LTCI: Top 6 Medicare myths
The Essential Guide
Health insurance for senior clients used to be simple. Employers often provided retirees with some form of lifetime coverage; those lacking that option signed up for a Medicare supplement. Nowadays employers are cutting back retirees’ medical coverage, forcing more of your older clients to wade through the alphabet soup of Medigap coverage and Medicare Advantage policies. An advisor recently told me that health insurance planning had become the new wealth planning for retirees. That’s an exaggeration but it does highlight the increasingly important role that health insurance has assumed in senior clients’ finances.
A DYNAMIC MARKET
The Allsup Medicare Advisor Seniors Survey of 900 individuals, published in October 2011, shows important differences among younger seniors’ (ages 65-69) and older seniors’ attitudes toward Medicare. The study’s findings highlight potential business opportunities for senior market advisors who can address clients’ health insurance concerns. In particular, the study notes, younger seniors are:
Less satisfied with coverage. Only 58 percent of those under 70 years of age were very satisfied with their Medicare coverage compared to 72 percent of those 80 years of age or older.
More willing to change coverage. Most seniors don’t plan to change Medicare plans during the next year. However, 48 percent of those under age 70 are not ruling out a change, compared to 38 percent who are age 80 and older.
More frequently changing coverage. In just the few years that those under 70 years of age have been eligible for Medicare, 18 percent have already changed plans.
Nearly twice as likely to review their plan. Forty percent of seniors under age 70 have reviewed their current Medicare plan in the past 12 months, compared to just 22 percent of those 80 years of age or older.
Overcoming the myths
Medicare and private health policies’ complexity can create misinformation among older clients. Before you can tap into the business opportunity created by insureds’ lack of satisfaction with their policies, you need to clear up any coverage misunderstandings they have. We asked two health insurance experts to identify the most common Medicare myths they and their affiliated advisors encounter and how advisors can respond.
Mary Dale Walters Senior Vice President, Allsup http://www.allsup.com Belleville, Ill.
“So, first and foremost, health-care reform is not eliminating Medicare Advantage plans.”
1) Poor benefits and on the way out. “One of the big myths that we hear all the time is that Medicare Advantage plans are not good plans and/or the health-care reform act that was recently passed is eliminating Medicare Advantage plans,” says Walters. “So, first and foremost, health-care reform is not eliminating Medicare Advantage plans. It’s reducing some of the subsidies that might be paid to those plans but they continue on.”
Roughly one-quarter of Medicare’s 49 million beneficiaries have Medicare Advantage plans so you are likely to encounter this myth with clients. Walter’s advice: Tell the client to ignore the rumors and evaluate all their insurance options, including Medicare Advantage plans. The plans offer a range of structures and benefits that can help clients tailor the coverage to their needs at competitive prices.
2) I can’t switch plans because of my pre-existing conditions. Your client has a serious health problem. She’s concerned about changing Medigap or Medicare plans because she’s heard that her condition won’t be covered. “We see this all the time with Social Security disability beneficiaries,” says Walters. “Traditional Medicare, Medicare Advantage and Part D plans don’t discriminate against pre-existing conditions. Medicare Advantage plans can offer more flexibility and coverage for people with disabilities. With Medigap or supplemental plans you may find pre-existing conditions are a bigger issue—they may have prohibitive underwriting criteria if someone does not enroll in Medigap when first eligible.”
3) Medicare will cover my long-term care expenses. This is one of the longest-running myths. Surprisingly, despite years of consumer education, this mistaken idea is still around, says Walters. “We talk to people all the time who are looking for long-term care coverage,” she notes. “They think that Medicare will cover long-term care.” Her advice: Make it part of the retirement planning process with clients to consider, for example, that they may need long-term care post-surgery for a while. That conversation is a natural way to discuss Medicare’s limitations in protecting against long-term care costs. “Medicare is not going to cover you to a great degree there,” she adds.
William Stapleton Chief Executive Officer HealthPlanOne/MedicareSolutions.com Shelton, Conn.
“We see rates in, say, Texas for a Plan F to be $100 to $120 a month, which we think is very reasonable.
4) I won’t be able to use my doctors under this plan. If they have a Medicare supplement plan, they can use any doctor, Stapleton notes, assuming the doctor participates with Medicare. Some doctors and other high-end specialists might not take Medicare patients in certain urban areas like Park Avenue in New York City, but most doctors HealthPlanOne encounters accept Medicare. “If you buy a supplement plan you can continue to see all those doctors,” he says.
But those who choose Medicare Advantage, which is a more traditional HMO or PPO offering, may not be able to use their doctors or may be required to pay an additional fee. “Typically, just like with a commercial PPO, you might have a $10 co-pay for a doctor in-network and $20 for a specialist and it may be double that amount if they’re out of network,” he says.
5) The Medicare supplement plan won’t cover my drugs. The good news is that most drugs are covered through prescription drug plans, reports Stapleton. But the insureds need to check with the plan to ensure the drug is covered and know what the co-payments are. While that’s not an issue with generics, it can be with brand-name drugs. Because financial advisors can’t spend their time researching each plan’s drug coverage, Stapleton suggests getting a sense of which Medicare-approved pharmacy providers are competitive in their area. “There are some great options out there,” he says. “CVS has a great plan. First Health Coventry has a great plan. Humana Walmart has a great plan. There are some really good (vendors) to choose from.”
6) Medicare supplement plans are too expensive. Fortunately, clients can choose from a wide range of cost-benefit options, Stapleton says. For example, if an insured buys Plan F, which is the most popular supplement plan, they incur no out-of-pocket costs for Medicare covered services. “It fills all the gaps that Medicare doesn’t pay for,” he says. “I think in many areas of the country it’s very affordable. We see rates in, say, Texas for a Plan F to be $100 to $120 a month, which we think is very reasonable. But if you came to Connecticut or you went to New York City it might be $350 a month. At those prices many seniors can consider Medicare Advantage options that can be less costly.”
It’s open enrollment season for Medicare Advantage
The insurers that participate in the Centers for Medicare & Medicaid Services (CMS) Medicare Advantage program are trying to generate their own “fall season” fever.
The Medicare Advantage program gives private insurers a chance to sell commercial alternatives to the traditional Medicare plan.
Units of Humana, UnitedHealth and other carriers have been interrupting the television and Web campaign ad stream with videos that show older people living happier, more confident lives because of their Medicare Advantage coverage. Many carriers started to roll out Medicare Advantage plan product announcements on October 1.
Humana and HealthSpring, a unit of Cigna, are adding both Medicare Advantage health plans and Medicare Part D prescription drug plans in many U.S. markets.
Humana, HealthSpring and United-Health are some of the big players adding new Medicare Advantage health plans.
Regional carriers announcing expansion of Medicare health plan programs, Medicare drug plan programs or both included Blue Cross and Blue Shield of Illinois, SCAN Health Plan Arizona and SelectHealth.
Some insurers have been promoting their use of relatively narrow, low-cost provider networks as a selling point, and others have been promoting their use of unusually active efforts to manage and coordinate patient care as a virtue.
UnitedHealth’s UnitedHealthcare unit said a “new preferred pharmacy network” will “deliver more savings.”
Use of the relatively narrow pharmacy network will help UnitedHealthcare to hold the monthly premium for the plan to $15, the company said.
The 2013 Medicare Advantage open-enrollment season is set to run from Oct. 15 to Dec. 7.
Humana said Medicare Part D enrollees who stick with its preferred pharmacy network can hold co-payments for many generic drugs to $1 for prescriptions filled in person and to $0 for prescriptions filled through a mail-order pharmacy.
HealthSpring is telling consumers that its “coordinated team approach focuses on prevention and delivering [a] more personalized health-care experience.”
HealthSpring’s “proven physician engagement approach to health care involves working closely with doctors to monitor and analyze patient data,” Herb Fritch, HealthSpring’s president, said in a statement. “This enables the team to stay ahead of illness and proactively meet each person’s health-care needs.” Allison Bell, LifeHealthPro.com
By Ed McCarthy for the November 2012 issue of Senior Market Advisor Magazine.