A growing number of seniors hitting that magical age of 65 are facing one of retirement’s first big decisions: whether to opt for Medicare or Medicare Advantage for their health care. And it seems as if the Advantage plans, offered by private insurers instead of the federal government, are winning the battle. Last year about one-third of enrollees chose Medicare Advantage, compared with fewer than one enrollee in seven back in 2004. At that rate Medicare Advantage will truly have the advantage in the not too distant future.
But are these popular plans with their added features and lower costs really the best bet for the average senior? This recent article from the Kiplinger financial website strongly suggests that for some seniors, especially those with more serious health issues, Medicare Advantage plans may not be the best choice after all. Traditional Medicare may actually turn out to have the edge.
Advantage Disappears when Ill Health Strikes
“Medicare Advantage plans are attracting seniors with their appealing price tags and promise of comprehensive health coverage in one convenient package,” says Kiplinger. “But are these plans actually a disadvantage for people with serious health problems? That’s the question raised by a string of recent studies.” The bottom line: Medicare Advantage “tends to work for people when they are relatively well,” says Judith Stein, executive director of the Center for Medicare Advocacy. “But if they become ill or injured and really need a significant length of care, they’re not as well served.”
Ironically, these studies that cast at lease a shade of doubt on the benefits of Medicare Advantage (or MA) plans come at a time when the federal government, in a burst of privatization, seems to be pushing enrollees away from traditional Medicare. According to Kiplinger, “Centers for Medicare and Medicaid Services, the federal agency that administers the Medicare program, is making a fresh push to drive Advantage enrollment even higher. The top objectives listed in a CMS ‘communications plan’ for last fall’s open-enrollment period include putting ‘renewed emphasis on MA plans.’” In other words, far from being competitors, the Medicare Advantage plans appear to be welcome collaborators as Medicare seeks to shift some of their costs toward private insurers. Still, in spite of the enticing marketing efforts of the MA plans, they don’t appear to be the best choice for everyone.
Limited Medical Choices
“Some studies have found benefits for Medicare Advantage enrollees,” Kiplinger writes, “including greater use of preventive care services. But for people in poor health, the evidence on health care access and quality decidedly favors original Medicare over Medicare Advantage, according to a Kaiser Family Foundation review of 40 studies published between 2000 and 2014.” Indeed, the article continues, “the drawbacks of Medicare Advantage may only become apparent when health declines.” One of the biggest drawbacks – perhaps the biggest – of Medicare Advantage plans is the limited pool of doctors, including specialists, who policy-holders are allowed to see. The hospital a senior prefers, or the surgeon with the best reputation, often is unavailable under the limitations imposed by some MA policies.
We were also surprised to read in Kiplinger that MA patients being sent to nursing homes for short-stay rehabilitation are more likely to be assigned to a lower-quality facility than their counterparts on regular Medicare. Says the article, researchers from Brown University “studied all Medicare beneficiaries newly admitted to a nursing home between 2012 and 2014. Even after controlling for factors such as where patients live, those on Medicare Advantage were substantially more likely than those on original Medicare to enter lower-quality nursing homes—those rated three or fewer stars on Nursing Home Compare, the comparison tool available to consumers at Medicare.gov.” The implication is that those on traditional Medicare can choose from a wider range of nursing homes and rehab facilities while many Medicare Advantage plans simply assign patients to the few facilities where they offer coverage.
If you’re on Medicare Advantage and want to switch to Medicare, you can, but it can get complicated. During Open Enrollment, October 15-December 7, you can switch plans without penalty. You’ll also have a widened 3-month window to switch plans starting in January 2019, Kiplinger reports. But the real problem may arise if you’re in poor health and want to switch to Medicare plus a medigap policy to help minimize out of pocket costs. “In many states,” Kiplinger warns, “you are only guaranteed the ability to buy a medigap policy under limited circumstances, such as when you initially become eligible for Medicare or within 12 months of signing up for an Advantage plan. At other times, you may be subject to medical underwriting – and you may not be able to get a medigap plan at all.” This can leave you financially exposed.
Solution: a Comprehensive Plan
So what’s the answer? Life planning coach and elder law expert Rajiv Nagaich of AgingOptions has a lot to say about Medicare, but what’s most important is that he puts this decision into a much broader context of multi-faceted retirement planning. Medical and financial considerations in retirement are obviously closely linked, and must be blended together into your retirement plan, but there are other element to consider. What legal structure is appropriate for your estate? What housing choices best suit your health, your finances and your desires? How will your family figure into all these decisions – will they be a help or a hindrance? A LifePlan from AgingOptions blends all these critical elements together into one seamless strategy for a fruitful and secure retirement. LifePlanning can help guide all your retirement decisions, including thorny ones like those concerning medical insurance.
Please come join Rajiv Nagaich of AgingOptions at a free, no-obligation LifePlanning Seminar at a location that works for you. We’ve offered hundreds of these highly popular seminars to folks just like you for well over a decade. You’ll find a complete listing of currently-scheduled LifePlanning Seminars, along with handy online registration, by clicking here. Come join us at a LifePlanning Seminar soon – it will be our pleasure to greet you.
(originally reported at www.kiplinger.com)