Every year, millions of Americans turn 65 and face a key decision that will affect their healthcare spending for the rest of their lives: Medicare or Medicare Advantage.
Like many people approaching this birthday, Amy Gage, of St. Paul, Minnesota, was shocked when her inbox filled up day after day with offers to sell Medicare-related insurance plans.
It was a jarring reminder that she was reaching the age she once considered old. She got over the shock and chose a moderately priced Blue Cross Blue Shield Medicare Advantage plan that offered doctors she trusted.
Now, at age 66, she was shocked again, this time by a sudden flurry of ailments: osteoporosis, deterioration of her hand joint and arthritis in her left toe. As a result, she is rethinking her Medicare insurance, knowing that she will use it much more than she had planned.
“There’s no way to put frosting on the cake,” he said. “I’m starting to see my body deteriorate.”
While its Medicare Advantage plan has done well so far, it may switch to traditional Medicare plus a supplemental plan to gain more freedom for doctors when open enrollment hits in October.
Gage is not alone. Many people don’t fully digest the impact of their Medicare choice until they get sick. Many find that the decision they made when they were strong at age 65 excludes them from seeing the best doctors for serious conditions that arise later.
“Choosing Medicare plans is complex, and people don’t want to do it again once they’ve done it,” said Juliette Cubanski, deputy director of the KFF program on Medicare policy. “But people don’t think about their future needs and only realize the limitations of their (medical and hospital) networks when they are faced with a medical problem.”
According to KFF research, only 29% of Medicare enrollees review their plans, and only 10% change during annual open enrollment periods. The transition becomes even more complicated for people who want to leave a Medicare Advantage plan and enroll in traditional Medicare plus a supplemental Medigap insurance plan.
If you sign up for a Medigap plan at age 65 or whenever you first sign up for Medicare Part B, the insurer must accept you without asking any health questions. But once this window is passed, the insurer has the right to charge a retiree with health problems more or even refuse coverage altogether.
Even the need for a knee replacement can prevent a person from switching from Medicare Advantage to a Medigap policy, said Ari Parker, a Medicare educator with Chapter and author of the Medicare guide “It’s Not That Complicated.”
Choosing wisely when you are young and healthy is important, said Harold Stankard, head of Fidelity Medicare Services, a unit of the financial services company. “If you’re not sick, the savings are real” in Medicare Advantage plans that typically have low or no premiums, he said. “But you know the risks: wealthy people tend to buy a supplement (Medigap) for peace of mind.”
Melinda Caughill, co-founder of Medicare Advisory 65 Incorporated, talks about a former client who died of cancer at age 70 after a long and unsuccessful fight to get her Medicare Advantage plan to allow her to see the specialists she thought could save her life.
When this woman was 65, “she looked young, she felt young, and you couldn’t imagine her getting sick,” Caughill recalls. So you didn’t get Medigap Plan G, recommended by Caughhill because patients have the freedom to choose the best treatment at a fixed price. Instead of spending $120 a month on Medigap premiums, Jean opted for a Medicare Advantage plan with a low monthly premium.
A couple of years later she was diagnosed with cancer and was unable to get her Medicare Advantage insurance plan to approve treatments her doctors recommended. “She was weak due to the illness and was stressed by the endless calls and rejections,” Caughill said.
In the end, the woman chose what Caughill calls “the nuclear option.” She moved from Wisconsin to Illinois so she could get a new insurance plan and see a great oncology doctor.
He took advantage of a quirk of Medicare rules: If you stray outside Medicare Advantage territory you can get Medigap insurance without underwriting, even if you’re already sick. His move came too late. He died shortly thereafter and his ordeal is not unique, Caughill said.
According to KFF, Medicare Advantage plans limit health care use by requiring patients to see certain doctors and obtain prior approval from insurance companies for treatments, medications and procedures. If patients go to doctors outside a plan’s network, they face most of the costs up to a cap that could exceed $10,000 a year.
Studies by Brown University assistant professor David Meyers found in 2021 that even highly rated Medicare Advantage plans have narrow networks of doctors ranging from primary care to cardiologists and psychologists. And in a 2020 study of 2016 hospital admissions he found that Medicare Advantage patients tended to go to medium-quality hospitals, rather than high- or low-quality hospitals.
In 2022, the U.S. Office of Inspector General found that the process of seeking prior approvals for doctor-recommended treatments too often put patients at risk. Patients lacked urgent care due to lengthy approval processes and were too often denied care deemed necessary by doctors. About 13% of the denials analyzed by the inspector general involved care that traditional Medicare and Medigap plans would have covered.
Amid such delays, patients may abandon Medicare Advantage and simply return to traditional Medicare, which covers about 80% of medical expenses. But without a Medigap plan on top of basic Medicare, patients can still be hit with steep bills.
“We want to make it clear to people,” Stankard said. “You will initially be accepted into a Medicare supplement even if you are sick, but you may not be able to access it later.”
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