I decided to interrupt my series on "the Bucket Strategy" to look at something that concerns me: potentially misleading Medicare ads. Every time I see them on TV, I complain to my wife, so I thought I'd get it "off my chest" by writing an article about them.
I have to confess that this kind of thing is a pet peeve of mine. I'm not too fond of companies that use "misleading" (I am using the term loosely) advertising and other sales tactics to take advantage of people, especially seniors. It happens with all kinds of financial products—investments, annuities, reverse mortgages, life insurance, long-term care insurance, and Medicare Advantage plans.
Although the context is very different, I am reminded of Jesus' words in Matt. 10:16:
Behold, I am sending you out as sheep in the midst of wolves, so be wise as serpents and innocent as doves.
You may have noticed that Medicare's "open enrollment period," which runs from October 15th to December 7th, is underway. Not coincidentally, those near age 65 or older have probably seen their mailboxes filled with solicitations from insurance carriers for Medicare Advantage plans, not to mention a flurry of TV ads for them.
Perhaps you have an elderly parent who is dealing with the complexity of Medicare. You may be wondering, "Why are there Medicare insurance commercials in the first place—isn't it provided free of charge by the government?" Well, the answer is yes and no (more on that later). Or, if you're 65 or older, you may be trying to understand what all this means for you and whether you need to make a change or not.
I've noticed a consistent theme in these commercials. They target a common fear that people have: FOMO (the "fear of missing out"). We are repeatedly told that there are all kinds of "free" benefits that we deserve and would be getting if only we knew about them, and the way to find out about them is to call the 1-800 number that just popped up on the screen. What??!!
I want to say upfront that what is being said, like so many sales pitches, is correct on its face. The problem is the lack of context and what isn't being said (political ads are another good example of this), not to mention the microscopic size of the small print at the bottom of the screen that appears throughout the commercials.
So, I did some digging. Am I, as a Medicare benefits recipient, eligible for all those "free" benefits? Can I get that goodness at little or no additional cost? How is it that I have been "missing out" on these benefits all along? Well, let's see. . .
I will list the benefits as they appear in one commercial and then offer some further clarification for each statement.
"You may qualify for up to $144 added back to your Social Security check every month." Later in the commercial, the spokesperson says, "Your zip code may have coverage with the give-back benefit that adds money back to your Social Security check every month."
One commercial starts with the first statement. And yes, this is true, but much in need of further explanation.
Medicare Part A benefits are free if you qualify for them, but there is a cost for Part B. The $144 is the typical monthly cost for Medicare Part B benefits that is automatically deducted from your monthly Social Security check. (A couple will pay $288 per month.) The rebate being referenced (sometimes called a "payback") isn't something like traditional Medicare that you "qualify" for through the government. It's something that you may be eligible for IF you purchase a Medicare Part C Advantage Plan and live in a certain area of the country. The plan provider (insurance company) may offer a rebate for all or part of the monthly Medicare Part B cost. In 2021, 49 states offer a full or partial refund, but it varies by plan and county (up from 44 states in 2020.)
What the commercial fails to mention is that the Medicare Part C Advantage plan has a monthly premium, which in some cases is almost as much as the Part B cost. However, it can be much less than Part B plus a Medigap supplemental plan, or no cost at all, which leads to the next benefit:
"You may qualify for a $0 Medicare Advantage Plan that includes additional benefits."
Again, a "true," but somewhat incomplete, statement.
The commercial refers to the zero-premium plans that some providers offer that include benefits not available with Medicare Part B at no additional cost. But the spokesperson fails to mention that not all plans are zero-premium. Plus, you don't have to "qualify" for them in the strict sense of the word—it has more to do with whether they are available in your area or not.
Also, if you sign-up for one, that doesn't mean there will be no costs at all. There will be out-of-pocket costs for deductibles, Medicare coinsurance, and copays for most services, and you will have to pay them up to the plan's out-of-pocket limit. For 2020, the largest out-of-pocket maximum that a plan can have is $8,150 for an individual plan and $16,300 for a family.
To be fair, some commercials will have small print at the bottom of the screen that says something like "additional premiums, coinsurances, or copays may apply," but you have to look closely to see them as they are there and gone in a few seconds.
"Included in your plan are free dental (fillings, exams, dentures), hearing aids and batteries, and prescription drug coverage, included in your plan at no additional cost."
This is one of the more accurate statements in the commercial.
Most Part C Advantage plans offer these benefits, and some may even provide additional coverage for vision care and perks like gym memberships and meal delivery services. But more explanation is needed here also.
None of these services are provided by Medicare Part A or B, nor do Medigap (supplemental plans) cover them. However, you can get dental and vision coverage via separate policies, and you can get prescription coverage with a Medicare Part D prescription drug plan. All of these come at a cost in addition to Part B and Medigap plans, but they tend to be fairly reasonable.
Another commercial also cites "free rides to medical appointments, private home care assistance, nursing assistance, and doctor visits by telephone, all at no additional cost."
Once again, basically correct. "Traditional" Medicare Part A (hospitalization) and Part B (medical) do not cover these services. However, some Medicare supplemental plans do if a doctor prescribes the services.
Medicare Advantage Plans can now provide them since this is new for Advantage plans, but not all plans offer them, and some other essential details are conveniently left out.
With Advantage Plans, these benefits are typically provided in ways similar to the structure of Health Maintenance Organization and Preferred Provider Organization (PPO) plans. Except in emergencies, the benefits are only available through an "in-network" set of selected providers, which can limit your choices. There are also limits on these benefits (frequency, duration, etc.). The in-network requirements may also apply to care that is normally provided under Part B medical services, such as doctor visits.
"Today is one of the only days of this year you can update your coverage and benefits…before the deadline you're entitled to eliminate premiums and copays and get dental care, dentures, eyeglasses, in-home aides…get prescriptions, unlimited transportation, home delivered meals..all at no additional cost."
At this point, the spokesperson conveys a sense of urgency and FOMO and once again emphasizes that you can get all the help you need by calling the 800 number on the screen. The number is displayed with a red, white, and blue backdrop that looks like a big Medicare card. This could lead many to think that they will reach a government Medicare assistance center if they call the number. But, as usual, the small print at the bottom of the screen reveals some needed details despite not being highly visible.
First, the "today is one of the only days…" statement could be interpreted to mean that there are only a few days a year when you can change your policy. This not exactly accurate. As stated earlier, the open enrollment period runs two months from mid-October to early December.
Second, if you dial the 800 number, you won't get a government call center; you will be connected to a licensed insurance agent who typically acts as a commissioned broker for Medicare Advantage Plans.
Wise as Serpents, Innocent as Doves
I want to be clear here. I'm NOT saying that I think Medicare Advantage Plans are bad; in fact, far from it. I think they are great for many people. What I am concerned about is the general "imprecision" of the commercials.
If you think I am being nit-picky, I would probably agree. But I think total accuracy and full transparency is paramount in matters such as these.
You may also argue that the commercials are not "misleading" in the strictest sense of the word since they don't try to get someone to believe and act on something that is absolutely incorrect or false. That's fair, but I would say, at the very least, they convey a false sense of authoritativeness (look like a government agency) and lack completeness and full transparency, which can over-sell and over-simplify certain benefits while not explaining the exceptions and caveats involved.
Fortunately, The Centers for Medicare and Medicaid Services has some useful tools for comparing plans and the premium information for each. So, this all comes down to doing your homework. You can check out the details on any Plan B rebates, out-of-pocket costs, and other benefits.
But if you want more details, such as prior authorization requirements, in-network service providers, and preferred pharmacies, you'll have to dig into the individual plans' coverage documentation (often called "Evidence of Coverage"). It should provide details on the plan's benefits, costs, and the plan's structure, including authorization rules, limits, networks, and more.
Most importantly, remember that Medicare Part C Advantage plans are NOT provided by the government (although Part C defines the rules that govern them), nor are they non-profits that exist solely to help you save money on your healthcare costs. They are for-profit insurance providers. The purpose of these official-looking and sounding commercials is to get you to do one thing: feel a sense of urgency and a FOMO, and then call the number on the screen.
So, like any informed consumer, do your homework. Make sure you understand the differences between Medicare Part A, B, C, and D and the other plans available such as Medigap. By all means, get a trusted advisor to help. Then, look beyond the commercials to the plan providers themselves so that you can make an informed decision (or help your loved one to do so).
Be "wise as serpents and innocent as doves."