The Medicare coverage you choose determines how much money you pay out of pocket for medical care during retirement, which medical providers can give you fully covered care, and other results.
Choosing Medicare coverage can be a daunting process.
First, you decide whether to enroll in a Medicare Advantage plan or stay with original Medicare and add a Medicare supplement policy and a Part D prescription drug policy.
Some people choose original Medicare but don’t add both a Medicare supplement and Part D prescription drug policy. Not adding that coverage often costs them more money in the long term.
Then, you choose from among the plans or policies available to you. In many areas of the country, a dozen or more options are available.
That’s why I recommend that most people seek the help of an insurance broker or agent who’s familiar with the Medicare coverage in their area.
A report from The Commonwealth Fund last year and other recent information show how important the choice of insurance agent is.
You need an agent who isn’t biased for or against Medicare Advantage plans and is willing to design coverage that meets your goals and needs.
To develop its report, The Commonwealth Fund conducted focus groups with brokers and agents specializing in Medicare.
The study found that the commissions the brokers and agents received varied greatly between the different options. Medicare Advantage plans paid higher commissions, sometimes much higher, than the Medicare supplement and Part D policies.
Most of the focus group participants said if they were eligible for Medicare they would choose original Medicare with Medicare supplement and Part D policies for themselves, because they believed the combination offered better coverage and choices.
The participants said they tended to sell that package of policies to higher income clients while selling Medicare Advantage plans to other clients.
Within the Medicare supplement plans, most clients took the Plan G policies, which offer the most comprehensive coverage and also have the highest premiums to the buyers and highest commissions to the agents.
But some agents said if they were eligible for Medicare, they might opt for Plan L. It offers the same comprehensive coverage as Plan G, but requires the policyholder to pay a high deductible before the comprehensive coverage kicks in. The higher deductible results in lower premiums to the buyer and lower commissions to the agent.
In response to this situation, the Department of Justice recently filed a suit against major Medicare insurers.
The suit alleges the insurers paid brokers and agents substantial amounts to steer their clients into Medicare Advantage plans instead of other options.
Medicare beneficiaries need help selecting the best coverage for them. But they need to be sure the help is relatively free from bias, especially bias caused by financial incentives offered by plan sponsors.
Brokers and agents should disclose if they are able to sell a client any plan available in the area or if they work with only a subset of insurers and plan types. Be sure to ask an agent about biases and incentives before accepting advice.
An alternative to a broker or agent is the free counseling service provided through most state health agencies known as SHIP, or State Health Insurance Assistance Program. Trained, volunteer counselors offer help to any Medicare-eligible person who asks.
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