We are about to embark, once again, on Joe Namath season! That is the “open season on seniors” when people enrolled in the Medicare system are bombarded with information, phone calls, fliers in the mail, and random salespeople walking up to their doorsteps.
It’s a frustrating season for the consumer and Medicare Insurance agents alike. Our clients see the commercials and always have the feeling, “What am I missing out on?” The commercials are full of everything that is free, and “You’d better call now to get all that you deserve from Joe Namath’s company.”
A couple of years ago, I wrote an article for a local publication. It discussed the fact that Medicare Advantage plans each year get loaded up with more glitz in terms of added benefits. It talked of the downsides to being in those plans should someone get a significant diagnosis, and how limited they are for skilled rehabilitation and on-going home bound therapy provided by home healthcare agencies. Maybe the plan isn’t all that the person thought they’d enrolled into. Can they get out? They certainly may find that they are unable to do so.
That’s when the shock arrives.
Earlier in the year, I had posted something titled “The Gotcha Moment.” The clip described the situation where people realize they can’t easily change their Medicare coverage at times once enrolled in an M.A. plan. Should they be diagnosed with something significant, they could regret their plan choice. There’s nothing they can do about that at times. The message regarding pre-existing conditions related to the Medicare always strikes a nerve.
Unfortunately, Medicare can be complex, but agents do have the ability to make things simpler.
When a person enrolls into the Medicare system, they may have access to retiree plans, federal workers retiree benefits (FEHB), union plans, state and municipal plans, etc. Many people worked for 40 years in one of those areas and they’ve earned medical coverage into retirement.
Most of the world isn’t as fortunate. These are the people that I work with. They have worked for 40 years. But when they are on the doorstep to Medicare, they have to figure things out for themselves.
That’s who we provide council too. We help them get through the process of filing for Medicare with the government and then we discuss with them their two options for coverage beyond what Medicare will pay. Then, since we are an insurance agency, we enroll the person into their choice of plans.
When a person enrolls into part A and B of Medicare (referred to as “original Medicare,” they pay for Part B through a reduction in their Social Security check, and that premium will provide coverage for 80% of their healthcare but does not include prescription medications. We’re here to help them with the 20% that original Medicare does not cover. That will lead to someone enrolling into a Medigap plan or a Medicare Advantage plan. Those are the two choices.
The people that do not have that retiree coverage available to them must choose a path. That’s the hardest part of Medicare. Deciding. Why is it difficult to decide? There are many little rules and timing issues that wreak havoc into the Medicare beneficiaries’ world if they don’t know what they are and how to avoid them. When people finally do understand some of these rules, it can become a difficult decision for some.
We spend much of our time having these discussions with clients: Medigap (aka Medicare supplements) vs Medicare Advantage.
Once a person can confidently choose a path, the rest can fall into place rather easily.
Let’s focus on why this choice is so important. The common thought process is, “If you don’t like your plan, just change it next year like you did while you had employer coverage or purchased your own coverage through the ACA/Obamacare/Marketplace (all the same concept).”
It doesn’t work the same way during the Medicare years. That’s why I refer to it as the “gotcha moment.”
In most states, (NY, CT, ME and MA excluded), when a person enrolls into a Medicare Advantage plan, if they develop cancer, for example, four years later and come to our advisory company during the “open enrollment a.k.a “Joe Namath season” to get better coverage, they will need to go through medical underwriting to secure a Medigap policy.
The conversation typically goes like this. “I’ve had this plan for a few years, and it seems just fine. I haven’t had any issues. But now, I’ve gotten this diagnosis and now I’m ready to spend more money each month and get that Medigap type of policy.”
Agent: “You’ll need to go through underwriting to get that type of a plan.”
Consumer: “But I was told that I could change my plan every year? And no one ever told me about this thing called Medigap. My neighbor has it and he says he doesn’t get other bills; he just pays a higher monthly premium than I do.”
So, the conversation begins.
It usually ends with, “But I had no idea.” Unfortunately, that answer will not get someone approved for coverage.
Here is the core problem broken down.
One. The consumer often doesn’t know about Medigap contracts as an available option. That just plain isn’t fair. There are agents who solely offer Medicare Advantage plans. Or the person may call in to Medicare to enroll and they are enrolled into a Medicare Advantage plan. Medigap plans aren’t discussed. Maybe they saw the Joe commercial and called. They’ll most likely end up with a Medicare Advantage plan. Not knowing that they have two options is a problem.
Why this is so important to know? When a person is over age 65 and new to Medicare Part B, they have a window of six months where they can purchase any Medigap plan that they’d like to without go through any medical underwriting. Imagine a person who has lupus, for example. They turn 65, they don’t know this rule exists, etc. They very likely will not get coverage later if they tried to change coverage types (lupus is a condition on most carriers’ applications as a denial). Many people come to us as they enroll into the Medicare system with significant health issues. It’s important to get things done correctly right out the gate.
Two. The consumer doesn’t typically understand the rules. When a person is 65 years old, they can enroll into a Medicare Advantage plan and within the first 12 months, if they change their mind and prefer a Medigap plan, they can use a process called “trial rights” to leave the plan (again, this will apply to most states and most carriers. That’s another part that keeps things extra confusing. Things can be state- and carrier-specific).
Let’s say that person liked the plan for a few years. Then, they call an agent to change the plan using trial rights or just during the annual enrollment time. They’ll then need to go through medical underwriting.
As you can imagine, many calls that come to us about leaving a Medicare Advantage plan in the fall are due to the fact that an illness was diagnosed, and it’s become costly! Of course, people want better coverage when they’re having to use their coverage! The person naturally would like to upgrade their coverage. But they’re stuck much of the time.
Most insurance coverages don’t work like that. Think of your car insurance. You can literally “total” your car on Tuesday and can change your insurance policy on Wednesday. You may get a surcharge for doing so, but you’ll be able to change your coverage typically.
Medicare coverages don’t work like that. But the consumer’s brain believes that it does.
Three. Why it’s so important that consumers know rule one and rule two. In my opinion, Medicare Advantage plans are often “sold” versus “bought.” There’s just too much over-selling in terms of the benefits and the glitz. When someone wants to or needs to enroll into the Advantage plans, they only need to focus on a few things. They should understand how the plans work, they need to find out if their doctors are contracted with the plans, if their medications are well covered with the plan and understand how the future rules may impact them. If they are good with all those pieces, then enroll away.
We’re approaching the point in the Medicare market where 50% of the people enrolling into Medicare products are “choosing” Medicare Advantage plans. In our agency, 90% of our clients choose Medicare supplements (Medigap). Will the day come where they choose to enroll into a Medicare Advantage plan instead? It surely might and likely will as things change. We take that year by year and just keep educating.
We’re happy that our clients have stories such as, “I chose a Plan G. Two months later I found out that I had lung cancer. I am so thankful that I took out the Plan G – it covered everything.”
Versus: “I had no idea I couldn’t change, and I got a lung cancer diagnosis, and this plan isn’t what I thought it was.”
In Southwest Florida they may need to call it “Be careful this season”!
If you have customers, friends, colleagues, residents, patients, etc. who you may or may not want to broach this subject with or don’t quite know how to. We are happy to quiz them and play advocate on there behalf. Again, most are persuaded by being convinced M.A. plans are the equivalent of Medicare parts A & B with extra frills like Silver Sneakers and a dental cleaning and that is scientifically, factually, and actuarially untrue.