Free Medicare Benefits May Not Really Be Free

Medicare Advantage plans are going fishing for new enrollees during the coming open enrollment season.

The bait is very enticing, but, before your clients bite, warn them that, below the appealing surface, painful hooks are waiting.

The surface is ads that say something like “Zero dollars in monthly premiums! And extra free benefits — dental, hearing, eyeglasses, meals, transportation, and more!”

Let’s be honest, “free” is a powerful word.

So, during this year’s annual open enrollment period, which runs from Oct. 15 through Dec. 7, help your clients understand that there’s a dark side to these offers.

The Difference Between Medicare Advantage and Medigap Coverage

Heading into open enrollment, a little less than half of Medicare beneficiaries today have Original Medicare, which is also known as traditional Medicare, or fee-for-service Medicare.

This coverage consists of Medicare Part A inpatient hospital coverage and Medicare Part B coverage for physicians’ services and outpatient hospital services.

Part A coverage and Part B coverage are administered by the U.S. government, but Part A and Part B are not free.

In fact, clients who buy only Part A and Part B coverage, or “Original Medicare,” can wind up paying 20% of everything, with no spending limit. This is not comprehensive coverage.

Many clients supplement Original Medicare with a Medicare supplement insurance policy, or Medigap policy.

These policies cover many, if not all, of the costs that Medicare Part A and B would have left the beneficiary to pay, making this a very well-budgeted approach to Medicare coverage.

For the people paying the Medigap monthly premiums, the idea of getting what appears to be the same Medicare coverage for no monthly premiums is almost impossible to resist.

But, here’s the problem: A Medicare Advantage plan does not provide the same coverage as traditional Medicare with a Medigap policy.

Medicare Advantage Plan Limitations

When a client enrolls in a Medicare Advantage plan, the client no longer has coverage from the U.S. government.

The client trades in the government’s version of Medicare for an insurance company’s version of Medicare.

Your client must follow the rules of the insurance company to get care. The rules your client must follow when enrolled in a Medicare Advantage plan are vastly different from the rules traditional Medicare uses.

Network Limitations

Instead of being able to see any provider or going to any hospital that accepts Medicare, your client is now limited to seeing the providers in a provider network, which can change at any time.

The doctors in the network today may not be in network three months from now, when your client’s surgery is scheduled.

Even if your client does not have out-of-network coverage, they will always be covered in an emergency.

But beware if an ER visit turns into a hospital admission or a surgery.

Your client will have no coverage for anything other than the emergency room.

If your client has a Medicare Advantage preferred provider organization plan, or PPO plan, your client can have coverage outside of the plan’s network, but your client will pay more of the final bill than if your client had stayed in network.

Your client cannot assume that a doctor will take the PPO plan.

Providers outside of a plan’s network do not have to take insurance coverage from companies they do not have a relationship with.

If a client in a Medicare Advantage plan seeks care out of network, the client will need to pay the provider and then navigate the reimbursement process with the insurance company.

Prior Authorization

The health care services your client gets under Medicare Advantage have different restrictions and limitations than those covered by traditional Medicare.

In traditional Medicare, providers that accept Medicare rarely have to get prior authorization, or permission to provide medical services, from the paying entity.