I know my replies are long-winded, but this one has a few words for me to comprehend
Medicare with Medigap or Medicare Advantage?
- Thread starter ZZman
- Start date
Should I have said "old Medicare"I know my replies are long-winded, but this one has a few words for me to comprehend
Our hospital admissions has signs up saying the hospital does not accept advantage plans. Both of us have been to the emergency room several times in the last ten years. We would not have been covered for the 20% of charges that Medicare does not cover.
Really? I find this rather amazing. Just certain plans or ALL plans?
What hospital specifically?
Ignore my previous post. I believe it. There are some Ins Co's that are just plain crappy. Hope the marketplace cleans them away frankly.
There are no deductibles with an advantage plan, there are deductibles with a medi gap plan. However it is true for an extra $200 a month. You won’t have to worry about co-pays with a maximum out-of-pocket that you would with an advantage plan
It’s easy to find out before you get into any plan if a provider near you is not in the plan.
Advantage plans have nothing to do with the 20%
Based on your post, it doesn’t make any sense what you are saying which tells me you don’t know how these plans work
What is a PDP?
How much does it cost you a month for Plan G and Plan D?
Plan G high deductible, to me is too expensive plus you need a separate Plan D if you want drug coverage. In addition to the government premium of 175 a month, you have to pay Plan G premium every month and Plan D premium every month.
On top of that if you get sick you have to pay $2800 before any of those plans pay anything, then they cover 100% or close to it except for drugs
My advantage plan cost only 175 a month and I have no deductible but I do have co-pays and if I end up with a half million dollar medical bill in any given year, I might be liable for up to $4500
But then again, they give me $1200 to spend on anything I want plus $180 a year for over the counter pharmacy, 1750 for a dentist, $300 for contact lenses, free basic gym membership, should I ever want anything to do with hearing aids? They pay a significant part of the cost and whatever else I’m forgetting
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- Apr 4, 2023
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I just retired in December and am still on my wife's health insurance for the next couple of years, but Medicare is coming up soon for both of us. Thus, this thread was very interesting to me as I've begun my own analysis of possible healthcare insurance options. Based on what I have found, I think I might have something useful to add to this thread.
I think one thing that might be causing confusion in this discussion is that it's important to understand that Medigap supplements and Medicare Advantage plans both have fixed and variable costs.
Another thing that confounds comparisons is that, except for the ~$175/mo. that is required for both Medigap supplements and Advantage plans, all the other premium and deductible costs vary widely based on the company you choose and your zip code (not even state-- it can change a lot based on zip codes within a state).
This variability based on location can make it very difficult when one person is quoting what they pay (and the benefits they get) in one state because what others will pay will likely be different (possibly even within the same state).
In order to eliminate all this variability and confusion, I did a full analysis for myself comparing both the fixed and variable costs of the Medicare supplement Plan G and the cheapest Advantage plan for me. Since I'm the same person in the same zip code, the numbers are directly comparable, but note that Plan G is the most expensive supplement so, in that sense, this cost comparison slightly favors the Advantage plan.
Also note that I'm not picking the absolute cheapest Plan G policy. You can find some companies that have very low premium prices on G Plans, but often they are smaller companies that may not stay in the market for long. If your Plan G provider decides to leave the market, you won't be kicked off (you have it for life), but the policy becomes what is called "closed book" so your premiums might go up more than average.
With larger, more established companies, you might pay a little higher premium, but the odds are lower that you'll see out-of-line premium increases in the future.
So, the plans I'm comparing are:
--Medigap Plan G: Provided by Mutual of Omaha (very established company). The monthly premium for me is $138, which is a little below the nationwide average of $150. I'm also including Part D and Drug/Dental/Vision policies to keep the coverages as equal as possible.
--Advantage: Provided by Aetna (the SmartFit plan). It has the lowest Maximum Out Of Pocket (MOOP) maximum of any plans offered ($3,600/yr or $300/mo.) and has $0 premiums and no deductibles.
All numbers come from medicare.gov and they are specific for me and my location-- your costs will likely vary.
COST ANALYSIS
NOTE: ALL NUMBERS ARE PER MONTH!!
Plan G Fixed Costs:
Part A/B: $175
Part G premium: $138
Drug/Dental/Vision: $110
-----------------
Total Plan G Fixed Costs: $423/mo.
Advantage Fixed Costs:
Part A/B: $175
Advantage premium: $0
Drug/Dental/Vision: $0
-----------------
Total Advantage Fixed Costs: $175/mo.
So, as far as fixed costs, Advantage wins hands down.
Now let's look at variable costs-- the costs that you incur if you get sick. To start with, I'll look at the best-case scenario year (you never get sick) compared to a worst-case scenario year (you get sick enough to max out your MOOP).
Plan G Variable Costs in a GOOD Year:
Deductible: $0
MOOP (for Co-Pay, Co-Ins, Excess charges): $0
Plan G Variable Costs in a BAD Year:
Deductible: $20
MOOP (for Co-Pay, Co-Ins, Excess charges): $0
Advantage Variable Costs in a GOOD Year:
Deductible: $0
MOOP (for Co-Pay, Co-Ins, Excess charges): $0
Advantage Variable Costs in a BAD Year:
Deductible: $0
MOOP (for Co-Pay, Co-Ins, Excess charges): $300
Total Costs (Fixed + Variable):
GOOD year:
Plan G: $423 + $0 = $423/mo.
Advantage: $175 + $0 = $175/mo.
BAD year:
Plan G: $423 + $20 = $443/mo.
Advantage: $175 + $300 = $475/mo.
So clearly Advantage plans have much lower total costs if you have a best-case scenario year (no illness at all), and only moderately higher costs than Plan G if you have a worst-case scenario year (full MOOP).
Note that most people are healthy enough that they don't hit the full MOOP of their Advantage plans in most years, so the above analysis might favor the Plan G because it only looks at the extremes of years that you are either "fully well" or "fully sick."
So, in order to get a better sense of real costs over time, let's look at a 25-year period between age 65 and 90 (which will include the majority of people with average lifespans).
Let's say that over that 25 years, you have the following healthcare profile:
First 8 years: You never get sick in any year (so best-case scenario for the first 8 years)
Next 4 years: Your health costs reach 50% of your MOOP each year
Next 5 years: Your health costs reach 67% of your MOOP each year
Last 8 years: You hit full MOOP in each year (so worst-case scenario for the last 8 years)
In that scenario, the average total costs (i.e. fixed + variable) per month would be:
Total Costs (Fixed + Variable) over 25 years:
Plan G: $437/mo.
Advantage: $309/mo.
So, in that more realistic 25-year scenario, Advantage would be cheaper by $127/mo. for 25 years. Again, Advantage wins on cost.
Now, let's see what kind of health profile it would take for the Plan G and Advantage costs to break even over that 25 years. In order for the total costs of Plan G to equal the cost of Advantage, you're going to have to have more healthcare costs (so more "bad years") because the high fixed/low variable costs of Plan G only help you when your healthcare costs are higher.
So, here is an example of a mix of health-years that would break even: In this case you have no "fully well" years and no years of hitting 50% of MOOP. I.e., you are pretty sick most years:
First 5 years: You hit 67% of your MOOP each year
Next 20 years: You hit the full MOOP each year (so, 20 out of 25 years are worst-case scenarios)
Total Costs (Fixed + Variable) over 25 years:
Plan G: $443/mo.
Advantage: $443/mo.
So, even if you're sick enough to hit your full MOOP for the majority of retirement years, then Advantage will cost no more than Plan G. However, if you expect to have significant health costs such that you hit full MOOP every year, the Plan G will be lower cost.
Conclusion of Cost Analysis:
The results of this analysis seem clear: If you expect to have a large amount of healthcare needs in most years, Plan G is more cost effective. It's also better if you're someone who doesn't like financial surprises and would like to just pay a level premium to cover all years (good and bad) even if that level premium will end up costing you substantially more than the surprise cost you might get every now and then on an Advantage plan.
But for people with only moderate healthcare costs over 25 years of retirement and who can easily afford a ~$4,000 healthcare expense every few years (i.e., most people), Advantage plans are going to be far more cost effective. Advantage plans are also best if your income in retirement is such that you simply cannot afford the $423/mo. fixed costs of Plan G.
With that analysis, I was seriously considering an Advantage plan for myself, and I would guess that this cost difference is the main reason ~50% of people are buying Advantage plans these days.
However, I'm still leaning toward getting a Plan G. Why? Well, with any insurance, but especially healthcare insurance, cost isn't the only factor. Let's look at the other factors next.
OTHER, NON-FINANCIAL ANALYSIS
As with any insurance, you can't look at just the cost-- you also have to consider what is covered. Alarmguy is correct that Advantage plans by law must cover any medically necessary plan that traditional Medicare covers.
But the words "medically necessary" are doing a lot of work here.
In traditional Medicare, if any treatment or procedure is covered and your doctor deems it to be medically necessary, the treatment or procedure will be covered. Period.
On the other hand, if you have an Advantage plan and your doctor deems a treatment or procedure to be medically necessary, the Advantage plan carrier has veto power over that decision. And the Advantage providers are not afraid to exercise that veto power as the savings that come from denying treatment that isn't truly necessary is where the providers get the funds to support that $0 premium.
So, do Advantage plans have an unreasonable rate of denial for most people? It appears that they do not. Most studies show that a relatively small percentage of doctor recommendations are denied. And of those that are denied, a relatively large number of those are deemed by independent experts to be correctly denied as they really were not medically necessary.
So, I consider this to be a good thing. With healthcare costs rising all the time, it seems reasonable to generate savings by culling out non-necessary treatments and sharing that savings between the provider that generated those savings, and the consumers and government who are paying for it.
As evidence that this system is working, there are many surveys showing that people are highly satisfied with their Advantage plans. Here's a video discussing that. That video is very neutral, and I'd even say pro-Advantage.
I would say that this sort of experience is exactly what is making alarmguy so happy with his plan, and that his happiness is justified as I've shown that the costs are lower, most medical events will be covered, and people are generally satisfied.
So, what's the problem?
Well, I'm no expert in any of this, but in the research I've done, it seems like the Advantage denial problem is bigger than appears at first glance, and it is sort of a "hidden" problem. This may explain why alarmguy (and many others) is not seeing the potential problem.
To illustrate what I mean, I made the following graph. This isn't based on any actual data, it's just an illustration that sums up my impression of the Advantage denial problem:
What this figure is attempting to show is that healthcare costs go up exponentially as healthcare problems move from the more common and inexpensive to the less common and more expensive.
In the flat part of the curve, where even major events like an appendectomy or joint replacement surgery (just to pick two random events) are relatively normal medical occurrences, you may not be able to even tell the difference between Plan G and Advantage coverage.
Thus, alarmguy isn't being disingenuous in his praise for his Advantage experiences-- I'm sure he's getting great coverage at a fraction of the cost of a traditional Medicare supplement plan.
The problem occurs when you have something less common and more expensive happen to you-- like suffering a stroke that damages your brain such that you need to spend extensive time in a skilled-nursing facility getting treatment or rehab. This is the blue-shaded area of the graph.
While traditional Medicare will pay for procedures in this area (no questions asked), the Advantage plan providers are notorious for denying coverage for events in this area. Here is a video that provides an anecdotal experience with Advantage denial in such an extreme case, and these stories are very common. In fact, here's another video by the same creator showing how insidious the Advantage providers are at looking for ways to deny coverage for the extreme events where you need the coverage the most.
While the case made by that creator is pretty strong, one might reasonably argue that maybe he has some axe to grind. But the fact is that the overwhelming number of insurance brokers on YouTube give exactly the same warning-- that Advantage plans are not bad when you have a normal level of healthcare need, but the minute you get into a catastrophic health situation-- i.e., you need that insurance coverage the most-- that's exactly when the Advantage plans tend to leave you high and dry.
Or, said another way, if all your healthcare events are on the flat part of the curve, you're going to be getting great coverage for a low price and probably be out there trumpeting how great Advantage plans are. But the minute you get into that shaded area-- which will likely happen many years later-- you could end up being devastated when desperately needed care is denied.
Note that, because the blue-shaded area of the graph represents the more uncommon healthcare events, many fewer people will experience this type of event (and will probably be much older when they do). This likely explains why the surveys indicate such high satisfaction with Advantage plans-- the vast majority of the holders of these plans are on the flat part of the curve and have not experienced a devastating event in the blue-shaded area... yet.
Because of this possibility for devastation, I'd say 90% of the Medicare brokers on YouTube don't recommend Advantage plans unless you are in such poverty you simply can't afford a supplement like Plan G. Here and here are two videos by the same broker who is less dramatic than the previous one, but still recommends against Advantage plans mostly due to the coverage problem. Here and here are two videos by another broker who is adamantly against Advantage plans unless that's all you can afford.
Those are just a few videos, but in my research nearly all of the ~100 videos I've watched draw the same conclusion and offer the same advice-- assuming you can afford it, you should get Medicare Plan G, and if you opt for the savings of an Advantage plan, you are taking a serious risk of devastation through coverage denial if you have a more serious and expensive medical event.
Note that this advice is given even though the commissions these brokers receive would be higher if they sold an Advantage plan. So, they have no conflict of interest here-- in fact the conflict is in favor of the Advantage plans, and yet they still recommend Plan G.
Conclusion of Other Factor Analysis:
The bottom line for me is that, while I really like the theory of the Advantage approach of saving money by doing reasonable screening of medical recommendations for true medical necessity, the reality is that the Advantage approach hasn't actually cracked any code for low-cost, full coverage health insurance. You may be paying X% less in premium cost, but you're taking on that same X% of increased liability if you have a devastating health event that's on the right-hand side of the cost curve.
My Overall Conclusion Based on Cost + Other Factor Analysis:
While I totally agree that it sucks to pay for expensive insurance that you might never use, it sucks even more to pay (even a discounted rate) for coverage and then have it denied when I need it. I buy insurance specifically to cover those big, unexpected events and I'm willing to pay more to make sure that I'm covered when I really need it the most. Since I can afford Medicare Plan G, that's probably what I'm going to get when I sign up.
So, that's my analysis at least at the present moment. Note that I'm no expert in healthcare or insurance, and as of last week I literally knew zero about any of this. So, there could be errors in my thinking here. I mostly share this analysis in the hope that it might be useful to others, and that others will provide corrective feedback if my analysis is lacking at any level.
If you made it this far, thanks for reading and I look forward to any responses!
I think one thing that might be causing confusion in this discussion is that it's important to understand that Medigap supplements and Medicare Advantage plans both have fixed and variable costs.
Another thing that confounds comparisons is that, except for the ~$175/mo. that is required for both Medigap supplements and Advantage plans, all the other premium and deductible costs vary widely based on the company you choose and your zip code (not even state-- it can change a lot based on zip codes within a state).
This variability based on location can make it very difficult when one person is quoting what they pay (and the benefits they get) in one state because what others will pay will likely be different (possibly even within the same state).
In order to eliminate all this variability and confusion, I did a full analysis for myself comparing both the fixed and variable costs of the Medicare supplement Plan G and the cheapest Advantage plan for me. Since I'm the same person in the same zip code, the numbers are directly comparable, but note that Plan G is the most expensive supplement so, in that sense, this cost comparison slightly favors the Advantage plan.
Also note that I'm not picking the absolute cheapest Plan G policy. You can find some companies that have very low premium prices on G Plans, but often they are smaller companies that may not stay in the market for long. If your Plan G provider decides to leave the market, you won't be kicked off (you have it for life), but the policy becomes what is called "closed book" so your premiums might go up more than average.
With larger, more established companies, you might pay a little higher premium, but the odds are lower that you'll see out-of-line premium increases in the future.
So, the plans I'm comparing are:
--Medigap Plan G: Provided by Mutual of Omaha (very established company). The monthly premium for me is $138, which is a little below the nationwide average of $150. I'm also including Part D and Drug/Dental/Vision policies to keep the coverages as equal as possible.
--Advantage: Provided by Aetna (the SmartFit plan). It has the lowest Maximum Out Of Pocket (MOOP) maximum of any plans offered ($3,600/yr or $300/mo.) and has $0 premiums and no deductibles.
All numbers come from medicare.gov and they are specific for me and my location-- your costs will likely vary.
COST ANALYSIS
NOTE: ALL NUMBERS ARE PER MONTH!!
Plan G Fixed Costs:
Part A/B: $175
Part G premium: $138
Drug/Dental/Vision: $110
-----------------
Total Plan G Fixed Costs: $423/mo.
Advantage Fixed Costs:
Part A/B: $175
Advantage premium: $0
Drug/Dental/Vision: $0
-----------------
Total Advantage Fixed Costs: $175/mo.
So, as far as fixed costs, Advantage wins hands down.
Now let's look at variable costs-- the costs that you incur if you get sick. To start with, I'll look at the best-case scenario year (you never get sick) compared to a worst-case scenario year (you get sick enough to max out your MOOP).
Plan G Variable Costs in a GOOD Year:
Deductible: $0
MOOP (for Co-Pay, Co-Ins, Excess charges): $0
Plan G Variable Costs in a BAD Year:
Deductible: $20
MOOP (for Co-Pay, Co-Ins, Excess charges): $0
Advantage Variable Costs in a GOOD Year:
Deductible: $0
MOOP (for Co-Pay, Co-Ins, Excess charges): $0
Advantage Variable Costs in a BAD Year:
Deductible: $0
MOOP (for Co-Pay, Co-Ins, Excess charges): $300
Total Costs (Fixed + Variable):
GOOD year:
Plan G: $423 + $0 = $423/mo.
Advantage: $175 + $0 = $175/mo.
BAD year:
Plan G: $423 + $20 = $443/mo.
Advantage: $175 + $300 = $475/mo.
So clearly Advantage plans have much lower total costs if you have a best-case scenario year (no illness at all), and only moderately higher costs than Plan G if you have a worst-case scenario year (full MOOP).
Note that most people are healthy enough that they don't hit the full MOOP of their Advantage plans in most years, so the above analysis might favor the Plan G because it only looks at the extremes of years that you are either "fully well" or "fully sick."
So, in order to get a better sense of real costs over time, let's look at a 25-year period between age 65 and 90 (which will include the majority of people with average lifespans).
Let's say that over that 25 years, you have the following healthcare profile:
First 8 years: You never get sick in any year (so best-case scenario for the first 8 years)
Next 4 years: Your health costs reach 50% of your MOOP each year
Next 5 years: Your health costs reach 67% of your MOOP each year
Last 8 years: You hit full MOOP in each year (so worst-case scenario for the last 8 years)
In that scenario, the average total costs (i.e. fixed + variable) per month would be:
Total Costs (Fixed + Variable) over 25 years:
Plan G: $437/mo.
Advantage: $309/mo.
So, in that more realistic 25-year scenario, Advantage would be cheaper by $127/mo. for 25 years. Again, Advantage wins on cost.
Now, let's see what kind of health profile it would take for the Plan G and Advantage costs to break even over that 25 years. In order for the total costs of Plan G to equal the cost of Advantage, you're going to have to have more healthcare costs (so more "bad years") because the high fixed/low variable costs of Plan G only help you when your healthcare costs are higher.
So, here is an example of a mix of health-years that would break even: In this case you have no "fully well" years and no years of hitting 50% of MOOP. I.e., you are pretty sick most years:
First 5 years: You hit 67% of your MOOP each year
Next 20 years: You hit the full MOOP each year (so, 20 out of 25 years are worst-case scenarios)
Total Costs (Fixed + Variable) over 25 years:
Plan G: $443/mo.
Advantage: $443/mo.
So, even if you're sick enough to hit your full MOOP for the majority of retirement years, then Advantage will cost no more than Plan G. However, if you expect to have significant health costs such that you hit full MOOP every year, the Plan G will be lower cost.
Conclusion of Cost Analysis:
The results of this analysis seem clear: If you expect to have a large amount of healthcare needs in most years, Plan G is more cost effective. It's also better if you're someone who doesn't like financial surprises and would like to just pay a level premium to cover all years (good and bad) even if that level premium will end up costing you substantially more than the surprise cost you might get every now and then on an Advantage plan.
But for people with only moderate healthcare costs over 25 years of retirement and who can easily afford a ~$4,000 healthcare expense every few years (i.e., most people), Advantage plans are going to be far more cost effective. Advantage plans are also best if your income in retirement is such that you simply cannot afford the $423/mo. fixed costs of Plan G.
With that analysis, I was seriously considering an Advantage plan for myself, and I would guess that this cost difference is the main reason ~50% of people are buying Advantage plans these days.
However, I'm still leaning toward getting a Plan G. Why? Well, with any insurance, but especially healthcare insurance, cost isn't the only factor. Let's look at the other factors next.
OTHER, NON-FINANCIAL ANALYSIS
As with any insurance, you can't look at just the cost-- you also have to consider what is covered. Alarmguy is correct that Advantage plans by law must cover any medically necessary plan that traditional Medicare covers.
But the words "medically necessary" are doing a lot of work here.
In traditional Medicare, if any treatment or procedure is covered and your doctor deems it to be medically necessary, the treatment or procedure will be covered. Period.
On the other hand, if you have an Advantage plan and your doctor deems a treatment or procedure to be medically necessary, the Advantage plan carrier has veto power over that decision. And the Advantage providers are not afraid to exercise that veto power as the savings that come from denying treatment that isn't truly necessary is where the providers get the funds to support that $0 premium.
So, do Advantage plans have an unreasonable rate of denial for most people? It appears that they do not. Most studies show that a relatively small percentage of doctor recommendations are denied. And of those that are denied, a relatively large number of those are deemed by independent experts to be correctly denied as they really were not medically necessary.
So, I consider this to be a good thing. With healthcare costs rising all the time, it seems reasonable to generate savings by culling out non-necessary treatments and sharing that savings between the provider that generated those savings, and the consumers and government who are paying for it.
As evidence that this system is working, there are many surveys showing that people are highly satisfied with their Advantage plans. Here's a video discussing that. That video is very neutral, and I'd even say pro-Advantage.
I would say that this sort of experience is exactly what is making alarmguy so happy with his plan, and that his happiness is justified as I've shown that the costs are lower, most medical events will be covered, and people are generally satisfied.
So, what's the problem?
Well, I'm no expert in any of this, but in the research I've done, it seems like the Advantage denial problem is bigger than appears at first glance, and it is sort of a "hidden" problem. This may explain why alarmguy (and many others) is not seeing the potential problem.
To illustrate what I mean, I made the following graph. This isn't based on any actual data, it's just an illustration that sums up my impression of the Advantage denial problem:
What this figure is attempting to show is that healthcare costs go up exponentially as healthcare problems move from the more common and inexpensive to the less common and more expensive.
In the flat part of the curve, where even major events like an appendectomy or joint replacement surgery (just to pick two random events) are relatively normal medical occurrences, you may not be able to even tell the difference between Plan G and Advantage coverage.
Thus, alarmguy isn't being disingenuous in his praise for his Advantage experiences-- I'm sure he's getting great coverage at a fraction of the cost of a traditional Medicare supplement plan.
The problem occurs when you have something less common and more expensive happen to you-- like suffering a stroke that damages your brain such that you need to spend extensive time in a skilled-nursing facility getting treatment or rehab. This is the blue-shaded area of the graph.
While traditional Medicare will pay for procedures in this area (no questions asked), the Advantage plan providers are notorious for denying coverage for events in this area. Here is a video that provides an anecdotal experience with Advantage denial in such an extreme case, and these stories are very common. In fact, here's another video by the same creator showing how insidious the Advantage providers are at looking for ways to deny coverage for the extreme events where you need the coverage the most.
While the case made by that creator is pretty strong, one might reasonably argue that maybe he has some axe to grind. But the fact is that the overwhelming number of insurance brokers on YouTube give exactly the same warning-- that Advantage plans are not bad when you have a normal level of healthcare need, but the minute you get into a catastrophic health situation-- i.e., you need that insurance coverage the most-- that's exactly when the Advantage plans tend to leave you high and dry.
Or, said another way, if all your healthcare events are on the flat part of the curve, you're going to be getting great coverage for a low price and probably be out there trumpeting how great Advantage plans are. But the minute you get into that shaded area-- which will likely happen many years later-- you could end up being devastated when desperately needed care is denied.
Note that, because the blue-shaded area of the graph represents the more uncommon healthcare events, many fewer people will experience this type of event (and will probably be much older when they do). This likely explains why the surveys indicate such high satisfaction with Advantage plans-- the vast majority of the holders of these plans are on the flat part of the curve and have not experienced a devastating event in the blue-shaded area... yet.
Because of this possibility for devastation, I'd say 90% of the Medicare brokers on YouTube don't recommend Advantage plans unless you are in such poverty you simply can't afford a supplement like Plan G. Here and here are two videos by the same broker who is less dramatic than the previous one, but still recommends against Advantage plans mostly due to the coverage problem. Here and here are two videos by another broker who is adamantly against Advantage plans unless that's all you can afford.
Those are just a few videos, but in my research nearly all of the ~100 videos I've watched draw the same conclusion and offer the same advice-- assuming you can afford it, you should get Medicare Plan G, and if you opt for the savings of an Advantage plan, you are taking a serious risk of devastation through coverage denial if you have a more serious and expensive medical event.
Note that this advice is given even though the commissions these brokers receive would be higher if they sold an Advantage plan. So, they have no conflict of interest here-- in fact the conflict is in favor of the Advantage plans, and yet they still recommend Plan G.
Conclusion of Other Factor Analysis:
The bottom line for me is that, while I really like the theory of the Advantage approach of saving money by doing reasonable screening of medical recommendations for true medical necessity, the reality is that the Advantage approach hasn't actually cracked any code for low-cost, full coverage health insurance. You may be paying X% less in premium cost, but you're taking on that same X% of increased liability if you have a devastating health event that's on the right-hand side of the cost curve.
My Overall Conclusion Based on Cost + Other Factor Analysis:
While I totally agree that it sucks to pay for expensive insurance that you might never use, it sucks even more to pay (even a discounted rate) for coverage and then have it denied when I need it. I buy insurance specifically to cover those big, unexpected events and I'm willing to pay more to make sure that I'm covered when I really need it the most. Since I can afford Medicare Plan G, that's probably what I'm going to get when I sign up.
So, that's my analysis at least at the present moment. Note that I'm no expert in healthcare or insurance, and as of last week I literally knew zero about any of this. So, there could be errors in my thinking here. I mostly share this analysis in the hope that it might be useful to others, and that others will provide corrective feedback if my analysis is lacking at any level.
If you made it this far, thanks for reading and I look forward to any responses!
My thinking and experience is exactly what you have described. The same reason I carry 300k on auto ins when the state min is 50k. Its more expensive for something I hope I never need but if I do I dont want to be on the hook for the other 250k when I am sued and even that may not be enough. I dont insure for losses I can afford only for the ones that would break me.
- Joined
- Apr 4, 2023
- Messages
- 73
Yes-- exactly my philosophy on any insurance.
I'm all for options but Medigap policies are LESS REGULATED & brokers can be paid more than signing someone up on Medicare Advantage plan. Here's some research into the Medigap pay loop hole.
"many of the private Medicare Supplement health insurance companies offer luxurious vacations and cash bonuses to agents and brokers, creating incentives for them to steer seniors to Medigap products that may not be the best fit for their financial and health care needs."
"Bonus perks for agents and brokers are legal and minimally regulated."
Anyone surprised most YT channels promote Medigap plans?
https://www.warren.senate.gov/imo/media/doc/FINAL Medigap Sales Report1.pdf
"many of the private Medicare Supplement health insurance companies offer luxurious vacations and cash bonuses to agents and brokers, creating incentives for them to steer seniors to Medigap products that may not be the best fit for their financial and health care needs."
"Bonus perks for agents and brokers are legal and minimally regulated."
Anyone surprised most YT channels promote Medigap plans?
https://www.warren.senate.gov/imo/media/doc/FINAL Medigap Sales Report1.pdf
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I have had Anthem Advantage plan now for 4 years and my wife has it too we are both in our 70's and relativly healthy, but I was in the hospital for 8 days last January And my hospital bill was 110K on my plan I paid 2.6K for my part. I thought that very reasonable. I was loosing blood from somewhere and had multiple transfusions and endoscopes and colonoscopies. I have the PPOversion since we travel a lot. My wife was recently in the hospital and we asked the nurse what plan seemed to offer the best coverage. Our nurse had just had a course about the different plans and told us that Anthem and Aetna and one other one I can't recall we the plans that covered better. I our newspaper recently the local Baptist hospital has stopped accepting payment from Humana, WellCare and several others. So if you go there with their coverage you get out of network prices. That is not good. Anyway, you take your pick. We used to have United healthcare and combined with Medicare we were paying $1200/mo. Now with Anthem and Medicare we are paying $460/mo for both of us. That savings lets us travel while we still can and do more with our grand daughters.
Excellent overview. As I stated previously in my posts, choice is a good thing. Many people will have satsfaction and save some money with an Advantage plan. For most of the patients I treat, they can get the same care I recommend whether they have a quality Advantage plan or regular MC with a supplement.I just retired in December and am still on my wife's health insurance for the next couple of years, but Medicare is coming up soon for both of us. Thus, this thread was very interesting to me as I've begun my own analysis of possible healthcare insurance options. Based on what I have found, I think I might have something useful to add to this thread.
I think one thing that might be causing confusion in this discussion is that it's important to understand that Medigap supplements and Medicare Advantage plans both have fixed and variable costs.
Another thing that confounds comparisons is that, except for the ~$175/mo. that is required for both Medigap supplements and Advantage plans, all the other premium and deductible costs vary widely based on the company you choose and your zip code (not even state-- it can change a lot based on zip codes within a state).
This variability based on location can make it very difficult when one person is quoting what they pay (and the benefits they get) in one state because what others will pay will likely be different (possibly even within the same state).
In order to eliminate all this variability and confusion, I did a full analysis for myself comparing both the fixed and variable costs of the Medicare supplement Plan G and the cheapest Advantage plan for me. Since I'm the same person in the same zip code, the numbers are directly comparable, but note that Plan G is the most expensive supplement so, in that sense, this cost comparison slightly favors the Advantage plan.
Also note that I'm not picking the absolute cheapest Plan G policy. You can find some companies that have very low premium prices on G Plans, but often they are smaller companies that may not stay in the market for long. If your Plan G provider decides to leave the market, you won't be kicked off (you have it for life), but the policy becomes what is called "closed book" so your premiums might go up more than average.
With larger, more established companies, you might pay a little higher premium, but the odds are lower that you'll see out-of-line premium increases in the future.
So, the plans I'm comparing are:
--Medigap Plan G: Provided by Mutual of Omaha (very established company). The monthly premium for me is $138, which is a little below the nationwide average of $150. I'm also including Part D and Drug/Dental/Vision policies to keep the coverages as equal as possible.
--Advantage: Provided by Aetna (the SmartFit plan). It has the lowest Maximum Out Of Pocket (MOOP) maximum of any plans offered ($3,600/yr or $300/mo.) and has $0 premiums and no deductibles.
All numbers come from medicare.gov and they are specific for me and my location-- your costs will likely vary.
COST ANALYSIS
NOTE: ALL NUMBERS ARE PER MONTH!!
Plan G Fixed Costs:
Part A/B: $175
Part G premium: $138
Drug/Dental/Vision: $110
-----------------
Total Plan G Fixed Costs: $423/mo.
Advantage Fixed Costs:
Part A/B: $175
Advantage premium: $0
Drug/Dental/Vision: $0
-----------------
Total Advantage Fixed Costs: $175/mo.
So, as far as fixed costs, Advantage wins hands down.
Now let's look at variable costs-- the costs that you incur if you get sick. To start with, I'll look at the best-case scenario year (you never get sick) compared to a worst-case scenario year (you get sick enough to max out your MOOP).
Plan G Variable Costs in a GOOD Year:
Deductible: $0
MOOP (for Co-Pay, Co-Ins, Excess charges): $0
Plan G Variable Costs in a BAD Year:
Deductible: $20
MOOP (for Co-Pay, Co-Ins, Excess charges): $0
Advantage Variable Costs in a GOOD Year:
Deductible: $0
MOOP (for Co-Pay, Co-Ins, Excess charges): $0
Advantage Variable Costs in a BAD Year:
Deductible: $0
MOOP (for Co-Pay, Co-Ins, Excess charges): $300
Total Costs (Fixed + Variable):
GOOD year:
Plan G: $423 + $0 = $423/mo.
Advantage: $175 + $0 = $175/mo.
BAD year:
Plan G: $423 + $20 = $443/mo.
Advantage: $175 + $300 = $475/mo.
So clearly Advantage plans have much lower total costs if you have a best-case scenario year (no illness at all), and only moderately higher costs than Plan G if you have a worst-case scenario year (full MOOP).
Note that most people are healthy enough that they don't hit the full MOOP of their Advantage plans in most years, so the above analysis might favor the Plan G because it only looks at the extremes of years that you are either "fully well" or "fully sick."
So, in order to get a better sense of real costs over time, let's look at a 25-year period between age 65 and 90 (which will include the majority of people with average lifespans).
Let's say that over that 25 years, you have the following healthcare profile:
First 8 years: You never get sick in any year (so best-case scenario for the first 8 years)
Next 4 years: Your health costs reach 50% of your MOOP each year
Next 5 years: Your health costs reach 67% of your MOOP each year
Last 8 years: You hit full MOOP in each year (so worst-case scenario for the last 8 years)
In that scenario, the average total costs (i.e. fixed + variable) per month would be:
Total Costs (Fixed + Variable) over 25 years:
Plan G: $437/mo.
Advantage: $309/mo.
So, in that more realistic 25-year scenario, Advantage would be cheaper by $127/mo. for 25 years. Again, Advantage wins on cost.
Now, let's see what kind of health profile it would take for the Plan G and Advantage costs to break even over that 25 years. In order for the total costs of Plan G to equal the cost of Advantage, you're going to have to have more healthcare costs (so more "bad years") because the high fixed/low variable costs of Plan G only help you when your healthcare costs are higher.
So, here is an example of a mix of health-years that would break even: In this case you have no "fully well" years and no years of hitting 50% of MOOP. I.e., you are pretty sick most years:
First 5 years: You hit 67% of your MOOP each year
Next 20 years: You hit the full MOOP each year (so, 20 out of 25 years are worst-case scenarios)
Total Costs (Fixed + Variable) over 25 years:
Plan G: $443/mo.
Advantage: $443/mo.
So, even if you're sick enough to hit your full MOOP for the majority of retirement years, then Advantage will cost no more than Plan G. However, if you expect to have significant health costs such that you hit full MOOP every year, the Plan G will be lower cost.
Conclusion of Cost Analysis:
The results of this analysis seem clear: If you expect to have a large amount of healthcare needs in most years, Plan G is more cost effective. It's also better if you're someone who doesn't like financial surprises and would like to just pay a level premium to cover all years (good and bad) even if that level premium will end up costing you substantially more than the surprise cost you might get every now and then on an Advantage plan.
But for people with only moderate healthcare costs over 25 years of retirement and who can easily afford a ~$4,000 healthcare expense every few years (i.e., most people), Advantage plans are going to be far more cost effective. Advantage plans are also best if your income in retirement is such that you simply cannot afford the $423/mo. fixed costs of Plan G.
With that analysis, I was seriously considering an Advantage plan for myself, and I would guess that this cost difference is the main reason ~50% of people are buying Advantage plans these days.
However, I'm still leaning toward getting a Plan G. Why? Well, with any insurance, but especially healthcare insurance, cost isn't the only factor. Let's look at the other factors next.
OTHER, NON-FINANCIAL ANALYSIS
As with any insurance, you can't look at just the cost-- you also have to consider what is covered. Alarmguy is correct that Advantage plans by law must cover any medically necessary plan that traditional Medicare covers.
But the words "medically necessary" are doing a lot of work here.
In traditional Medicare, if any treatment or procedure is covered and your doctor deems it to be medically necessary, the treatment or procedure will be covered. Period.
On the other hand, if you have an Advantage plan and your doctor deems a treatment or procedure to be medically necessary, the Advantage plan carrier has veto power over that decision. And the Advantage providers are not afraid to exercise that veto power as the savings that come from denying treatment that isn't truly necessary is where the providers get the funds to support that $0 premium.
So, do Advantage plans have an unreasonable rate of denial for most people? It appears that they do not. Most studies show that a relatively small percentage of doctor recommendations are denied. And of those that are denied, a relatively large number of those are deemed by independent experts to be correctly denied as they really were not medically necessary.
So, I consider this to be a good thing. With healthcare costs rising all the time, it seems reasonable to generate savings by culling out non-necessary treatments and sharing that savings between the provider that generated those savings, and the consumers and government who are paying for it.
As evidence that this system is working, there are many surveys showing that people are highly satisfied with their Advantage plans. Here's a video discussing that. That video is very neutral, and I'd even say pro-Advantage.
I would say that this sort of experience is exactly what is making alarmguy so happy with his plan, and that his happiness is justified as I've shown that the costs are lower, most medical events will be covered, and people are generally satisfied.
So, what's the problem?
Well, I'm no expert in any of this, but in the research I've done, it seems like the Advantage denial problem is bigger than appears at first glance, and it is sort of a "hidden" problem. This may explain why alarmguy (and many others) is not seeing the potential problem.
To illustrate what I mean, I made the following graph. This isn't based on any actual data, it's just an illustration that sums up my impression of the Advantage denial problem:
View attachment 202709
What this figure is attempting to show is that healthcare costs go up exponentially as healthcare problems move from the more common and inexpensive to the less common and more expensive.
In the flat part of the curve, where even major events like an appendectomy or joint replacement surgery (just to pick two random events) are relatively normal medical occurrences, you may not be able to even tell the difference between Plan G and Advantage coverage.
Thus, alarmguy isn't being disingenuous in his praise for his Advantage experiences-- I'm sure he's getting great coverage at a fraction of the cost of a traditional Medicare supplement plan.
The problem occurs when you have something less common and more expensive happen to you-- like suffering a stroke that damages your brain such that you need to spend extensive time in a skilled-nursing facility getting treatment or rehab. This is the blue-shaded area of the graph.
While traditional Medicare will pay for procedures in this area (no questions asked), the Advantage plan providers are notorious for denying coverage for events in this area. Here is a video that provides an anecdotal experience with Advantage denial in such an extreme case, and these stories are very common. In fact, here's another video by the same creator showing how insidious the Advantage providers are at looking for ways to deny coverage for the extreme events where you need the coverage the most.
While the case made by that creator is pretty strong, one might reasonably argue that maybe he has some axe to grind. But the fact is that the overwhelming number of insurance brokers on YouTube give exactly the same warning-- that Advantage plans are not bad when you have a normal level of healthcare need, but the minute you get into a catastrophic health situation-- i.e., you need that insurance coverage the most-- that's exactly when the Advantage plans tend to leave you high and dry.
Or, said another way, if all your healthcare events are on the flat part of the curve, you're going to be getting great coverage for a low price and probably be out there trumpeting how great Advantage plans are. But the minute you get into that shaded area-- which will likely happen many years later-- you could end up being devastated when desperately needed care is denied.
Note that, because the blue-shaded area of the graph represents the more uncommon healthcare events, many fewer people will experience this type of event (and will probably be much older when they do). This likely explains why the surveys indicate such high satisfaction with Advantage plans-- the vast majority of the holders of these plans are on the flat part of the curve and have not experienced a devastating event in the blue-shaded area... yet.
Because of this possibility for devastation, I'd say 90% of the Medicare brokers on YouTube don't recommend Advantage plans unless you are in such poverty you simply can't afford a supplement like Plan G. Here and here are two videos by the same broker who is less dramatic than the previous one, but still recommends against Advantage plans mostly due to the coverage problem. Here and here are two videos by another broker who is adamantly against Advantage plans unless that's all you can afford.
Those are just a few videos, but in my research nearly all of the ~100 videos I've watched draw the same conclusion and offer the same advice-- assuming you can afford it, you should get Medicare Plan G, and if you opt for the savings of an Advantage plan, you are taking a serious risk of devastation through coverage denial if you have a more serious and expensive medical event.
Note that this advice is given even though the commissions these brokers receive would be higher if they sold an Advantage plan. So, they have no conflict of interest here-- in fact the conflict is in favor of the Advantage plans, and yet they still recommend Plan G.
Conclusion of Other Factor Analysis:
The bottom line for me is that, while I really like the theory of the Advantage approach of saving money by doing reasonable screening of medical recommendations for true medical necessity, the reality is that the Advantage approach hasn't actually cracked any code for low-cost, full coverage health insurance. You may be paying X% less in premium cost, but you're taking on that same X% of increased liability if you have a devastating health event that's on the right-hand side of the cost curve.
My Overall Conclusion Based on Cost + Other Factor Analysis:
While I totally agree that it sucks to pay for expensive insurance that you might never use, it sucks even more to pay (even a discounted rate) for coverage and then have it denied when I need it. I buy insurance specifically to cover those big, unexpected events and I'm willing to pay more to make sure that I'm covered when I really need it the most. Since I can afford Medicare Plan G, that's probably what I'm going to get when I sign up.
So, that's my analysis at least at the present moment. Note that I'm no expert in healthcare or insurance, and as of last week I literally knew zero about any of this. So, there could be errors in my thinking here. I mostly share this analysis in the hope that it might be useful to others, and that others will provide corrective feedback if my analysis is lacking at any level.
If you made it this far, thanks for reading and I look forward to any responses!
However, as was alluded to, there is "no free lunch" and the seeming savings/perks offered by the Advantage plans are accounted for elsewhere. The Advantages companies get a set amount from the gov't and they are obviously in business to make a profit. One of the ways they accomplish this is by slow authorizations or denials on some care or just not covering certain procedures or treatments that I can do on traditional MC patients. Perhaps they are "not supposed to do that", but they do. Just something I felt people should be aware of.
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