I recently turned age 65, which made me eligible for government health insurance for the first time in my life. I've been paying into Medicare all my life, but suffering through the limitations of private health insurance for nearly 40 years. I had first thought that starting Medicare would be an easy task, but soon found out that it has become a maze of marketing, confusion, and critical decisions that could haunt me for the rest of my life. Why have we made signing up for Medicare so complicated and turned so much of it over to the same insurance companies that denied coverage all of our lives? Money, of course.
As of 2023, more Medicare beneficiaries are now signed up for private Medicare Advantage plans than are on traditional Medicare. Medicare Advantage plans (aka Medicare part C), are privately run plans that take money from Medicare while managing medical care payments for those who are enrolled. If you're one of the people who can't fast forward through commercials, you will see hundreds of commercials targeted at seniors touting the benefits of Medicare Advantage plans. The government isn't able to advertise, so you won't see any ads for traditional Medicare. Only by doing your homework will you find out the true differences between the two options.
Once I turned age 64, I began getting junk mail, text messages, and emails from all sorts of private insurance companies urging me to sign up with their Advantage plans. All of them offered toll free numbers where "advisors" would walk me through all of my questions about Medicare. I've been leery of private insurance companies like Anthem, Cigna, and Aetna most of my life. They denied me care in my 20's and 30's because of "pre-existing conditions." They charged me through the wazoo for crappy Bronze level policies on the Healthcare.gov exchange after I turned age 60, providing me high deductibles that paid nothing until I reached limits that I never reached. And now they wanted me to trust them with my golden years, when there's a much higher likelihood that I will need substantial medical care?
There is so much wrong with our healthcare system, and much of it revolves around incentives. For-profit insurance companies are incentivized to charge the most for the least, and they deliberately make things confusing and difficult to boost their profit margins. I wrote in depth about this in an earlier blog post. Today I want to specifically discuss Medicare and the traps that I had to jump over. There's plenty more to be said about Medicare's financial difficulties and the aging of America, but that's for another time.
Here is what I found:
1- If you don't sign up on time, you can be penalized! Medicare gives you a six month window- three months on either side of your 65th birthday. If you miss that window, in most cases you can still sign up but you will pay a permanent penalty for every month afterwards. That goes for both Medicare B (doctors) and Medicare D (prescriptions). Few people will miss this, but some my forgo Medicare D until they need prescriptions later in life, only to find that the penalties are substantial.
2- Medicare B only covers 80% of doctor and test charges. The rest is up to the patient. And there is no maximum out of pocket amount like with other plans. That extra 20% can add up to a lot for those who have to pay it, and that's where Medigap policies come in. Medigap, (aka Medicare supplement) policies are offered by private insurers, but with a lot of rules. The main rule is that if Medicare covers it, they have to. And they can't limit providers to a network. So they are a good deal for those who can afford the approximately $150 a month premiums.
3- Medigap plans are only guaranteed if you sign up right away at age 65. This makes switching between Advantage and Traditional Medicare plans much more tricky. If you elect them at age 65, you can keep Medigap plans year after year. But if you try to enroll later, they can deny you coverage for pre-existing conditions! This makes all decisions at age 65 that much more fateful.
4- Medicare does not cover dental, vision, or hearing care. Some Medicare Advantage plans offer those benefits, but if you look closely into them, they are limited and not that useful. I have seen bills for dental care of over $10,000 for some of my clients, and it's a shame that our system divides those things out like it does. I ended up signing up with a company called Best Life that offered the best coverage.
5- Traditional Medicare has a low deductible of $240 (2024 price). After you pay that amount, Medicare B covers 80% of all the rest of your care for the year. This is in stark contrast to the $9,400 deductible I had with Anthem before I turned 65. Deductibles for Medicare Advantage plans can vary, but remember they are getting most of their money from Uncle Sam.
6- Medicare Advantage plans have limited networks of providers, while traditional Medicare is good anywhere in the US that takes it. Advantage plans require pre-authorization for specialists, where traditional plans do not. What traditional plans covers is pretty much set by Medicare, but Advantage plans can deny services and providers whenever they can justify it. Since there is a huge profit motive there, it can be harder for sick people to get treated than for those with government insurance.
7- Medicare advisors get payment from private insurers for anybody that they sign up. And the payment they receive for an Advantage signup is substantially bigger than they get from a private Medigap policy. The incentives for this signing bonus has created an entire industry of "advisors" who operate through AARP, hospitals, private offices, and other sources that seniors might trust. Take everything that they say with a grain of salt. That said, I'm very happy with the advisor that I used. This is not something that is easy to tackle alone.
8- Both Advantage and Medigap policies often cover gym membership. This makes great sense as the exercise and socialization that comes from going to a health club is very good for you. It cuts back on other medical care that would be needed later on and improves chronic conditions. I had a hard time justifying joining a gym due to the costs, but my plan allows me to join just about any facility in my area!
9- Both Social Security and Medicare are government agencies that have limited numbers of employees that can answer questions. And they certainly can't afford to advertise. The best information can be found online at medicare.gov. Unfortunately, this leads to Medicare being a popular target of fraudsters, who are thought to steal over $100 Billion per year from the program. There aren't enough agents to pursue suspected frauds, and crooks are very sophisticated about filing claims for healthy or fake patients. In addition, private insurers have been accused of a process called upcoding, where they exaggerate ailments for the Advantage clients to get more money from the government.
While I greatly appreciate the opportunity to finally get good, affordable insurance and not have to deal with private insurance companies, I worry about my fellow seniors. Older people are more likely to fall for scams, and are frequent targets, as I have seen. I wouldn't exactly say that private Medicare plans are scams, but they don't tell the truth either. They use slick advertising and commission-driven salespeople to make their low-cost plans most appealing. The thought of paying four premiums and having four insurance cards versus one plan and one card is a big plus for private plans. I can see why they have ballooned in popularity. I just wish that people thought more long-term about what they are getting in the future for their choices.
So I ended up with traditional Medicare, a Medigap policy, a drug policy, and a private dental policy, but they all will cover what I need, and a I'm already pursuing therapies I've been putting off for years. What happens in 10 years when Medicare runs out of money? What happens to the many people under age 65 who need care? I have no idea. Hopefully saner voices will be in power and we will stop blaming our bad healthcare system on the poorest and most vulnerable among us.