Don't Let a Medicare Commercial Choose Your Health Insurance

Two costly mistakes to avoid and seven questions every older American should ask before changing Medicare coverage.

by Alvin Blackshear  |  Historian & Researcher

Every autumn, television viewers are bombarded with Medicare commercials promising additional benefits, lower premiums, and savings they may be missing. Friendly spokespersons urge older Americans to call immediately and speak with a "licensed insurance specialist."

But before picking up the telephone, consider a question rarely mentioned in these advertisements: Is the person answering your call helping you select the best healthcare coverage, or trying to sell you an insurance policy?

The distinction matters, particularly when your health and financial security are at stake.

What Are They Selling?

Medicare beneficiaries generally choose between Original Medicare, often supplemented by Medigap and separate prescription coverage, and Medicare Advantage, a private insurance alternative.

Medicare's October 15 through December 7 annual enrollment period allows beneficiaries to change Medicare Advantage and Part D prescription plans. Medigap has different enrollment rules.

Both approaches have advantages and disadvantages. The problem arises when complicated insurance decisions are reduced to attractive advertising promises.

Two potential mistakes deserve particular attention.

Mistake #1: Believing a $0 Premium Means Free Healthcare

Perhaps the most seductive Medicare advertising promise is the "$0 monthly premium."

It sounds wonderful, particularly for retirees living on fixed incomes. But a zero-dollar premium does not mean zero-dollar healthcare expenses.

Most Medicare Advantage beneficiaries must continue paying their Medicare Part B premiums. Depending on their plans, they may also face deductibles, specialist copayments, hospital charges, coinsurance, and prescription expenses.

Consider two hypothetical retirees.

One enrolls in a zero-premium Medicare Advantage plan. Healthy today, that person enjoys lower monthly insurance expenses. But an unexpected illness requiring hospitalization, rehabilitation, and repeated specialist visits could produce substantial medical bills.

Another retiree pays higher monthly premiums for Original Medicare supplemented by Medigap. Although the regular insurance expense is greater, that individual may face substantially lower out-of-pocket costs for Medicare-covered treatment.

Medicare Advantage plans have annual out-of-pocket limits for covered Part A and Part B services, but those limits do not include every healthcare expense.

Neither insurance arrangement is automatically superior.

The real question is not what your insurance costs when you are healthy. It is what your insurance could cost when you become seriously ill.

Before changing plans, calculate your potential annual expenses, not merely your monthly premium.

Mistake #2: Surrendering Insurance You May Never Recover

The second mistake can be even more consequential.

Imagine someone who has Original Medicare and a Medigap policy. Attracted by advertisements promising additional benefits and lower premiums, that person switches to Medicare Advantage and cancels the supplemental policy.

A year or two later, circumstances change. A serious illness develops, a trusted specialist is outside the plan's network, or the beneficiary simply wants greater flexibility in choosing physicians.

Returning to Original Medicare may be possible during an applicable enrollment period.

Recovering the Medigap protection previously surrendered is another matter entirely.

Outside certain guaranteed-issue protections, insurance companies may be permitted to review medical histories, charge higher premiums, or deny applications altogether.

Federal law provides some protections, including a 12-month trial right for certain first-time Medicare Advantage enrollees. Individual states may provide additional rights.

But these protections are not universal.

Someone who abandons a Medigap policy without understanding the consequences could discover that returning to comparable supplemental coverage is difficult, expensive, or impossible.

Before canceling existing Medigap insurance, determine whether you have a guaranteed right to obtain comparable coverage again. Get that information in writing.

Recognizing the Sales Pitch

Not every insurance representative is dishonest. Many licensed agents provide valuable assistance.

Nevertheless, consumers should recognize warning signs: exaggerated promises, pressure to enroll immediately, repeated emphasis on free benefits, or reluctance to explain coverage restrictions.

A licensed insurance agent is not necessarily an independent adviser. Agents may receive commissions and may represent only certain insurers.

Medicare prohibits misleading marketing and pressuring beneficiaries to enroll before they are ready.

You are entitled to ask questions, request documentation, and take time to decide.

Seven Questions to Ask Before Changing Coverage

Before agreeing to any new Medicare plan, ask the representative:

1.     Who do you represent? Are you independent, and how many insurance companies and plans can you compare?

2.     How are you compensated? Will you receive a commission if I enroll, and does compensation differ among plans?

3.     Can I keep my doctors and hospitals? Are my physicians, specialists, and preferred hospitals covered under this specific plan?

4.     What will my prescriptions cost? What are my estimated annual expenses based on my medications, dosages, and preferred pharmacy?

5.     What could I actually pay each year? Include premiums, deductibles, copayments, coinsurance, and applicable out-of-pocket limits.

6.     What restrictions will I encounter? Will I need referrals, prior authorizations, or approval for treatment outside a provider network?

7.     What happens if I change my mind? Can I return to my previous coverage, particularly Medigap, without medical underwriting or higher premiums?

Do not authorize enrollment until you understand the answers.

For independent assistance, visit Medicare.gov, call 1-800-MEDICARE, or contact your state's free State Health Insurance Assistance Program (SHIP).

The best Medicare coverage is not necessarily the plan with the lowest advertised premium or the longest list of benefits. It is the coverage that protects your health, preserves access to necessary medical care, and fits your financial circumstances.

Your healthcare is too important to be decided by a television commercial.

Resources:

Medicare.gov  - General marketing rules for Medicare health and drug plans
https://www.medicare.gov/health-drug-plans/health-plans/your-coverage-options/plan-marketing-rules

Medicare.gov – LearnHow Medigap Works
https://www.medicare.gov/health-drug-plans/medigap/basics/how-medigap-works