Welcome to Medicare School Daily, where we help you understand Medicare, save money,
avoid mistakes, and above all else, get the most out of your Medicare benefits.
Today's topic is this question here: Are Medicare Advantage plans really free?
As you know, when you start your Medicare benefits, you have two options in using those
benefits.
Number one, you can stay on original A and B with a supplemental plan or you can
do what's called a replacement plan or advantage plans.
They're given the letter C plans.
And so those are your two options.
Half of all Americans today are going with advantage plans.
The other half are going with supplemental plans.
And so many times people that are on advantage plans will say this "well my advantage plan
doesn't cost me anything" as though there's never a cost to the advantage plan, as though
it is totally free.
And so the question is, why is it that people do not understand the actual cost of an advantage
plan?
Why did would they say they're free?
Well, there's five reasons why they appear to be free.
Number one, there is zero monthly premium that you have to pay to the insurance company.
When I have a supplemental plan, I pay a premium every month to that company to take that
risk for me.
Over here, I don't have to pay a premium to that advantage company.
There's usually no premium or very low premium.
So many times, people say they're free because of that.
Second reason is because there are some copays built within the advantage plan that are $0.
You can usually see your primary care doctor at no copay.
You can get your preventive services at no copay.
So, again, that appears as though there's no cost for them.
And then number three, there's zero premiums for perks.
Most of the advantage plans today will throw in some dental benefits, some vision, maybe some
hearing aid benefit and some gym membership.
Now, it doesn't mean that all of those benefits are going to be free, but there's no premium
for them to add those perks to the plan.
So, again, it appears as though everything is free.
And then the part B premiums are deducted from Social Security checks.
Anyone that's on advantage plan is paying for their part B. Right now that's $144.60.
But if that person's on an advantage plan and they're also on Social Security, that
$144.60 is taken right out of their Social Security check.
And so because it's out of sight, out of mind, they forget that they are paying something
for that advantage plan because everybody has to pay their Part B premium.
And then lastly, probably anyone who is saying that their advantage plan is all free, it's
because they probably have not had to use it much because anyone that's had a serious
health problem knows that there's going to be a cost with their advantage plan.
And so the question is always, well, why is it they are low cost or no cost?
And how do they throw the perks in and how can they offer some of these copays at zero?
I can see my primary care doctor at no cost.
How does that happen?
Well, here's what happens, folks, when you enroll in an advantage plan, you're getting
what we call a replacement plan.
In fact, your Medicare A and B card is put in the drawer because Medicare does not pay
any individual bills at all.
They don't pay claims on advantage plans.
What happens is you have a replacement plan, and the advantage company is going to receive
a thousand dollars on average every month from Medicare on your behalf.
So instead of Medicare paying individual bills, they just pay a flat thousand dollars to that
insurance company on your behalf.
So you pay your copays and they're responsible for the rest.
And so they take some of that money that they have and they kind of throw a few things in
here to make them very attractive and actually very marketable.
And so their whole goal is to get you to enroll in advantage plans because Medicare says eighty-five
cents of every dollar has to go to someone's care.
But that private health insurance company can make a profit of 15% and 15%
of millions of people in those plans results in billions of dollars of profit.
So that is the reason why many people think advantage plans are free.
But let's look at the actual cost of advantage plans.
Number one, there's always a part B premium as I said.
This year, that's $144.60.
Now, just because it's coming out of your Social Security check doesn't mean you're
not paying it,
you just don't see that. Everyone has to pay a part B premium. And all the advantage plans
charge that, comes out of your Social security or you pay for it on a quarterly basis to
Medicare.
Also, there are copays for most health services.
Right? Now, there are some that are surely certainly zero.
But the majority of things, you're going to have a copay until you hit a max out of pocket
for the year.
So let me give you just a quick example of some of the copays that are associated with
all the advantage plans.
If you see your primary care doctor, again, some of those are zero, upwards maybe to $10 per visit.
If you see a specialist, this would be a cardiologist or maybe a rheumatologist, then you're going
to pay somewhere between 25 to 50 dollars per visit.
You go to the urgent care, it's a 40 dollar copay.
Emergency room is $120 copay.
Tests, labs, and x rays would be zero if it's gonna be preventive, 50 dollars if not.
MRI, CAT scans, PET scans for all those tests you would need, you'd pay somewhere between
$200-400.
Outpatient surgery, which would be cataract surgery, maybe gall bladder removal or hernia
operation, something like that in an ambulatory surgical center, $300-400 for those tests.
And then when you go to a hospital, you also have to pay somewhere between $300-450 per day.
And so, as you can see, Advantage plans are not free.
And some of the services are going to require a copay.
So if you had a situation come up that was some health issue and let's say you had to
go to your specialist maybe two or three times, and then they decide that you needed to do
an MRI or some kind of a CAT scan.
That's going to cost you.
And then you'd go to the hospital for maybe three or four days.
You're going to probably spend anywhere between about $1,500-2,000 in co-pays.
All right?
And so one of the things that all the advantage plans will do, though, they will put a limit
on what you have to pay for the whole year.
So if the bill is $50,000 or $100,000, you’re surely not going to pay that.
You're going to pay the annual max out of pocket established by the plan.
But as you can see, they're certainly not free, but they're also not going to probably
break the bank either.
Very reasonable through co-pays, but eventually, you will possibly hit that max out of pocket.
Probably the most challenging situations we had within our practice, we had a lady who
got cancer at the end of last year, got diagnosed with cancer in October, and she had to go
through chemotherapy, radiation;
had an operation.
These max out of pockets reset every January.
And so her cancer treatment carried over into the next year.
And so she had to meet that max out of pocket again very quickly.
So within just a matter of four to five months, she had maxed out two different times.
And so it was $6,700 per year.
So within a matter of just a few months, she spent $13,400 dollars.
And anyone that's had a serious health issue or any even minor health issues realize advantage
plans are not free.
There's always a cost associated with advantage plans as well.
Thanks so much for watching.
We understand how difficult making the right Medicare decisions can be.
To take the next step, watch our full course at MedicareSchool.com or schedule a free one
on one call with a certified Medicare school guide who can answer your questions, compare
plan options, and help you get enrolled in
the proper plans. Go to medicareschool.com to get started.