Of interest: When you hit Medicare age, you will be shuttled into what looks like a single-payer system. But bear in mind: it’s NOT a single-payer system. It’s really a two- or three-payer system.
SDXB’s lifelong friend is dying of prostate cancer, a condition he’s been struggling with for several years. Recently he told SDXB that the costs he’s racked up will pauperize his widow. At one point, a hospital demanded they disgorge $9,000 up front, before he could be admitted for treatment.
That may be because he doesn’t have so-called “Medigap” insurance: a supplemental policy that picks up the costs Medicare won’t cover. Possibly, too, his prescription drugs have dropped him into the so-called “doughnut hole,” in which the victim of a serious illness has to cover Rx costs out of pocket after they hit $3,300 and until they reach an astronomically high ceiling.
Traditional Medicare, the safest option because it allows you to choose the doctors you will go to rather than limiting you to an HMO’s network, covers only 80% of most bills. A stay in a hospital can rack up tens or even hundreds of thousands of dollars in medical bills.
In the US, costs for treating major ailments vary by region. Rescuing you from a heart attack, for example, can cost as much as $92,000. Folks…20 percent of $92,000 is $18,400! Not many of us happen to have that laying around the house. And acute costs may be just the beginning. Treatment for most conditions of old age goes on and on and interminably on.
If you select traditional Medicare (Part A comes with the 65+ territory; the optional Part B covers doctor’s visits and outpatient experiences), you will also need to buy a couple of other policies if you want to be fully covered. These include a Medicare supplement policy (often called “Medigap”), which picks up the 20% that Medicare doesn’t cover, and a Part D policy to (partially) cover prescription drugs. These are supplied by private insurance companies, not by the government program called Medicare.
So now we have not one payer, not two payers, but three payers.
Yes. You can opt out of buying Part B, a Medigap policy, and/or Part D. But you do so at your extreme peril.
So, those who elect “traditional” Medicare so as to preserve their right to see a doctor of their own choice and who wish to be fully covered will end up with three-provider coverage: the U.S. government, a large corporation selling Medicare supplements, and another large corporation selling prescription drug coverage.
An alternative is to buy a Medicare Advantage plan, which is your basic HMO or PPO designed to collect your Medicare benefits in exchange for rationing your care. Medicare Advantage insurers usually sweeten the deal with dental and optometry benefits, which make those plans look more attractive to the unwary. Some, but not all, Advantage plans also include coverage for prescription drugs.
Does a Medicare Advantage plan keep costs down? Maybe; maybe not. Depends on the plan and the circumstances. In 2015, for example, almost half of these plans imposed limits on prescription drug coverage above $5,000. For a victim of prostate cancer — just as an example — an androgen receptor inhibitor can cost $8,862.
AARP tells us that by law, “all [Medicare Advantage] plans…have annual limits on out-of-pocket costs.” What is this limit? Unclear. Says the redoubtable lobbying group and insurance provider for the aged:
Additional out-of-pocket expenses associated with Medicare Advantage plans depend on a variety of factors, including
• If the plan covers part of or all of your Part B monthly premium
• How much you pay for each service or health visit (copayment and/or coinsurance)
• Whether the plan has a yearly deductible that you must meet before it provides coverage
• What types of services you require and how often you require them
• Whether you join a plan with additional benefits such as vision, dental, or prescription drug coverage
• How much the plan’s maximum out-of-pocket limit is for medical services
• Whether you receive care from in-network health care providers
Some plans charge yearly deductibles. Some do not. Some plans charge copays for some benefits and services, and all Medicare Advantage plans are allowed to set their own coinsurance percentages and terms. In other words: good luck with that!
Only about 82 percent of Advantage plans cover Rx drugs. For some plans, your monthly premium may exceed the amount you’d pay for part D. Original Medicare has no out-of-pocket maximum. Unless you have Medigap coverage, you’ll keep paying for some part of as you use them. Medicare Advantage plans, by law, have an out-of-pocket maximum of no more than $6,700 per year. Once you hit that limit, the plan pays for all covered expenses.
And by the way, if you’re in a Medicare Advantage Plan that includes drug coverage, you must accept its terms for prescription drug coverage. Dare to join a Medicare prescription drug plan, and you’ll be expelled from your Medicare Advantage Plan and returned to traditional Medicare.
So how is SDXB’s buddy going broke despite a federal plan designed to protect the elderly from exactly that? Evidently he has traditional Medicare without a Medigap policy, or else he has a Medicare Advantage plan that doesn’t cover drugs and he failed to get a Medicare Part D (prescription drugs) plan.
The whole program is tricky, complicated, and loaded with land mines. You have to study it carefully and understand exactly what you’re doing — no small order! — to protect yourself from impoverishment should you face a medical problem that doesn’t carry you away quickly.