Top 5 Things your Medicare Advantage salesman won't tell you

[Teacher Terry]

I wouldn’t touch MA because there’s way too many disadvantages. This year I am switching from a expensive supplement to plan G high deductibles at 2450. If I would have had that plan this year I would have paid much less out of pocket than my premiums.

 

[Z3Dreamer]

I believe page 18 of the report link on his first point contradicts what he is saying regarding admin costs.
A 15% admin cap is typical contract language for federal funds/programs.
What’s included in admin vs program costs differs by program.
I don’t see any side by side comparison of admin costs for MA vs admin costs for CMS/Medicare specific to the administration of Medicare A and B.

You are discussing point #1. "Medicare Advantage "skims off" about 15% of the value of your annual Medicare benefit to fund "overhead, profit, and excessive executive compensation" The big chart in that point shows how excessive his compensation is.

In looking at a recent filing with the SEC https://www.unitedhealthgroup.com/content/dam/UHG/PDF/investors/2021/UNH-Q4-2021-Form-10-K.pdf

On page 36, they list the customers for UnitedHealthcare. 13% are Medicare Advantage. This is further diluted in that UnitedHealthcare is only 77% of their business, based on revenue. So a small amount of his compensation (about 10%, maybe) comes from ripping off MA customers.

On page 35 they claim their revenues are $287 billion. Now, I believe that CEO compensation is too high but someone getting paid $34 million for a company that has revenue of $287 billion is in line.

OK, but is the compensation really $34 million? For 2021, I am seeing reports that the CEO made $18.4 million. So lets look at where the author in note 2 got his figure of $34.9 million. The article in note 2 computed compensation different that the rest of the world. To quote the author "The figures were calculated by using the actual realized gains of stock options and awards, instead of the estimated fair value of those options and awards that is more commonly reported. " So, if a CEO is given $1 million of stock and that stock appreciates to $5 million because of the good work of the CEO, the author is using the figure of $5 million. That may be a great way to do things, but it is not useful to have figures that don't compare with the standard.

So, the chart on compensation is wrong. And it is wrong to compare a CEO's compensation to a government employee. You should be comparing the CEO to say Tim Cook. Apple had revenues of $387 billion and Tim Cook made $98 million. The UHC CEO looks pretty good, eh?

I forgot to add that only a small portion of his total compensation is cash and benefits. Rest is stock options. And stock options don't cost MA customers any money, IMHO.

 

[CRLLS]

Firstly, folks should know that "Medicare Advantage" is NOT Medicare, it is a play on words by the insurance companies.

It appears is does work for some, depending on what area of the country you live and what support system is available for the limited networks provided.

Agents make a lot of money selling MA, and only a fraction for selling Supplemental plans (N, G etc. controlled by Actual Medicare). Millions of dollars are spent on advertising them for a reason, that money has to come from somewhere.

There are 10 times as many sad stories about MA and very few good ones compared to supplemental plans.

Buyer Beware. As with any Insurance product, but especially Healthcare as you cannot go back to a decent plan without Medical Underwriting.

I agree that everyone should follow the "Buyer Beware" process in deciding which Medicare plan they get. However, I do disagree with your "Medicare Advantage is NOT Medicare" statement as it sits. MA plans are in fact, Medicare Part C. As such, they are part of Medicare, just not traditional Medicare as we once knew it. It is not a "play on words" as you put it. They are regulated by Medicare. Yes, they are run by for-profit insurers, just as all of the Supplement providers are.

That said, they are sold with very questionable sales tactics (such as no premiums), there are larger commissions paid to the agents (some unscrupulous ones push those MA plans for their own profit) and some have very restrictive networks. For those who do their due diligence or live in states where they can change without underwriting, it may not be such a bad thing. WRT higher commissions, I don't really care about them once the meat of the different choices in coverage and coasts are fully compared.

For us, Medicare Part C plans were not in the cards, but that was not done without forethought.

 

[steelyman]

MA plans are in fact, Medicare Part C. As such, they are part of Medicare, just not traditional Medicare as we once knew it. It is not a "play on words" as you put it. They are regulated by Medicare. Yes, they are run by for-profit insurers, just as all of the Supplement providers are.

I think that the various terms used (“original Medicare”, “traditional Medicare”, “Medicare Supplement”, “Medigap”, etc) contribute greatly to the confusion for many during what is already a confusing and stressful time (reaching age 65).

 

[Gotadimple]

Interesting conversation, and as one poster said one of the hot topics on Early Retirement. However, there are some inconvenient assumptions that are made by posters.

Commissions are bad. Not true, every insurance product sold in the US has the cost of a commission built into the rates for products sold to individuals. If you buy an auto/home/boat/life/health policy directly from the company it costs the same amount as buying it through an agent. Boomer Benefits is an insurance agent and they provide good information for consumers to make an informed decision. Agents need to be compensated for the time, research, and presentations they make. To insurance agents, volume is what gets them sales, and sales is what result in compensation. Everyone DESERVES to be compensated for their effort.

There is a thing called Magic of Medicare Pricing. CMS negotiates a fee schedule with a industry lobbying groups representing all health care providers. Every provider signs a contract with CMS for Medicare (and/or Medicaid) and agrees to abide by certain rules, like accepting the fee schedule as final payment, no balance billing, providing reporting on health outcomes, etc.

Insurance carriers that provide Medigap and Medicare Advantage plans also have contracts with CMS. Their products are reviewed (including negotiated fee schedules) by CMS before they can advertise. CMS will not tolerate charging a beneficiary more for a service than Traditional Medicare - so the "magic" continues. Insurance Carriers also agree to abide by certain rules. So what the difference between Traditional Medicare, Gap, and MA: a fee schedule, and ease of paperwork.

AARP and United Health Care relationship. AARP is a lobbying organization that has mined the publicly available demographic data of the Medicare eligible population. They know the areas where Medicare beneficiaries live, and they sell generalized data to companies who are interested in the pockets of retirees for marketing purposes. If a vendor wants to use an AARP logo on their marketing materials, they need to pay AARP for permission to use the logo.

AARP has always been an income-generating organization tied closely to the public welfare programs in order to generate more income. They do verify who gets to use their logo, the DO NOT warrant the product or service using the logo.

United Healthcare was one of the first carriers to contract with CMS to process Part A and Part B claims for Traditional Medicare (you didn't know that CMS doesn't pay claims directly - now you do!). They mined the claims data to understand health outcomes and as a larger organization took on the cost of federal programs that were 'proof of concept'. One of those was Medicare Advantage. They have long expertise in knowing what kinds of claims they can expect, and they provide input to CMS about pricing on the Medicare fee schedule based on their claim history.

They too need to be paid for their work, but, Government Programs are not money-makers because the compensation the government offers is lower than what they can earn through products sold to businesses, or individuals. But they can make it up on volume! (See Commissions above) That is why in some states you will see only a UHP/AARP product, and in other states you not see an AARP logo'd product, or you will see both.

HTH!

 

[Z3Dreamer]

I wouldn’t touch MA because there’s way too many disadvantages. This year I am switching from a expensive supplement to plan G high deductibles at 2450. If I would have had that plan this year I would have paid much less out of pocket than my premiums.

May I put a spin on this and say that you "wouldn't touch MA because there's way too many disadvantages" FOR YOU? FOR ME, Medigap had too many disadvantages. In other words, just like when to start on SS and SWR, it is an individual thing.

 

[Time2]

May I put a spin on this and say that you "wouldn't touch MA because there's way too many disadvantages" FOR YOU? FOR ME, Medigap had too many disadvantages. In other words, just like when to start on SS and SWR, it is an individual thing.

When you say, "Medigap has too many disadvantages" I can only think of one, and that is the premium. However if you get sick, that disadvantage can disappear very quick.
Another point, clearly the dollars allocated to Advantage plans is to high.
The are spending on advertising with thousands of commercials to coerce you into a plan. If it wasn't overly profitable they wouldn't spend so much pushing it.

 

[Irishgirlyc58]

You are discussing point #1. "Medicare Advantage "skims off" about 15% of the value of your annual Medicare benefit to fund "overhead, profit, and excessive executive compensation" The big chart in that point shows how excessive his compensation is.

In looking at a recent filing with the SEC https://www.unitedhealthgroup.com/content/dam/UHG/PDF/investors/2021/UNH-Q4-2021-Form-10-K.pdf

On page 36, they list the customers for UnitedHealthcare. 13% are Medicare Advantage. This is further diluted in that UnitedHealthcare is only 77% of their business, based on revenue. So a small amount of his compensation (about 10%, maybe) comes from ripping off MA customers.

On page 35 they claim their revenues are $287 billion. Now, I believe that CEO compensation is too high but someone getting paid $34 million for a company that has revenue of $287 billion is in line.

OK, but is the compensation really $34 million? For 2021, I am seeing reports that the CEO made $18.4 million. So lets look at where the author in note 2 got his figure of $34.9 million. The article in note 2 computed compensation different that the rest of the world. To quote the author "The figures were calculated by using the actual realized gains of stock options and awards, instead of the estimated fair value of those options and awards that is more commonly reported. " So, if a CEO is given $1 million of stock and that stock appreciates to $5 million because of the good work of the CEO, the author is using the figure of $5 million. That may be a great way to do things, but it is not useful to have figures that don't compare with the standard.

So, the chart on compensation is wrong. And it is wrong to compare a CEO's compensation to a government employee. You should be comparing the CEO to say Tim Cook. Apple had revenues of $387 billion and Tim Cook made $98 million. The UHC CEO looks pretty good, eh?

I forgot to add that only a small portion of his total compensation is cash and benefits. Rest is stock options. And stock options don't cost MA customers any money, IMHO.

I’m not sure why you quoted me but my point was that the 15% admin costs are a normal government contract provision. When I worked for the government we contracted with other agencies and the admin cap % was in the contract. Some were 10% and some 15%.
10% admin cost wasn’t really sufficient.
It isn’t “skimming”, they have to pay people to run the program just like CMS pays their people.
Also, I don’t see where CMS’ admin cost for Medicare is in order to compare which entities are more efficient. Dollar wise.

As far as CEO compensation being much higher than the CMS director- in other news the earth is round although you can find people who believe it is flat.

Page 18 of the first report says this:

For fee-for-service Medicare, the largest category of Part A expenditures is inpatient hospital services, while the largest Part B expenditure category is physician services. Payments to private health plans for providing Part A and Part B services represented roughly 48 percent of total A and B benefit outlays in 2021.
Table II.B1.—Medicare Data for Calendar Year 2021

 

[Irishgirlyc58]

I googled this but couldn’t find the answer.
Does anyone know if the companies administering Medicare Advantage programs get funding for outreach and enrollment from CMS or other grant type funds that are available to promote Medicare outreach and enrollment knowledge?

 

[RobbieB]

I didn't talk to any Medicare Advantage salesmen, just signed up all by myself.

 

[Z3Dreamer]

When you say, "Medigap has too many disadvantages" I can only think of one, and that is the premium. However if you get sick, that disadvantage can disappear very quick.
Another point, clearly the dollars allocated to Advantage plans is to high.
The are spending on advertising with thousands of commercials to coerce you into a plan. If it wasn't overly profitable they wouldn't spend so much pushing it.

OK, you ask for Medigap disadvantages. The whole Medigap theory is a reactive approach. My MA is a proactive approach. My MA has preventative things. So this is a big disadvantage of Medigap. I can give a whole bunch of examples of how they try to get/keep you healthy, if you want.

A second advantage of my MA is the speed at which they process claims. My MA is within a few days. DW's Medigap is lengthy. A recent misbilling took her two months to clear up.

I have more but I will address the "However if you get sick, that disadvantage can disappear very quick." Yes, my MA has co-pays, but no deductibles and no premiums. In some years, you will do better with an MA and some years you will do better with a Medigap. This is the whole concept of risk management. Do want to pay nice regular premiums or only pay when you are sick? Personal choice. Let me ask you this: For your house, would rather pay low premiums but have a higher deductible or pay high premiums and have a low deductible? Again, personal choice. But I hear from people are passionate that a high deductible on a house is bad, stupid, etc.

On my MA plan, if I save $2,000 per year for a number of years, but have a number of years where I pay more, is that bad?

I don't understand this point: "Another point, clearly the dollars allocated to Advantage plans is to high." I think you are saying that it costs the government too much and is therefore bankrupting Medicare. Is that correct?

Your last point is: "The are spending on advertising with thousands of commercials to coerce you into a plan. If it wasn't overly profitable they wouldn't spend so much pushing it." I think you are saying that the massive amount of spending on advertising proves it is too profitable and therefore their product must be bad. I don't see that one follows the other. I could argue that all advertisers must be bad by that logic, but you would say that I was offering a strawman's argument. I could say that they have to advertise to overcome all the negative things about MA, but you would say they are doing a bad job as we are all sick of Joe Namath and JJ Walker. I will just agree that we are all sick of the MA advertisements.

 

[Z3Dreamer]

I’m not sure why you quoted me but my point was that the 15% admin costs are a normal government contract provision.

I quoted you as a lead in to discussing that point in the original news story quoted by OP. I agreed with what you said, but am sorry I did not make that clear. Yes, 15% margin is normal.

 

[Irishgirlyc58]

I quoted you as a lead in to discussing that point in the original news story quoted by OP. I agreed with what you said, but am sorry I did not make that clear. Yes, 15% margin is normal.

Oh good! I was wondering if you disagreed which is fine but I wasn’t sure.

 

[mpeirce]

I didn't talk to any Medicare Advantage salesmen, just signed up all by myself.

Yeah, same for DW. She researched her various options and picked the one that she wanted. Some people try to make it seem like people are signed up at gun point.

I’m sure there are less that terrific MA plans out there, but there are excellent ones too. My DW’s MA plan is a PPO that is very much like the PPO she had before (and I still have - non-ACA).

 

[RetMD21]

His 5 points are in fact very well-documented, with links in the body of the post and additional supporting links at the end (I especially recommend the New York Times exposé, a major piece on the graft and corruption of all of the leading Advantage plan providers published just last week). Saying you can easily refute something isn't the same as actually doing so. Good luck with that.

Yeah, the NYT expose on advantage plans was eye-opening. Interesting that the initial rationale was for CMS to save money but they pay more for MA per capita. Belk has a point that part B charges are not a lot for many folks but since there is no cap I think the cost of supplement is reasonable. As pointed out above part B chemotherapy costs, for example, can be very high.

 

[yakers]

DW & I have Kaiser HMO MA, has worked fairly well, nothing perfect with them or any alternatives. DW & I had serious cancer issues, nothing out of pocket. Never searched deeply into alternatives as we had Kaiser before medicare so it was working and just stayed with them.

 

[SecondAttempt]

You folks are much smarter about all this than me. I am trying to learn as much as I can so I can make good decisions in 8 years when I am eligible for Medicare. The discussion here caused me to do some research today. I personally would not sign up for anything that required me to give up a governemnet guaranteed plan and premium for a plan subject to a for-profit company's decisions. I have always been fairly healthy but there will come a time when I am not as there is for all of us. I don't think that is a time when I want to try to switch back to medicare and have preexisting conditions excluded.

 

[SecondAttempt]

I have a related question. My partner has a pension from the State of Hawaii she is eligible in a few years. She gets health insurance paid for life, which is of course good. But once she gets on Medicare it looks like the only plan offered is a MA plan. Obviously she could buy a Part G/K/L/N plan on her own but this seems like another incidence of a MA scam/influence. My understanding is she can opt out of their plan but would give up the premium supplement they provide. Doesn't seem very fair that the state government only provides a MA plan. I could be wrong about this but that is how it seems.

 

[Irishgirlyc58]

I have a related question. My partner has a pension from the State of Hawaii she is eligible in a few years. She gets health insurance paid for life, which is of course good. But once she gets on Medicare it looks like the only plan offered is a MA plan. Obviously she could buy a Part G/K/L/N plan on her own but this seems like another incidence of a MA scam/influence. My understanding is she can opt out of their plan but would give up the premium supplement they provide. Doesn't seem very fair that the state government only provides a MA plan. I could be wrong about this but that is how it seems.

I actually have the same type of decision except I’ll be 65 next September so I have to decide by June.
What I did was request the information on the Medicare Advantage plan that they offer.
MA plans from an employer are typically different from what is offered in the wild.
The plan from my former employer has no co pays for any medical services in or out of network, effective throughout the U.S., max out of pocket is 0. So really the only cost will be for prescriptions.
There are some additional services such as hearing aids, routine eye exam, and others.
Prescriptions have additional medications covered in addition to the normal list.

You don’t give up your government provided Medicare which are parts A and B. They must cover the same services that Medicare covers.
The private insurance part is what is covered over and above Medicare.
Medigap coverage is also provided by private insurance.

I plan to develop a spreadsheet of coverages etc and hopefully that will help me make a decision.

 

[Scuba]

You folks are much smarter about all this than me. I am trying to learn as much as I can so I can make good decisions in 8 years when I am eligible for Medicare. The discussion here caused me to do some research today. I personally would not sign up for anything that required me to give up a governemnet guaranteed plan and premium for a plan subject to a for-profit company's decisions. I have always been fairly healthy but there will come a time when I am not as there is for all of us. I don't think that is a time when I want to try to switch back to medicare and have preexisting conditions excluded.

I agree 100%. We are planning to go for traditional Medicare plus supplemental. We want the maximum choice possible and are willing to pay for that, just as we’ve paid for a PPO plan all these years.

DH turns 65 in 2024. Is any underwriting required when initially signing up, and are pre-existing conditions used as a basis for supplemental policy rates or denial of eligibility? Since he had quadruple bypass surgery at age 63, I hope we will be able to get him good coverage.

 

[athena53]

DH turns 65 in 2024. Is any underwriting required when initially signing up, and are pre-existing conditions used as a basis for supplemental policy rates or denial of eligibility? Since he had quadruple bypass surgery at age 63, I hope we will be able to get him good coverage.

Pre-existing conditions are not considered when initially signing up for traditional Medicare. They are considered only by the supplement carrier if you're switching from Medicare Advantage. I retired at 61 and DH was 75. He had cardiac stents and polycythemia (bone marrow churning out too many red blood cells- eventually morphed into acute myeloid leukemia, which is a common result). No problem at all getting him traditional Medicare coverage and no major out-of-pocket expenses, even through his final months.

 

[ncbill]

OK, you ask for Medigap disadvantages. The whole Medigap theory is a reactive approach. My MA is a proactive approach. My MA has preventative things. So this is a big disadvantage of Medigap. I can give a whole bunch of examples of how they try to get/keep you healthy, if you want.

A second advantage of my MA is the speed at which they process claims. My MA is within a few days. DW's Medigap is lengthy. A recent misbilling took her two months to clear up.

I have more but I will address the "However if you get sick, that disadvantage can disappear very quick." Yes, my MA has co-pays, but no deductibles and no premiums. In some years, you will do better with an MA and some years you will do better with a Medigap. This is the whole concept of risk management. Do want to pay nice regular premiums or only pay when you are sick? Personal choice. Let me ask you this: For your house, would rather pay low premiums but have a higher deductible or pay high premiums and have a low deductible? Again, personal choice. But I hear from people are passionate that a high deductible on a house is bad, stupid, etc.

On my MA plan, if I save $2,000 per year for a number of years, but have a number of years where I pay more, is that bad?

I don't understand this point: "Another point, clearly the dollars allocated to Advantage plans is to high." I think you are saying that it costs the government too much and is therefore bankrupting Medicare. Is that correct?

Your last point is: "The are spending on advertising with thousands of commercials to coerce you into a plan. If it wasn't overly profitable they wouldn't spend so much pushing it." I think you are saying that the massive amount of spending on advertising proves it is too profitable and therefore their product must be bad. I don't see that one follows the other. I could argue that all advertisers must be bad by that logic, but you would say that I was offering a strawman's argument. I could say that they have to advertise to overcome all the negative things about MA, but you would say they are doing a bad job as we are all sick of Joe Namath and JJ Walker. I will just agree that we are all sick of the MA advertisements.

It's not just denying things like physical therapy where you could pay OOP.

But when you develop a form of cancer whose treatments require $60,000 infusions every four weeks (according to your oncologist) but your MA plan will only approve paying for those infusions every eight weeks what will you do then?

It would take weeks for any appeals...the first two levels of which are internal anyway, IIRC.

 

[Livefree]

I've had a Blue Cross PPO Medicare Advantage Plan for almost 3 years and it's been fine.


It works well for me, as I don't take prescriptions, or any real health problems.



Also, I live in Mass. and there is no medical underwriting, so I can switch to a gap plan if I decide to.

 

[RetMD21]

I believe page 18 of the report link on his first point contradicts what he is saying regarding admin costs.
A 15% admin cap is typical contract language for federal funds/programs.
What’s included in admin vs program costs differs by program.
I don’t see any side by side comparison of admin costs for MA vs admin costs for CMS/Medicare specific to the administration of Medicare A and B.

from the original link:

If you choose Medicare Advantage, the Centers for Medicare & Medicaid Services (CMS), transfers that average $13,500/year benefit to the private health insurer you select. In turn, the insurer is allowed to skim off up to 15% of that $13,500 in admin expenses (i.e., $2,025/yr) though in many urban areas competition may limit that skim rate to 12% or so. That 15% figure relates to the so-called Medical Loss Ratio or MLR. Medicare demands that Medicare Advantage insurers spend at least 85% of your benefit on actual medical services and no more than 15% on overhead & profit.

For 2021, traditional Medicare had program costs of $887.6 Billion, spent $839.3 Billion on actual medical services for its 63.8 million beneficiaries, and $10.8 Billion for administrative expenses. (See Page 12, 2022 Medicare Trustees Report). That's an admin cost of 1.2%.

 

[RetMD21]

Challenge accepted. NYT article is behind a paywall, but the section quoted below the hyperlink discusses the IG report (I think) that found MA plans deny too many legitimate pre-authorization requests. This is true, but the author at retireearlyhomepage then drew the conclusion of "There's a lot of suspected for-profit insurance company fraud in Medicare Advantage." Fraud is a totally different animal. Here is a link to the IG's report. https://oig.hhs.gov/oei/reports/OEI-09-18-00260.asp

No where in the IG's report is the term "FRAUD" mentioned. Furthermore, the IG recommends improvement to the system, which is an administrative fix. What the author of the article suggests is a criminal proceeding. Totally different.

Furthermore, H.R. 3173 which purports to fix the problem has passed the House. It may never be law, but the issue in the IG report is being looked at, addressed, etc.

So, I am refuting point #4 as the facts do not support his conclusion.

‘The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions
By next year, half of Medicare beneficiaries will have a private Medicare Advantage plan. Most large insurers in the program have been accused in court of fraud. https://www.nytimes.com/2022/10/08/upshot/medicare-advantage-fraud-allegations.html