Medicare Information
The average American senior who is on an MAPD plan has no idea how it is funded. What they know is there is usually no monthly premium. Beyond that, 95% of seniors have no idea how it is funded and don’t care if they get the care they need.
Of course, being a government funded program, it is complicated but it does work and save the government money each month.
There are two trust funds managed by the Department of the Treasury that supplies the money for Medicare payments. They are the Hospital Insurance Trust Fund and Supplemental Medical Insurance Trust Fund.
The Hospital Insurance trust fund pays for hospitalization or services under Medicare Part A. There is also money coming from payroll taxes paid by both employer and employee and people who must pay for Part A because they didn’t have the 40 quarters necessary to obtain Part A at no cost.
The Supplemental Medical Insurance trust fund pays for Part B services, the money comes from Part B monthly premiums, funds authorized by Congress and interest gained from the trust fund
The government funded payments necessary to fund Medicare Advantage is around $540 billion dollars in 2025. That’s up from the cost of $462 billion dollars in 2024. 51% of all Medicare eligible seniors chose Medicare Advantage plans. MAPD spending amounts to 1/3 of all Medicare billing.
The plans really help seniors with a guaranteed maximum out of pocket (Original Medicare has no maximum out of pocket) thus limiting their financial exposure if they have a serious medical issue.
The popularity of these plans continues to increase annually because of a fixed maximum out of pocket, additional benefits like dental vision, hearing and gym membership among others.’
The issue with these Advantage plans is really two questions 1. Does my doctor take the plan? 2. Are my medications covered and at what cost?
Assuming the affirmative, these MAPD plans are very good for most seniors and help them manage their finances since most are on a fixed income.
Medicare Supplements or Gap Policies:
We need to explore the benefit of having a Medicare supplement or gap plan over the MAPD type plans.
The other option is keeping Original Medicare but adding a supplement or gap policy to pay what Original Medicare doesn’t. Medicare pays 80% of the bill after they have verified the local rates and adjusted the bill to meet those requirements. If the doctor bill was $200 but the average bill in your area for the same services was $160, Medicare would reduce that bill to $160 and then pay 80% of the bill or $128.00. The Medicare recipient would be responsible for 20% or $25.60.
There is a little known and mostly misunderstood Medicare term called assignment of benefits. In Medicare it means that if the doctor or facility took assignment of benefits (meaning they bill Medicare directly and get paid from Medicare) then they must write off the remaining amount of the bill not paid by Medicare.
If the doctor or facility does not take assignment of benefits (meaning you bill Medicare, get paid directly from Medicare and then must pay the doctor or facility, can bill you the 15% that Medicare disallowed. However, this rule does not apply to Medicare Advantage and if you have a supplement, in most cases the plan pays the disallowed amount.
The plan designs are done by CMS, so a plan G has the same medical benefits regardless of the company, but premiums vary by insurance carrier. Plan G allows you to see any doctor, go to any hospital anywhere in the country if they take Medicare. Depending upon the insurance carrier, some or all emergencies or urgent coverage outside the US could be covered. It depends upon the insurance carrier. If I was planning on traveling outside the US, I’d personally buy a separate travel policy. The premium for these plans varies based on age, destinations and length of trip but well worth the protection afforded by the plans.
The benefits of a supplemental plan versus the MAPD plan comes down ot choice of doctor, facility and the freedom to go anywhere you want for medical services. I happen to have a supplement but for a different reason. I have Rheumatoid Arthritis and need two shots monthly to eliminate any pain or joint damage. That shot costs $4,000 monthly. My supplement picks up what Medicare doesn’t pay, including the amount disallowed and I just pay the monthly premium.
Many seniors with medical issues use Medicare supplements and have little or no out-of-pocket bills. To explain further, under the MAPD plan I would have to pay $800 per month for the shots. My premium from the supplement is less than ½ that so I’m ahead of the game.
That is why you need the services of a Medicare broker who understands the local market and can guide you to the best and appropriate plan for you. With 84 different plans in Clark County NV, without the guidance of a Medicare broker you cannot navigate the Medicare maze by yourself. Since the broker cannot charge you for their services and advice, it is an easy way to proceed. It is also common sense to use their services.
Lastly, I want to address those that only want Original Medicare and nothing else. The big issue is Original Medicare does not have a maximum out of pocket. So, you are responsible for 20% and 15% which Medicare doesn’t pay regardless of how large the bill. As a sample a recent hospital stay of 5 days can result in a $400,000 bill. Medicare reduces it to $300,000. Then Medicare pays 80% or $240,000. You are responsible for the 20% or $48,000. If the hospital does not take assignment of benefits, you are responsible for the $12,000 as well.
Medicare is very complex, so use a broker to help you understand what the best plan for you is. Remember two things: Medicare Advantage plans can be changed annually between 10/15-12/07 and again between 1/1 and 3/31 each year. The Medicare supplement can be changed only during the month before and the month of your birthday. Nevada has the birthday rule which I coauthored. Meaning you can switch supplemental plans without medical underwriting or what is known as guaranteed issue.
Please again, always use a broker to change plans, as they have the market knowledge of all plans and can direct you to the best one for you.
I hope this information is useful and if anyone has questions, please contact me via phone or email and I will respond quickly.
Also, you may want to take a look at Medicare 2025 Information. 2026 Medicare Information coming soon.
The Barend Agency Inc.
Len Barend, Broker
Cell:702-250-2200