Medicare is Very Complicated

Medicare is complicated, in Clark County NV alone, there are 82 different options. Each county in the country has many different options from MAPD plans to stand-alone drug plans. The Medicare supplement plan designs are standard nationwide in 47 states. Three states have some different plans not germane to our discussion. Rates are determined based on geography, so they differ by location. If you move from one location to another the insurance company will provide the new rate without having to qualify medically. 

Many seniors not only do not understand Medicare, but the sheer number of options is overwhelming. This really needs to be fixed. Unfortunately, Congress has exempted themselves from Medicare and unless that changes, Medicare will remain complicated. That is one of the items that need to be changed. 

Why are there so many options in Medicare? The reason is simple, the government is paying insurance companies to provide medical services to seniors. It is very lucrative for these insurance companies. That is why new ones appear annually. 

The real issue, however, is that Original Medicare is the only insurance nationally that does not have a maximum out of pocket. Technically, the Original Medicare recipient pays 20% of all charges with no stop loss. In some cases that cost could balloon to 35%. There is a function of Medicare called Assignment of Benefits. What it really means is if the physician or hospital or any Medicare service provider does not take assignment of benefits, that provider can bill the Medicare recipient the 15% Medicare disallowed. The assignment of benefits only applies to Original Medicare or those that have supplements and not the MAPD plans.  

Let us look at a real scenario. You go to a specialist and his/her normal fee is $250. Medicare only allows $212.50 for that office visit. Medicare pays the physician $180.62 which is 80% of the $212.50. The Medicare recipient owes the physician 20% of the reduced bill or $42.50 and if the physician does not take an assignment of benefits that patient owes that provider the remainder of the bill or another $37.50 for a total of $80 for that office visit. Most seniors are not aware this could happen. 

If the senior has a Medicare Supplement, plans F or G (the most popular plans) then the plan picks up all the charges that Medicare disallows including the 20%. If you have a plan N, or just Original Medicare then you are responsible for a copay for the office visit and the disallowed amount that Medicare did not pay. 

Many seniors are not aware that they have that much financial liability for medical services because they mistakenly believe their supplement will cover everything. Not true depending upon which supplement they choose. 

As mentioned earlier, Medicare is complicated, and when making decisions on the type of coverage to choose you to need a dedicated insurance broker with the knowledge of Medicare to make your choices clear. The compensation rates are set up, so the broker does not favor one plan over another as the compensation for the MAPD and drug plans are all the same. The Medicare supplement compensation is based on the insurance carrier. Typically, the smaller the insurance carrier the more they pay as compensation. The size of the company is germane to keeping rates reasonable.

In review, seniors with Medicare supplements need to understand the nuances of Medicare so they choose their plans carefully. Many of the smaller Medicare supplement insurance companies raise their rates yearly especially if their claims experience is high. The larger companies have a greater span of clients to spread that rate increase to more recipients thus having an overall lower rate increase. 

Seniors who choose a Medicare Advantage Plan or MAPD should look at the size of the physician network and verify their current physician is part of the network in the plan they choose. All MAPD plans offer extras like a gym membership, a quarterly amount of the counter no cost items like Band-Aids, aspirin. vitamins, etc. The consideration over which plan to choose should be based on the physician network and the type of extra no-cost benefits available by the plan. The basic components of these plans are the same as the government must approve each plan yearly. Thus, the similarity of plans. Each insurance carrier decides what extras they will offer so that should also be part of your decision on which plan to choose. 

My personal preference is any plan that has a large physician network. All plans have all Southern NV hospitals so that is not a consideration. Medicare supplements are guaranteed issues during your initial 7 months of turning 65 or leaving a qualified group you get guaranteed issues with the Medicare supplement. You could be dying, and the plan must accept you without asking any medical questions. After that 7-month period (3 months before, the month of, and three months after your 65th birthday) there is medical underwriting for any Medicare supplement, and you could be denied coverage. 

Clark County Association of Health Underwriters (Part of the National Association of Health Underwriters) has a bill pending in the state legislature that will allow Medicare Supplement recipients to change plans the month of and the month after their birthday to another Medicare Supplement plan with guaranteed issue. Another broker and I, Chris Carothers introduced that bill, and it should become effective sometime in June. 

As you now know, Medicare is complicated, and you should use the services of a licensed Medicare broker. (Not all insurance brokers are licensed to sell Medicare) These Medicare brokers must prove their Medicare proficiency annually by passing a series of tests to stay Medicare certified. They must pass those tests with a 90% or better to keep their certifications and quite frankly, their previously earned commissions. Medicare brokers are the most scrutinized group of insurance brokers in the nation. Once we have passed the AHIP (American Health Insurance Plans) tests we are required to pass individual insurance company tests if we want to sell their plans.

This rigorous testing helps ensure that the brokers are competent and truly understand the products they sell. It also tells the consumer that the person presenting the new plans is competently trained to present these plans. 

Again, with 82 different options in Clark County, the use of an experienced and knowledgeable Medicare broker is paramount to you choosing the best plan for you. 

The Barend Agency Inc.

Len Barend, broker


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