The Motley Fool Discussion Boards

Previous Page

Retirement Discussions / Retired Fools


Subject:  Re: Medicare, anyone? Date:  10/15/2012  7:06 PM
Author:  TwoCybers Number:  17940 of 19821

Brooklyn me thinks you need some information and less "facts" from people with political agendas.

Medicare Advantage is a version or part of medicare. In traditional Medicare premiums paid by those receiving benefits were/are paying 25% of the total program costs. The reminder of the program costs are paid by deductibles, co-pays and payroll taxes. A person who signs up for traditional Medicare will get at no cost something called Part A -- this is hospital coverage. It may have a deductible of a few hundred bucks, but with a typical hospital stay (not counting ER) costing over $1,000 a day - the deductible is not really an big part of the cost. Medicare also has a Part-B -- this is for physicians, office visits and just about everything else (including physical therapy, wheelchairs, etc.) that is not specific to a hospital stay. There is a Part-B deductible that is about $300. Additionally Medicare Part-B only pays 80% of the total net bill. (As you undoubtedly know all the medical people have a Rack Rate and then a much lower real rate for anybody with insurance.) Medicare pay 80% of the Medicare approved cost.

More recently there is Medicare Part-D that is drug coverage.

Medicare Advantage is a single policy that takes care of Parts A, B and D with a single premium (which may be zero to the retied person).

Prior to the Advantage plans, people on Medicare paid the 20% our of their pocket or get a Medicare Supplement (aka Medi-Gap) insurance policy. These polices are given letters to identify them. All "C" or "N" or what ever policies must offer a specific set of coverages. There are minor differences between the AARP "C" policy and the AETNA "C" policy, but unless you have a specific need for replacement glass eyes or what ever AETNA adds to their "C" policy, customer service and price are the only real differences between two Medicare Supplemental Policies.

I won't get into here - but be aware, you are only guaranteed only one option to get such a Medi-Gap policy. After that one time, the insurance companies can accept you, reject you or charge you any rate they want. (There are exceptions, but there are narrow and very specific.)

OK the supplemental policies cost in the range of $100 to $200 a month which is not trivial to folks who are living on social security.

Somewhere along the line the idea of advantage plans was developed. When all is said and done, here is how they work. A person signs up for Advantage insurance Company #1 The Federal government pays Company #1 what ever the average for all other medicare folks cost for Parts A. Also there is a Part-B premiums which for 95% of folks is currently $99.90 per month. That money goes to Company #1. In exchange for all that money, Company #1 pays all the medical costs for its policy holders. For a variety of reasons, Congress decided to give an additional capitation rate (several hundred dollars) per person per year signing up for Advantage plans to Company #1.

Obviously the AETNAs, United Healthcare, Hummanas, etc. of the world thought getting all that money (premiums plus capitation funds) offered a chance for profit and they started offering Advantage Plans. There are several. They are not all equal like the Medi-Gap Supplemental polices. One may be cheaper. Another may have advantages for those who are frail and need more in home care in the later years. Read the fine print!

Note - This capitation money is the $716 Billion dollars either the Ryan budget or the Obama budget is "stealing" from Medicare - sort of depends on you political views as to who is talking about taking medicare funds.

Now why do folks wan