Medicare Advantage Plan: Summary Of Benefits
Medicare Advantage plans have two documents that lay out plan details. The second one, the Evidence of Coverage, has all the length of the Godfather trilogy but it’s not exactly bedtime reading. This is why the Summary of Benefits is so popular. It’s short and to the point in explaining what you’ll get with a particular plan. And most of us like short and to the point.
Think of what the Summary of Benefits provides this way:
If you were renting a car from Avis there are things you would want to know: Is there a limit on the miles you can drive? Can you leave the state? Can you drive to the tip of South America and see penguins if you choose to? If you get into an accident with one of the penguins what part of the cost are you responsible for? In other words, the information that could actually impact you.
Here is a sample of a section of a Summary of Benefits so you can see what one looks like:
What Are The Benefits?
When it comes to matters of our health and what is covered, or not, we want to know. When it comes to matters of our pocket books and how much we are going to have to slap onto our own MasterCard, once again we want to know. A Summary of Benefit is the KNOWING. That is why it’s important to understand.
in reading a Summary of Benefit it's important to know: “What to Look For” and “How to Interpret“ exactly what the Summary of Benefit actually says. With that in mond, let’s go through the typical sections in a Summary of Benefits:
1) Monthly Premium: It’s usually zero. Medicare Advantage plans get a ton of money from Medicare to deal with all your medical needs, “Lock, Stock, and Barrel,” as the expression from our generation goes. The money they get is several times the $148.50 you continue to pay Medicare each month, which is why plans can generously give you so much coverage and often charge you zero. With some plans, and plans in less urban area, there is however a monthly premium to pay.
2) Deductibles: You may be used to the idea of a deductible from Group Health Insurance but with Medicare Advantage the deductible is usually (but not always) as they say in Urban Slang “Nada”. You are covered from dollar one, so for instance if you go to the hospital your Medicare Advantage plan starts to pay immediately without any deductible for you to cover first.
3) Maximum-Out-Of-Pocket Amount: Or what we in the business call MOOP. And it’s a good thing it is not named Peak-Out-Of-Pocket cost or you know what we’d be calling that!
MOOP is very often misunderstood by clients, so if you are confused by what it is, you’re not alone. Sometimes clients think MOOP is how much they have to pay before coverage starts, confusing MOOP as being their deductible. It is not. Sometimes clients believe MOOP is the most a plan will pay out and they are responsible for everything after that. It is not.
A Maximum-Out-Of-Pocket is just that. It’s the most you can pay out of your own pocket during a calendar year. Note that Medicare always works off of a calendar year and so 2022 will beginwith a fresh MOOP no matter when you started your plan in 2021.
A MOOP for a given plan could be as low as being in the high $2,000’s or be as much as $7,550 for an HMO or $11,300 for a PPO, the maximum limits set by Medicare. MOOP amounts for plans vary greatly from one county to another. In most urban counties $3,000 to $4,500 is a typical range for an HMO.
For most people most years, how much their plan’s MOOP is won’t matter at all. Most people’s copays will only add up to only a few hundred dollars a year which is a small fraction of their plan’s MOOP. If, however, a bad year happens, then MOOP is like a high-wire trapeze walker’s safety net. It’s nice to know that MOOP is there just because we never know when we’re going to lose our medical balance. It’s good to know we have a safety net from financial disaster.
With specialist visits costing $25 a pop, it would take 150 specialist visits in a year to reach a typical MOOP of $3,500 and unless we have a major crush on our cardiologist, that isn’t going to happen. There are two items that can cause people to reach their plan’s MOOP, which we will discuss shortly in the Summary of Benefits: Hospital Stays and Part B Drugs.
4) Drug Coverage: Here is another item that confuses clients: Initial Coverage Limit and Catastrophic Coverage Limit. These numbers are identical on every Medicare Advantage plan quote in the plan’s Summary of Benefits. They are always the same because they are set each year by Medicare itself and every plan must use the exact same numbers.
Clients are often very confused by what these two number mean. Firstly, it’s important to know, they have nothing at all to do with Part A and B medical costs. They only refer to Part D drug costs.
Drug plans use a Tier system for the first $4,130 of your prescriptions. This is calculated as the retail cost, or the combination of your copays with what your plan pays. The Coverage Gap goes from $4,130 to $6,550. Your copay in the Gap is 25% and your plan pays 75%. If the retail cost of your drugs gets to $6,550 you then reach the Catastrophic Coverage Limit and you’ll pay 5% copay after that with your plan kicking in 95%. Please refer to the section on prescription drugs for more details.
The Summary of Benefits will also outline what your copay is for all 5 Drug Tiers (some plans have 6).
Tier 1 (Preferred Generics) could be anywhere from $0 to $5 depending on the plan.
Tier 2 (Standard Generics) could be anywhere from $0 to $10 depending on the plan.
Tier 3 (Preferred Brand Name) is usually in the $30 to $50 range depending on the plan.
Tier 4 (Non-Preferred Drugs) is usually between $90 and $100 or it could be a percentage
Tier 5 (Specialty Drugs) are very expensive. The copay is usually 33%.
5) Doctor Visits: When we were kids we recited the little poem, “An apple a day keeps the doctor away.” Guess what, it didn’t work and now, 1,000’s of apples later, we are still seeing doctors.
If you join an HMO, as most Medicare Advantage plans are, you will be required to have a Primary Care Physician (PCP). Sorry, but your cardiologist or other specialist cannot be designated as your PCP. If you join a PPO then you do not need a Primary Care Physician although having one is still a good idea.
Unlike with Group Health insurance, with Medicare Advantage visits to your Primary Care Physician are almost always free of any copay. Visits to specialists are typically in the $20 to $30 range with an HMO and $40 to $50 with a PPO, or more if the specialist is not in-network.
A question I am often asked is, “How hard is it to find specialists who are in-network?” This is where some plans have much larger doctor networks and as such are more robust than others. With most of the better plans you will find that half or more of the doctors in your area are in-network and you won’t have any difficulty with being able to locate a specialist should you need one.
Prior Authorization: One of the items you will see a dozen times or more on your quote in the various sections on doctors, tests, and hospitals are these somewhat concerning words, “Prior Authorization Required for…”
My clients often take that to mean that for every little medical need they have they’ll have to call someone somewhere in a high-rise tower in the corporate office of their carrier and plead their case for a blood test, specialist visit or x-ray. Clients worry, even if they need to simply use the men’s room or lady’s room at their doctor’s office, that too will be, “Prior Authorization required for . . .”
Not to worry though. Anything requiring prior authorization is not your responsibility but rather it is an administrative function of your doctor’s office. It’s just your doctor’s office computer checking with your plans computer that something you need medically is covered by the plan and not a procedure, appointment or test that is outside of what Medicare covers. For instance: Dermatologist checking for melanomas—COVERED. Eye lift to get rid of wrinkles—NOT COVERED.
6) Preventative Care: It’s New Year’s Eve. While grabbing for a streamer when the clock strikes midnight you bump your funny bone, and while everyone else yells, “Happy New Year!” You yell, “Ouch!” For the first minute or two of the New Year your arm feels numb but you laugh and think to yourself, “I hope this is the worst thing that happens to me medically all year.” And guess what, it is!
This is how your Medicare Advantage plan hopes it goes for you, too. They hope a bumped elbow is the worst you ever get. Don’t get me wrong, they are nice guys over at Aetna, Humana, Cigna or United or whoever has your plan. They genuinely want you to be well. They are also in business and the less medical services you need the better it is for their corporate bottom line.
Because of this, they preach, “Preventative Care.”
Every Medicare Advantage plan works the same when it comes to preventative care. Items that fall under the Preventative Care umbrella have zero copay. This is mandated by Medicare. Preventative Care includes:
1) Your Wellness Exam: “Wellness Visit” is a Medicare term so when you call your primary care doctor’s office and ask for your wellness visit or exam they’ll know exactly what you’re asking for. Medicare plans always include an annual wellness visit consisting of a complete physical as well as lab work that will screen you for just about every medical condition that blood tests can screen you for. I’m not exaggerating when I tell clients, “Your blood work readout will be nine pages long.”
It can be a bit scary to learn that this number in your blood test or that number isn’t so good and for that reason, people sometimes put their wellness visit off. But it is better to know about something that could be bad when it’s in the easy to deal with stage than to find out a year down the road when you have a worse problem. After all, we humans don’t come with a Check Engine indicator as our cars do though we should. A wellness exam is the closest thing we have to a problem indicator light.
If you have designated a new doctor as your Primary Care Physician (PCP) in your Medicare Advantage enrollment, scheduling a wellness exam is a good way to introduce yourself.
2) Colorectal cancer screening better known as a colonoscopy are free as part of the preventative category. And, don’t we all look forward to those? I don’t know what our favorite part is: The galloons of pink liquid we have to drink the night before or the test itself.
3) Bone mass measurement
4) Breast cancer screening (mammogram)
5) Prostate screening
6) Cardiovascular heart health screening
7) Diabetes screening
8) Vaccines including flu shots and pneumococcal which you can get at your pharmacy. A common question I get is, “What about the shingles vaccine?” Medicare in its wisdom doesn’t cover it under preventative care. The good news is that it is usually covered under Part D.
7) Diagnostic Tests: The Ancient Egyptians would have sick people sacrifice a sheep as their way of doing a medical diagnosis. The sheep would be cut open and whatever was found wrong in the sheep’s organs was thought to be the same problem the sick person had. We have come a long way in our diagnosis techniques since Ancient Egypt.
Most common diagnostic procedures such as blood tests, urine tests, and simple x-rays are between $0 and $20 in copay depending on the plan. More elaborate tests such as MRIs and CT Scans can be up to $150 in copayments. Many plans have zero copays for tests done in your primary care doctor’s office but charge a small copay when you go outside a doctor’s office to get the test done.
8) Ambulance: Your copay is usually in the $200 to $275 range. You could instead rent a stretch limo to take you to the hospital for around the same $250 cost. The negative is the limo doesn’t include paramedics or the “get out of our way” siren and lights.
9) Urgent Care: A visit to an Urgent Care Center may cost you anywhere from $30 and $70 depending on the plan. With any Medicare Advantage plan, you can visit Urgent Care facilities anywhere in the country with the same copay as if you went to one in your own county. Most plans even allow you to go to Urgent Care Centers anywhere in the world, though the copay is usually more if you’re in another country.
10) Emergency Care: An Emergency Room visit copay is usually between $75 and $125 depending on the plan. That’s around double, or more, of the cost of an Urgent Care visit. Why, you might ask? The answer is because emergency room visits cost your plan a lot more than Urgent Care visits do. So they are encouraging you to make the more frugal choice wherever possible. Plus, Urgent Care facilities have shorter waiting times and more up-to-date magazines from 2019 as compared to hospital emergency rooms with magazines from 2011.
11) Hospital Charges: Remember we mentioned that there are two copay items that can get you to your MOOP, in other words: Medical situations with the potential for bigger copays. One of them is, of course, hospital charges.
Group Health insurance plans, which you may be used to, have coinsurance for hospital stays, usually 20% of the cost. Medicare Advantage almost always use copays instead of coinsurance, which work out to be a fraction of what20% coinsurance cost out of your pocket would come to.
Hospital copays are typically in the $175 to $350 per day range with HMOs usually charging at the lower end of that range and PPOs at the higher end. Paying around $200 a day isn’t bad considering a Holiday Inn costs that much per day and they don’t come with around-the-clock nursing care. Albeit they do give you a chocolate mint on your bed and most hospitals don’t.
How much per day a hospital stay is going to cost you is important to know. But there is something else you need to consider as well, which is how many hospital days that you can be charged for. This is where Medicare Advantage plans vary. Some plans charge you for 5 days and then any further stay is without any copay. Other plans charge you for up to 8 days. It’s kind of like if an Oahu resort said to you, “Pay for the first 5 days and the rest of your stay is free.” The only difference being that extra days in a hospital are probably not as exciting as extra days in Oahu.
Hospital Math 101: A plan with a $200 copay for a maximum of 5 days would cost you $1,000 out of pocket. That’s the most you would pay even your hospital stay was for a month. A plan with a $250 copay for up to 8 days could cost you $2,000 in copays, twice as much.
The number of day charges is per hospital stay. If you leave the hospital and go back in later then the daily stay meter will start running again unless you have reached your MOOP. So be careful not to slip and break your leg right leaving the hospital or there will be new copays.
A concern I often hear from clients is whether doctors in a hospital they’re admitted to will be in- network. The answer is that in an emergency you can go to any hospital anywhere including private hospitals that may not even be in your network. You will never be wheeled into surgery and then the surgeon announces, “Sorry I can’t operate on this person. He is not in my network.”
Elective surgery is however different. Your doctor will pick the hospital, and surgeon, based upon where your doctor has hospital privileges. Once again, you will not have to worry if the other doctors, such as the anesthetist, are in-network. Your only concern is to just get well.
12) Skilled Nursing Centers: Those are the rehab places where we often go following a hospital stay. The good news is that the first 20 days are with no copay on every Medicare Advantage plan. The not-so-good news is that after 20 free days the copay is in the $180 a day range. But unless you find a rehab center with scrumptious food, people rarely stay past 20 days.
13) Part B Drug Costs: A Part B drug is a drug that is injected in either a doctor’s office or an injection center, or taken outpatient in a hospital. This differs from Part D drugs which you take on your own and get from a pharmacy by way of a prescription.
Part B drugs have a 20% copay on any Medicare Advantage plan. The classic examples of Part B drugs are chemotherapy drugs which can be very expensive and with a 20% copay can often result in someone reaching their MOOP.
Note of Importance: If you are taking Part B drugs such as for chemotherapy or could soon be you may want to consider Original Medicare with a Plan G Medigap Supplement during the time you still have Guaranteed Issue. A Plan G Medigap Supplement would eliminate your 20% copay and even with the premium costs will often be less costly than reaching the MOOP of a Medicare Advantage plan would prove to be. Likewise, if you are taking an injectable Part B drug on an ongoing basis it is important to compare the 20% copay cost charged by a Medicare Advantage plan with a Plan G alternative and no Part B drug copays.
14) Chiropractic and Other Less Traditional Procedures: Most plans limit Chiropractic treatments to chiropractic treatments which is Medicare sanctioned. Such treatments are limited to manual manipulation of the spine needed for a fracture or dislocation. You chiropractor will know if what you being seen for is covered by Medicare or not. A few Medicare Advantage plans offer routine chiropractic visits with a small copay for a limited number of visits such as 12 appointments. Other plans might offer acupuncture or podiatrist visits on a routine basis as a perk.
15) Rehabilitation Therapy: Medicare may not be generous when it comes to chiropractors but they seem to like physiotherapists just fine. Plans cover various forms of rehab therapy including Physiotherapy, Occupational and Speech, usually with a copay in the $20 to $30 range.
16) Hearing, Vision, and Dental: We talked about this in detail in another section. You would think that our ability to be able to see, hear, and eat food without using a straw would be pretty important to our overall health and therefore important to Medicare.
You would think so, but Original Medicare does not cover hearing, vision, or dental at all. Unless it falls into the category of “Medicare Covered Dental,” which means dental in conjunction with a medical condition such as diabetes or breaking your jaw in an accident.
This is also a need where Medicare Advantage plans step in and many of them offer various degrees of coverage for vision, dental and hearing. Almost all of us have teeth and routine exams and cleanings are important. Because of this Medicare Advantage plans cover preventative dental. Some plans provide an allowance for comprehensive dental as well which could be anywhere from $500 to $3,000. It is not uncommon for a client to pick a Medicare Advantage plan based upon how generous the dental benefits are.
Most of us by age 65 also wear glasses (or we should) and Medicare Advantage plans usually pay for an annual optometrist exam without a copay and a varying amount towards glasses.
17) Durable Medical Equipment: This is one of the few Medicare Advantage categories where you pay 20% coinsurance instead of having fixed amount copays as you have with doctor visits, hospital stays, and most other Medicare Advantage costs. Therefore, if you want that shiny stainless steel bedpan that you always dreamed about getting, it is going to cost you 20% of the cost.
Likewise, all other equipment from crutches to the more elaborate equipment such as CPAP machines, oxygen equipment, diabetic pumps, and wheelchairs will come with a 20% coinsurance payment. It is also sometimes important to know that any supplies or medicines that are taken in conjunction with Part B equipment fall under Part B as well with a 20% copay.
18) Home Healthcare: The good news is that home healthcare always has zero copay. Of course, the not-so-good news is if you need home healthcare in the first place. But it can happen in life that we need skilled care such as a nurse or physiotherapist and we are not capable of leaving our home to get it. Should this ever happen it is comforting to know that Medicare Advantage plans allow you to have skilled care at home with no out-of-pocket costs.
Another service that is also with no copay is Hospice. Hospice also includes all medications and medical services including doctors. Hospice is without copays. It’s Medicare’s way of making a difficult situation a little easier to cope with for the person involved and their family.
19) Over-The-Counter-Products: This is a bonus that you get with most Medicare Advantage plans. Many clients I talk to are very excited to hear about this. “You mean we get free stuff,” they remark with glee. The visions of packages coming in the mail stuffed with antacids, nasal spray, Band-Aids, bunion creams, and Vitamin B dancing in their heads.
Most plans give you an allowance every three months that ranges from $40 to as much as $100 to buy just about any medicine you find in a drug store that doesn’t require a prescription, along with vitamins, toothbrushes, paste, and floss. Just about everyone is excited about the free stuff. But there’s a catch! You have to order it (by using the catalog in your member portal). Most people plan to do so, but when I ask them about it a year later, I hear, “Next year I will for sure.”
20) Additional Services: As discussed in another section, every plan gives you free Silver Sneakers gym memberships, or the equivalent, as a wellness feature of your Medicare Advantage plan. This allows you to join as many gyms as you want to for free. This is done on the belief that exercise helps you stay healthy and then the plan pays out less money for your medical needs. See, they have an ulterior motive.
Plans offer other additional services as well such as a 24-hour nurses’ hotline you can call with any medical concerns that pop up. Another common Medicare Advantage perk is sending over two meals a day for between 7 and 28 days a year depending on the plan. There is a condition, however, which is that it has to be after a hospital stay and not just because you didn’t feel like cooking for 7 to 28 days. Also, there is no guarantee you’ll like the meals they send over.
Evidence of Coverage
Do you feel like some light reading? A Medicare Advantage plan’s Evidence of Coverage is probably not what you are looking for. These documents, that outline your coverage in great detail, tend to be well over 100 pages long. And unlike this website, the healthcare carriers that put these Evidence of Coverage books together are not big believers in using humor to keep you engaged. Nobody ever read an Evidence of Coverage and commented to their friend, “Great read. I couldn’t put it down.” Or, “They ought to make it into a movie.”
Still, it is important to know about a plan’s Evidence of Coverage because as my grandmother used to say, “The devil is in the details.” The Evidence of Coverage has plenty of those. Details, not devils.
When you might want to refer to the Evidence of Coverage is when you are looking for more complete information about a particular concern. For instance, if you are a diabetic you will probably want to see full details about how your plan addresses your drugs, supplies, and other concerns. Another example is if you want fuller information about how to get a reimbursement for a benefit you have for dental, vision, or hearing and what providers you can go to in order to use your benefit.