If you are a Medicare beneficiary, you may have heard of the “MADP”. The MADP stands for Medicare Advantage Disenrollment Period. It starts January 1 and runs until February 14th. It is during this time you can disenroll from your Medicare Advantage plan. Why would you want to do this? We will get to that. You’ll want to think of the MADP as your “do over”. In this article, we discuss the Medicare Advantage Disenrollment Period and how to maximize your Medicare options should you decide to “do over”.
Why Does The MADP Exist?
The MADP, or Medicare Advantage Disenrollment Period, exists to give Medicare Advantage enrollees a chance to drop their Medicare Advantage (MA) plan and go back to Original Medicare (Parts A & B). Why would anyone want to do this? There are many reasons, but they lead to really 5:
• they missed their chance during AEP (annual enrollment period) to make changes
• they received their carrier’s Evidence of Coverage and want to make a change
• their MA network no longer covers a prescription drug (or cost increased)
• their doctor is no longer in the MA network
• they don’t like the referral process or the administration of the MA plan
The MADP gives beneficiaries a chance to start over. As we said before, think of it as a “do over”. This period is only for beneficiaries who have an Medicare Advantage plan and want to make a change.
New Enrollment Options
If you disenroll from your Medicare Advantage plan during this timeframe, you will be re-enrolled into Original Medicare (Parts A & B). If you have read our other articles on Medicare, you know that Original Medicare exposes you to unlimited out-of-pocket costs. Generally speaking, you want to avoid any chance of having unlimited out-of-pocket cost potential.
There are good news, however. During this timeframe, however, you can enroll in a Medicare Supplement plan as well as a part D Medicare prescription drug plan. You have to enroll in the part D Medicare prescription drug plan by February 14th.
Don’t put that off, though. You will want to enroll in a part D Medicare prescription drug plan as soon as possible to avoid any enrollment penalties due a creditable coverage gap. This gap is 63 days. After 63 days, you will pay the penalty upon enrollment in a part D plan.
You can enroll in the Medicare Supplement plan anytime, but we recommend as soon as possible to minimize any significant out-of-pocket costs.
By enrolling in a Medicare Supplement plan and a part D Medicare prescription drug plan, you will have limited out-of-pocket costs depending upon the plan you select.
When you disenroll from your Medicare Advantage plan, you will disenroll from any other services attached to your Medicare Advantage plan. This includes the prescription drug component as well as value-added services such as fitness benefits, dental, and vision. Be aware of this.
What You Can’t Do
There are some things you can’t do. You can’t switch from Original Medicare to a Medicare Advantage Plan. Additionally, you can’t switch from your Medicare Advantage plan to another Medicare Advantage plan. (That is what the annual enrollment period, AEP, is for.) Finally, you can’t switch from a part D Medicare prescription drug plan to another part D Medicare prescription drug plan. (Again, that is what AEP is for.)
You can ONLY drop your Medicare Advantage plan, which places you back into Original Medicare, and select a part D Medicare prescription drug plan and / or a Medicare Supplement plan.
An Affordable Option
You may be thinking, “John, this stinks. I signed up for my Medicare Advantage plan because it was a low premium cost. I would like another low cost option.”
You are thinking right. Depending on the Medicare Supplement plan type and your state, you could end up over $200 per month for a Medicare Supplement plan. Additionally, a part D Medicare prescription drug plan, on average, costs around $35 per month. You will then be paying around $235 per month when you were paying, probably, anywhere between $30 and $50 per month for your Medicare Advantage plan. (In some cases, Medicare Advantage plans have a $0 premium.)
There is an affordable option available to you, though. You might be aware that Plan F offers the most coverage on your out-of-pocket costs. You may not know, however, that most states allow a high deductible Plan F. Just how it sounds, you would have to meet the deductible first before enjoying the Plan F coverage benefits. The deductible level in 2018 is $2,240. The cost of these plans is around $40 per month, maybe higher or lower depending on your state. Add your part D prescription drug plan of $35 per month, on average, you have an estimated total cost of around $75 per month.
But, John. I don’t want to pay $2,240 right off the bat, you say. That is a great point. You actually won’t. Remember, in an Original Medicare and Medicare Supplement arrangement, your doctor or hospital will bill Original Medicare first. Original Medicare will pay for its appropriate share. Your Medicare Supplement plan will then pay the remaining balance. However, in this case, the high deductible plan will pay once you meet that deductible threshold. Let’s look at an example to make this clear.
Using Part B services as an example, let’s say you go to the doctor because of knee pain. This is your first doctor or hospital visit of the year. The office charge is $350 dollars – the Medicare approved amount. Per Original Medicare, you have to pay the part B deductible first of $183. Medicare will then pay 80% of the remaining amount or $133.60. The amount you need to pay and applied to your high deductible Plan F is $232.40 ($183 + $49.40)
Let’s say the doctor recommends knee surgery. The Medicare cost is $11,000. Medicare will pay $8,800. (Remember, you already met the part B deductible of $183.) The Medicare Supplement share is $2,200. You would only pay $2,007.60 as you now met the deductible level ($2,007.60 + $232.40). The balance of $192.40 ($2,200 – $2,007.60) will be paid by the Medicare Supplement plan.
The above example was used for illustrative purposes only. The Medicare Supplement plan now pays for its share of eligible Medicare services going forward for the rest of the year.
You can see Medicare still pays its share and you won’t have extreme out-of-pocket exposure. You will still have peace of mind knowing you have great coverage in case of large health care expenses.
The Math Works
The premium cost of a Plan F is $200 per month. This amount varies by state. Let’s say the average high deductible plan F costs $45 per month. That is a difference of $155 per month or $1,860 annually.
You have to ask yourself…is it worth your hard earn money to spend an additional $1,860 to protect $2,240 of deductible? For many, the answer is “No”.
That is why a high deductible Plan F makes sense. In nearly all cases, you are spending that amount in premiums on a Plan F.
Moreover, one carrier analyzed its claims on Plan F – both high deductible and regular Plan F. They determined that between 70% and 80% the total claims paid by their Plan Fs was anywhere from $500 to $800 per year. The probability increased with age, naturally.
So, stated another way, is it worth your hard money to spend $200 per month or $2,400 annually, when, on average, Plan F claims (paid by one large carrier) averaged between $500 and $800 per year? For most of us, the answer is No.
If you don’t like your Medicare Advantage plan, you can “do over” during MADP. As we outlined above, you can still create an affordable Medicare health insurance plan using a high deductible Part F plan. Is disenrolling the right decision for you? We can help determine that. We only work with your best interests and making sure you make the right decision for you and your family. Unlike other agents or agencies, we aren’t beholden to an insurance company. Rather, we are beholden to you. Contact us or use the form below if you would like to learn more about the Medicare Advantage disenrollment period (MADP) and affordable Medicare insurance options.