It’s time for the Days of Awe and that also means it’s Medicare Media Bombardment time trying to convince you and, in my view, actually brainwash you into thinking the more you pay the more superior company’s XYZ plan is to the one you have already or are about to go into if you are becoming Medicare eligible and are (this is important) relatively healthy.
I define relatively healthy as you see your primary care doctor for an annual checkup, a follow-up, two to three additional times because of a cold, allergy etc., and you see one to two specialists a couple of times each a year for routine preventive care or a follow-up to a condition you currently have. (ESRD, End Stage Renal Disease, is excluded for our purposes as Medicare has very specific guidelines for ESRD.) For drugs, you are taking either up to five (it can be more) Tier 1-2 drugs.
You, defined as person A, decide on the most expensive supplement/gap plan available from all those great ads you saw even though you are in the relatively health category because you are concerned you might get very sick one day in the future, and this plan allows you to go to any doctor or facility that takes Medicare anywhere with no copays. Everything is covered.
Your cost for the year:
Monthly premium to carrier (Metro area) average: $275
Yearly premium for health plan: $3300
Separate Part D drug plan required -- lowest monthly drug premium in area: About $20.00
Yearly drug premium: $240
Actual drug costs per month: Also $20
Five-year total cost for both the health and drug plan: $3540 x 5 = $17,700
10-year total cost for both the health and drug plan: $3540.00 x 10 = $35,400
Person B meets with me or the professional of their choice and based on recommendation goes with a zero-premium PPO Advantage Plan that has a $15 copay for a primary care doctor visit, $40 copay for a visit to the specialist and $250 cost for a non-preventive test.
Both you and person B are with major carriers so odds are high both your doctors and preferred hospital/s are in person B’s plan too. Because it’s a PPO, Person B can go out of network and also get in-network care in other states as person A can. Person B has no monthly drug premium and the monthly drugs cost the same as for person A. Person B has a yearly maximum out of pocket (MOOP) of $5000 (average in Metro area) should he have serious issues one year.
Person B yearly costs:
Sees primary doctor six times: $15 x 6 = $9
Sees specialist six times: $40 x 6 = $240
Has three non-preventive tests: $250 x 3 = $750
Yearly total: $1080
Five-year total: $5400
Person B gets very sick two years out of the 10 and hits his $5000 both times:
Five-year total: $5400.00 + $5000.00=$10400
10-year total: $10,800.00 + $10,000.00=$20,800
Who has the superior and more cost-efficient plan?
If necessary, Person B can change to the same plan as person A during any annual enrollment period and cannot be denied coverage or be charged higher premiums because New York, Connecticut and New Jersey are guaranteed issue states.
The point of these examples is to consult with a professional and not approach what I call the Medicare Puzzle on your own. See my website www.robertremininsurance.com for previous articles about the Medicare Puzzle.
By Robert Remin