Medicare Replacement Products

There are many options to replace your Medicare, starting with some unions that did that many years ago. Railway workers formed their own Railway Medicare many years ago, and it is administered separately from Medicare but appears nearly identical in every way as to what it pays for and how much.

"Advantage" Plans
The newer Medicare “Advantage” plans replace your Medicare with privately provided insurance by companies like Aetna. Medicare pays them a flat rate per year which is about 18% higher than they spend on seniors they insure directly. This bizarre cost saving plan was put forward by a Republican Congress when President George Bush feared losing mid-term elections for Republicans in congress. He “threw a bone” to AARP, and it worked as seniors love the program and they vote. But, it costs more money for the government to operate that standard Medicare; in fact it costs 18% more as the government has to allow a substantial profit margin to the insurers who create and offer Advantage plans.

Since an insurer makes so much money on Advantage plans, they can give you better coverage (like vision and dental care) then standard Medicare. The insurers market this advantage over standard Medicare, and now about 30% of all Medicare is under Advantage plans in the US. While the law requires an Advantage plan to pay the Medicare allowed rate for services to any Medicare provider (which is good, no plan-specific network), Medicare providers are not obligated to take Advantage plans like they have to with Medicare (which is bad, they can charge what they like).

In addition, they can vary tremendously. For example, Harvard Pilgrim’s First Seniority Freedom plan pays your deductible and the Medicare allowed rate, minus a small copayment; however, they cancelled the plan with little notice in 09/10 forcing 22,000 members out. We talked to 90 year olds who were given two weeks notice they were losing their insurance, and no information about how to return to standard Medicare. Some Aetna Advantage plans have very high deductibles ($2,500 which you must pay out-of-pocket before the Aetna plan pays anything. This means we bill you for the entire amount, for about $400-$600 which is the allowed Medicare fee. The amount does go against your deductible, if you ever reach it except for catastrophic illness! Read your manual or call the company.

Other Medicare Replacements
If you opt for a non-Advantage plan such as a Health Maintenance Organization (HMO), it replaces your existing Medicare with the HMO. It's confusing as the same HMO may offer both supplemental insurance to standard Medicare as well as a Medicare replacement insurance. Typically, the HMO replacements require no deductibles or copays and may have a built-in drug plan, but the tradeoff is you must stay within their network of participating doctors. Pilgrim's First Seniority HMO plan is gone, it just disappeared one day leaving many seniors in the lurch. We are participants in BC/BS' Medicare HMO Blue which pays us. However, Tufts Medicare Preferred never pays. They have refused us entry to their network–yet we know of no other providers offering our services to their patients in Southeastern Mass. Call them for their list of providers. If they are more than 50 miles away, they “may” reimburse you for seeing a local provider, like us. But, don’t count on it!