Since we are in the Medicare “open enrollment” period, Oct 15-Dec 7, now is a good time for a quick review.
Medicare was enacted in 1965. It established parts A and B. Part A is free to all Americans 65 and older and to younger people with chronic kidney disease or who are chronically disabled. It pays 80% of hospital bills after a deductible. Part B, for which you pay, covers doctor fees and most outpatient services. Part B also has a deductible and covers 80% of the charges.
While Medicare B is voluntary, it would be playing Russian roulette to not take it, as you would have no coverage for doctor bills. Most people pay $185/month for Medicare Part B, though this goes up for those with higher incomes. It also goes up if you delay enrolling.
Medicare Part D became available in 2006. It is optional and helps pay for prescriptions. You must sign up and choose a plan annually. Typical premiums run about $50/month.
Because A and B only cover 80% of your medical bills, and these bills can mount up dramatically if you have a serious illness, most people pay for a supplemental policy to cover the 20%. These so-called “medigap” plans are offered by private insurers, not the government.
Part C, establishing what is now called Medicare Advantage, began in 1997. It gives private insurance companies a fixed amount per person per year to cover their medical expenses. The theory was that private health insurers would provide equal or better care and save the government money, a theory that has been proven wrong.
Medicare Advantage plans advertise heavily, and promise lower costs and extra benefits. At this time of year, you will be inundated with direct mail, phone calls and media blitzes trying to entice you to join an Advantage plan.
If you join such a plan, you must still pay your Part B premium, but typically will not have to pay for a medigap plan or Part D. Your monthly insurance premiums will usually thus be lower. There is, however, no free lunch. Under traditional Medicare A and B, you can be treated by almost every doctor and hospital in the country. This is not true for Advantage plans.
In return for the lower insurance cost, you will be restricted in the doctors and hospitals you can use and you will find that your doctors’ recommendations are subject to the whims of the insurance companies. Most hospital care and any expensive test or medication will only be covered if the insurance company approves it. I do not have space here to cover all the issues, and strongly recommend you Google “John Oliver Medicare Advantage” (the 31 minute one) for a biting and humorous look at the problem.
People who sign up for Medicare Advantage when they are healthy can be fine if they stay healthy. If they develop a serious illness they may regret their choice, as they find that the doctors and hospitals they would like to use for their care are not available.
Switching back to traditional Medicare would seem like an option, but there is a catch. When you first go on Medicare, you have free choice of medigap plans. They cannot refuse you because you are in poor health. If you try to sign up for one of these plans later, they can refuse to cover you at all or refuse to pay for pre-existing conditions. Just when you would need that 20% covered, it will not be, so you are locked into your Advantage plan.
My strong advice is that if you can afford the extra cost, start and stay with traditional Medicare and a good medigap plan. Otherwise, if you choose an Advantage plan, stay healthy!
Edward Hoffer MD is Associate Professor of Medicine, part-time, at Harvard.
What Does The Doctor Say?
By Dr. Edward Hoffer
