By Neal Templin
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If you’ve ever worried that nobody loves you anymore, just wait until you turn 65 and become eligible for Medicare.
You will be receiving heartfelt letters for months from insurers, telling you how much better your life will be if you sign up for their Medicare Advantage plan. Some feel so strongly that they send multiple letters.
I reached that age in December and have been bombarded with letters for months. It doesn’t seem to matter that I’ve already enrolled in original Medicare plus a supplemental plan instead of Medicare Advantage. The letters keep coming.
I’m even getting Medicare Advantage pitches from the insurer that sold me a supplemental policy. Its marketing folks don’t seem to be aware I’m already a customer.
And if I turn on the television, I’m likely to see football legend Joe Namath pitching the advantages of a Medicare Advantage plan. Well, Broadway Joe was a heck of a quarterback, but I’m not sure why I should listen to him about health insurance.
Why is everyone so eager to sell me Medicare Advantage?
For starters, Medicare Advantage is particularly profitable for insurers, some research has found.
On top of that, insurance agents often get higher initial commissions for selling Medicare Advantage than they do for selling a supplemental plan. Stephen O’Brien, an insurance broker in Augusta, Maine, says his initial-enrollment-period commission for Medicare Advantage, $573, is nearly twice what he gets for selling a supplemental plan plus a drug plan. He says that doesn’t influence how he presents options to customers.
Maine isn’t an affluent state, and between 85% and 90% of O’Brien’s customers choose a zero-premium Medicare Advantage plan that still allows them to go to specialists outside the network without referrals if they get sick, he says. By contrast, sticking with original Medicare plus a G supplemental plan and a drug plan costs around $250 a month in Maine, O’Brien says.
“I let the customers choose,” O’Brien says. “It’s their plan.”
O’Brien says he hears from customers after he sells them Medicare Advantage plans when a medical expense isn’t covered or costs more than they think it should. By contrast, he never hears from customers after he sells them a G supplemental plan because it basically covers everything except the annual $233 Medicare Part B deductible.
“There are no other co-pays or costs for using plan G,” he says.
Nonetheless, O’Brien, who is 62 years old, says he will probably sign up for Medicare Advantage himself if his health remains good because he doesn’t want to pay roughly $3,000 in annual premiums for a supplemental plan.
I get that. For people who rarely see doctors or simply don’t have the money for the supplemental plan premiums, Medicare Advantage is the way to go.
I opted for supplemental coverage in part because I have an annoying but benign esophagus condition and I go to a gastroenterologist in New York City who charges high fees if he’s not in your network. He takes Medicare. He doesn’t take the Medicare Advantage plan I could get in New Jersey.
But I’ll be honest. I also didn’t feel like dealing with the hassles of being in a Medicare Advantage network that tells me which doctors I go to or which procedures are covered. With original Medicare, I can go to any doctor or hospital that accepts Medicare—which is pretty much everyone.
I’m paying up for the privilege of having nearly complete control over my medical treatment. I’m sincerely hoping that I stay in good health, and that this privilege goes unused.
Other Americans are making a different choice. Forty-two percent of Medicare beneficiaries in 2021 were in Medicare Advantage, and the number has been steadily rising, according to the Kaiser Family Foundation.
The Better Medicare Alliance, an advocacy organization for Medicare Advantage plans, unveiled an analysis last year that found Medicare Advantage beneficiaries report $1,640 less in total annual health spending than those in traditional Medicare. They frequently also get extra benefits like dental or vision care not provided by traditional Medicare.
The Alliance says that nearly half of seniors upon turning 65 aren’t familiar with Medicare Advantage and want information on it. In other words, we’re getting lots of letters touting Medicare Advantage because we want them.
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