Breaking Down Medicare
Medicare is extremely complicated, and most seniors do not have the knowledge to comprehend some of the crazy things in Medicare. We will look at several starting with Original Medicare, itself.
Original Medicare is the only insurance in the US that does not have maximum out-of-pocket. There are deductibles for both Parts A & B, but there is no maximum out-of-pocket. That means that the subscriber is subject to 20% co-insurance without having a maximum. For discussion’s sake, let’s say you had a $300,000 medical bill. you would owe $60,000 for that procedure. Why is that?
Mostly unknown to Medicare recipients but there is an insurance terminology called assignment of benefits. In English it means you the patient assign the payments from Medicare directly to the physician or hospital or facility treating you. Conversely it also means if the doctor or facility did not take assignment of benefits you would be responsible for the 15% that Medicare disallowed in addition to the 20% of that bill. That’s 35% of the bill. In my example above you would be held accountable to pay $105,000 of that $300,000 bill. Not too many of us can afford that and it would severely impact on your retirement savings. Why is that?
I have asked many brokers why Medicare doesn’t have a maximum out-of-pocket and no one can provide me with a responsible answer. My guess is when Medicare was first developed in the mid 60’s, the cost of healthcare was relatively low, and Congress never gave it a thought. As an aside, Congress is not on Medicare or social security. Why is that?
There are a couple of ways to mitigate this anomaly. One way is to buy a supplemental insurance policy which will cover 20% and anything over that amount, so you, the patient would only pay the Medicare Part B premium, and any charges would be handle by your insurance. There might be a small (under $300) annual deductible you would pay but that’s it. You do have to pay the monthly premiums and as you age, the premiums increase.
The other way to is to have a Medicare Advantage Plan or MAPD plan in effect. These plans have a maximum out-of-pocket and it is usually a reasonable amount. The HMO MAPD plans maximum out-of-pocket is between $800-3500 annually. The PPO plans have a higher maximum out-of-pocket in the $4,500-$6,500 range. Neither plan has any monthly premiums and most don’t have a deductible either. Compared to a medical bill of $300,000, these maximums are reasonable and usually affordable.
While Original Medicare allows you to see any doctor, go to any hospital anywhere in the country if they take Medicare. The offset is the lack of maximum expense.
Medicare Advantage Plans
THE MAPD plans all use networks of doctors and hospitals and in most areas all the hospitals accept Medicare. That is not true of doctors. Each plan has their own doctors to choose from. That is why you must be very careful in choosing an MAPD plan by making sure your doctor takes the plan, and all your medications are covered by the plan.
In Southern Nevada there are 84 different plans to choose from, so how is someone without the training or knowledge of Medicare going to figure out what is commonly called the Medicare Maze. The simple answer is they can’t. Even insurance brokers who specialize in other areas of insurance cannot comprehend the Medicare Maze and usually seek out a Medicare broker for assistance.
As Medicare brokers we are required annually to take an exam that usually lasts about 4-5 hours to complete, and we must pass it with a score of 90 or better to be allowed to sell Medicare. Then you must take the individual insurance companies’ courses and pass them with an 85-90% or better score. That is required to maintain your ability to sell those plans and keep commissions you have earned over the previous years. Medicare brokers are highly trained and have the knowledge to answer all your questions and concerns. This testing is annually conducted and to maintain your ability to sell Medicare you must complete all the courses. It takes about a week each year. No other type of insurance require that level of annual training.
Therefore, I would suggest that you seek out a Medicare broker who has the local knowledge to steer you in the best option based on your medical and prescription needs. Agents who work for the insurance company can only see the plans their company offers so your choices are somewhat limited. Make sure you are working with a Medicare broker who has the knowledge and experience to assist you in making the best choice for you.
As you can see, Medicare is extremely complicated and difficult for most people to understand. My question is why? Why so complicated, why no maximum out-of-pocket, why 84 plans in Southern Nevada? Good questions, all. Unfortunately, there are no answers.
I hope this information is useful and if anyone has questions, please contact me via phone or email and I will respond quickly.
Also, take a look at Medicare 2025 Information.
The Barend Agency Inc.
Len Barend, Broker
Cell:702-250-2200
Email: len@insurance4unevada.com