Squeezing the tube from the middle: why Part B givebacks aren’t always a great fit

Come fall, you’ll be inundated with ads for Medicare Advantage plans, each offering bigger and better benefits than the last. One of the latest trends you may be seeing is a Medicare Part B giveback – a benefit where the insurance carrier pays a portion of your monthly Part B premium. Sound too good to be true? That’s because it is – at least in a lot of cases. Let’s check out why.

But first, the background

Medicare Advantage, or Part C plans, are contracted by the government to provide Original Medicare services to enrollees. Medicare pays these plans a set amount per enrollee per month; that amount varies by county, the health status of the plan’s enrollees, and the plan’s estimated cost of covering each enrollee’s Part A and Part B services.

Because they’re paid by the government, the government also sets out very explicit rules for Medicare Advantage plans to follow. While there are a lot of them to keep track of, for our purposes, it’s important to know the government sets yearly limits on maximum-out-of-pocket limits (MOOPs), copays, and coinsurance for select services. As long as plans are using these guidelines when designing benefits, they have a lot of flexibility in determining how their government cash is spent.

So, to recap. The government provides Medicare Advantage plans a fixed payment to cover your Part A and B services. And, there are some strings attached to how they use that money.

The toothpaste tube

Picture a Medicare Advantage plan as a brand-new toothpaste tube. That tube will always hold the same 5.8 ounces of toothpaste, just like a Medicare Advantage plan will always have the same amount of dollars per enrollee per month. If you squeeze the tube in the middle, the toothpaste will squish around and find some more room at either end of the tube. If you squeeze dollars out of a benefit in a Medicare Advantage plan, you can squish them around to another benefit.

This is exactly what happens with Part B givebacks. Or any other shiny new thing in the Medicare Advantage world.

There’s only a finite amount of money a plan can use to pay for your care. If they are providing some of that money to you in the way of a Part B giveback, you’re going to be spending more in other places; whether that be on a higher MOOP, higher copays, or higher coinsurance rates. The plan squishes money out of these benefits to give you that Part B giveback.

Are Part B givebacks ever worth it?

Each and every scenario is different, and only you can make the decision that best fits your circumstances. But, generally speaking, Part B givebacks can be a good fit for healthy people who don’t see a doctor often, take few or no prescriptions, and only need preventive dental care. However, you’d have to crunch the numbers – does the money you get from that Part B giveback outweigh what you may have to pay if you do get sick, injured, or need a cavity filled? If your answer isn’t an immediate and resounding “yes,” then you may want to consider other options.

If Part B givebacks aren’t for me, what else can I do?

When making decisions about your Medicare benefits, we recommend letting a licensed insurance agent have your back. A key function of their job is to help you weigh the benefits of each plan in your area, enabling you to make an informed decision about what comes next. Contact our team to schedule a no-cost, no-obligation consultation.