Medicare Coverage and Enhancement Options

INTRODUCTION

As a Medicare beneficiary, you have at least six options available with regard to medical care and numerous options available for prescription drugs.  There are tradeoffs to each option in terms of what is covered, your out of pocket exposure and how much you must pay for the plan you select.

As an independent insurance agent and professional advisor, Jeff Wilhelm, J.D. of Otto & Wilhelm Insurance Agency LLC has reviewed the Medicare plans offered by all 44 of the health insurance companies in Arizona and has created this summary of recommendations.

The options include:

1. Original Medicare.
2. Medicare Advantage HMO Plans.
3. Medicare Advantage PPO Plans.
4. United of Omaha/Mutual of Omaha Standard Plan F Medicare Supplement.
5. AARP/UnitedHealthcare Standard Plan L Medicare Supplement.
6. AARP/UnitedHealthcare Standard Plan K Medicare Supplement.

MONTHLY PREMIUM/COST OF OPTION

1. Original Medicare:  $115.40.
2. Medicare Advantage HMO Plans:  $0.00.
3. Medicare Advantage PPO Plans:  $54.00.
4. Standard Plan F Medicare Supplement: United of Omaha/Mutual of Omaha (female) $118.98 (male) $129.39.
5. Standard Plan L Medicare Supplement:  AARP/UnitedHealthcare $75.42.
6. Standard Plan K Medicare Supplement:  AARP/UnitedHealthcare $51.97.

Note:  With all of the options listed (2 through 6), you must also be enrolled in Medicare Parts A and B, and you must pay the Medicare Part B premium.  The standard Medicare Part B Premium is $115.40.

With the exception of options 2 and 3 above, none of the other options includes prescription drug coverage.  You will need a stand alone Medicare Part D prescription drug plan to have drug coverage and to avoid the Medicare penalty for not enrolling in a Part D plan.  Depending upon the specific drugs you need, the recommended stand alone prescription drug plan will range in price from as low as $14.80 per month for a standard plan with a $320.00 deductible and $28.60 per month for an enhanced plan with copay features and no deductible.  On average and including paying the monthly premium for the plan, Medicare beneficiaries save between 50% and 60% on their annual drug costs, including paying for the plan, by enrolling in a prescription drug plan.

OUT OF POCKET EXPOSURE/RISK

1. Original Medicare:  With original Medicare, there is no cap on your annual out of pocket exposure.  For example, if you had an extended hospital stay of 150 days, you would owe $43,582.00.  If you were in the hospital for a year, you could owe more than $1.5 million.  It is strongly recommended that you select an option (2 through 6) other than original Medicare.
   
   
2. Medicare Advantage HMO (Example only):  The stated annual out of pocket limit/cap is $3,950.00.  The out of pocket costs that cannot cumulatively exceed $3,950.00 per year include hospitalizations ($225.00 per day for days 1-7), skilled nursing care ($110.00 per day for days 1-26), primary care physician visit ($10) and specialist doctor visit ($40.00).  Please see our Medicare OOP Expenses page which outlines where the out of pocket expenses can come from with original Medicare.  This type of plan is best suited for healthy budget-minded individuals who do not have chronic or recurring illnesses or a family history of illness.
   
   
3. Medicare Advantage PPO (Example only):  Same as option 2 above.  The out of pocket costs per year include hospitalizations ($175.00 per day for days 1-7), skilled nursing care ($0 per day for days 1-7 and $84.00 per day for days 8-100), primary care physician visit ($15.00) and specialist doctor visit ($35.00).
   
   
4. United of Omaha/Mutual of Omaha Standard Plan F Medicare Supplement:  Your annual out of pocket exposure is zero.  With this plan, you would owe nothing toward deductibles or coinsurance.  Your only cost is the monthly premium.  This type of plan is more expensive to purchase but with it you have peace of mind knowing exactly what you will be paying each month regardless of health issues you might develop.  This plan is especially good for anyone with chronic health conditions.
   
   
5. AARP/UnitedHealthcare Standard Plan L Medicare Supplement:  Your annual out of pocket exposure is limited to $2,472.00.  The out of pocket costs that cannot cumulatively exceed $2,472.00 per year include 1) the Medicare Part B deductible 2) Medicare Part B excess charges and 3) foreign travel emergency.  The costs also include 25% of 1) Medicare Part B coinsurance, 2) blood, 3) Part A hospice care, 4) skilled nursing and 5) the Medicare Part A deductible.  Please see our Medicare OOP Expenses page which outlines some of these out of pocket expenses under original Medicare.  This type of plan is best suited for healthy budget-minded individuals who do not have chronic or recurring illnesses or a family history of illness.
   
   
6. AARP/UnitedHealthcare Standard Plan K Medicare Supplement:  Your annual out of pocket exposure is limited to $4,782.00.  The out of pocket costs that cannot cumulatively exceed $4,782.00 per year include 1) the Medicare Part B deductible, 2) Medicare Part B Excess Charges and 3) foreign emergency travel.  The costs also include 50% of 1) Medicare Part B coinsurance, 2) blood, 3) Part A hospice care, 4) skilled nursing and 5) the Medicare Part A deductible.  Please see our Medicare OOP Expenses page which outlines some of these out of pocket expenses under original Medicare.  This type of plan is best suited for healthy budget-minded individuals who do not have chronic or recurring illnesses or a family history of illness.

OPTION SPECIFIC ISSUES

1. Original Medicare:  There is no good reason to have original Medicare only.  The out of pocket exposure/risk is too great.  This is especially true in light of the fact that a Medicare supplement Plan K costs just $57.97 per month and there are Medicare Advantage plans that can cap you’re out of pocket exposure/risk at roughly $3,950.00 per year and cost $0.00 per month to have.  In addition to out of pocket exposure/risk is the issue of doctor and hospital availability.  Many doctors and some hospitals such as the Mayo Clinic do not accept Medicare assignment.  You can still use these doctors and hospitals, but be prepared to pay up front out of your pocket and then seek reimbursement for a portion of the charges from Medicare.
   
   
2. Medicare Advantage HMO Plans:  There are several issues with Medicare Advantage HMO plans in general.  First, please understand that Medicare Advantage plans are not Medicare supplements.  One of the biggest issues you will have with a Medicare Advantage plan that you will not have with a Medicare supplement is doctor and hospital availability, both locally and when traveling.  Many doctors and some hospitals such as the Mayo Clinic might not accept a Medicare Advantage plan.  The second issue with Medicare Advantage plans is that the Medicare Advantage Plan company can change the plan design, change the premium or withdraw from the market at the end of each calendar year.  The third issue is budgeting.  Because you do not know how much, if any, of the $3,950.00 in annual out of pocket expenses you might incur in a given year, it is not as easy to budget as it would be with a Standard Plan F Medicare supplement where the out of pocket expenses are always $0.00.  With a Standard Plan F Medicare supplement, you know exactly what your monthly cost will be.
   
   
3. Medicare Advantage PPO Plans:  Same as option 2 above except the plan costs more ($54.00 per month versus $0.00).
   
   
4. United of Omaha/Mutual of Omaha Standard Plan F Medicare Supplement:  There are no issues with this plan with the exception that it costs the most.  As with anything, you get what you pay for.  If you want flexibility and peace of mind, this is the right plan.
   
   
5. AARP/UnitedHealthcare Standard Plan L Medicare Supplement:  There are no issues with this plan with the exception of the out of pocket risk of $2,472.00 per year.  If you remain healthy and have no out of pocket costs, you could save $356.04 to $545.28 on the annual premium.  On the other hand, you could easily end up spending much more.  You would still have access to most providers, including the likes of the Mayo Clinic.
   
   
6. AARP/UnitedHealthcare Standard Plan K Medicare Supplement:  Same as option 5 except the out of pocket risk is $4,782 and the premium savings is $637.44 to $826.68 per year.