommend Plan G over Plan F because I wouldn't recommend that anyone pay $360 more out of pocket for Plan F when all they're getting is additional coverage of $147.
JB: Why the cost difference?
KT: Over many, many years, people have always chosen Plan F. Since most people had Plan F, the claims for Plan F have always been high. The higher volume of claims has caused Plan F premiums to go up at a faster rate than Plan G premiums. Price increases for Plan F premiums each year are about 7%-12%. Since there are fewer claims with Plan G, the premium increase has ranged from 0% to 5% each year with the various companies.
Plan G is becoming less and less of a secret because most of the brokers I know are advising their clients to choose Plan G since it's simply more cost effective. I'm not trying to pick on BCBS but it's really only their agents who are still advising or allowing their clients to choose Plan F because the cost differential between BCBS Plan F and Plan G is only about $16 per month. Although the $16 per month still makes Plan G more cost effective under BCBS, it's not a significant cost difference, so many of the BCBS clients choose Plan F. The bigger problem is that BCBS premiums are significantly higher to start with, compared to the other companies. This is especially true for the older ages. So when choosing BCBS, regardless of whether it's Plan F or Plan G, you're costing yourself money.
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