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Patients can experience surprise medical bill with both Medicare and Medicare Advantage plans.

Column: Fix, don’t eliminate private Medicare plans

Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.

George: My experience with a Medicare Advantage plan was not good. The insurance company had been fine for several years, but then I received a large bill of more than $1,000 from the hospital for procedures that had been covered much more completely in the past. We went back and forth with the hospital and the insurer for six months and finally resolved matters. I concluded that the real reason Medicare and the insurance companies loved Advantage plans so much is that they permitted the insurance company to step in front of Medicare as primary provider and deny portions of a claim. The advantage to Medicare and the company is a cost reduction, with the sick person paying more for their care. This is very clever on their part but does the public no good.

Please do not recommend Medicare Advantage plans in your columns.

Phil Moeller: Thanks for sharing your story, George. I hear from readers all the time who are convinced that one package of Medicare is clearly better or worse than another. I’ve also noted repeatedly in my columns that people need to be aware of the shortcomings of Medicare Advantage plans compared with original Medicare.

Having said this, I believe there clearly are situations where people are better off with Medicare Advantage than original Medicare. With 35 percent of all Medicare enrollees having Medicare Advantage plans, the challenge is to make them better, not get rid of them.

So, while I do not recommend one type of Medicare in favor of another, I think there are legitimate roles for all types. This does not make what happened to you acceptable. And while I doubt it will make you feel better, I also get stories from people with original Medicare who say they have had experiences similar to yours.

Carolyn: I may claim Social Security when I turn 66, which is happening soon, or I can wait until later. But if I wait, I will be losing all those years of payments. My sister keeps telling me you need to claim at 66 to avoid losing all that money. Is this true? No one has ever mentioned this in anything I’ve read.

Phil Moeller: The Social Security book I co-authored has more on this topic than you probably want to read! In brief, if your full retirement age is 66, your monthly benefit if you wait until 70 to file will be 32 percent higher for the rest of your life. Of course, you would be giving up four years of age-66 benefits. And those benefits, I should stress, would be 32 percent lower than your age-70 benefits for the rest of your life.

I think that gains in longevity make waiting the superior option, unless you have life-shortening health conditions or are in such need of current income that you can’t really afford to wait.

Otherwise, waiting until 70 substantially increases the odds that you will not outlive your retirement funds. Opinion surveys regularly find that people fear this more than actually dying!

There is a large amount of information on the internet that advises people to make this important claiming decision by calculating their personal “payback” periods, which are defined as the length of time it would take their cumulative age-70 benefits to equal what they would have received had they claimed at age 66.

I think this is, at best, an incomplete way of looking at the decision, and that viewing Social Security as longevity insurance argues for waiting until 70. For couples, maximizing the higher earner’s benefit in this manner also guarantees that whichever spouse lives the longest will have the household’s highest possible Social Security benefit.

Terry – Connecticut: You’ve written that a person has guaranteed access right to Medigap plans on favorable terms when they first become eligible for Medicare but that these rights last only six months. What if you choose not to enroll in Medicare at all when first eligible (age 65) due to having comparable active employer coverage? If you enroll in Medicare at a later date, could you lose those Medigap guaranteed issue rights?

Phil Moeller: You would retain these rights. When you eventually lose your employer insurance, you will be entitled to a special enrollment period for Medicare, and your Medigap rights will be the same as when you first became eligible for Medicare at age 65.

Andrew – New Jersey: A client of mine is on Medicare through disability. She was originally covered through her employer and delayed Part B, but when the employer went bankrupt, she enrolled in Part B. She was then charged a Part B late-enrollment penalty because the bankrupt employer lost all their records. She is turning 65 soon and is wondering if this penalty will be erased at age 65 or if it will continue for as long as she has Medicare.

Phil Moeller: According to a spokeswoman for Social Security, the penalty will be erased when she turns 65 and receives her initial enrollment period for Medicare. Here’s the link to that formal rule.

John – Pennsylvania: My wife will file soon for her Social Security benefit. Soon thereafter, I will reach my full retirement age of 66. I am grandfathered under the 2015 changes to Social Security laws and plan to file a restricted benefit then for a spousal benefit and defer my own retirement benefit until I turn 70. Recently, and unfortunately, my wife found out that she will need major surgery soon. If she does fine, we are planning to use the restricted application strategy to give the surviving spouse the highest benefit possible. However, if she were to die post-operatively or some short time thereafter, can I choose to switch to a widower’s benefit and still defer my own benefit?

Phil Moeller: I am over-the-top on planning ahead, but your question makes even my planning genes shiver a bit. Generally, survivor benefits are the full amount of whatever the deceased spouse was receiving or, if they had not filed, what they would have received had they filed on the day of their death. If you were collecting a spousal benefit when she died, you could switch to a survivor benefit and continue deferring your own retirement benefit until age 70.

John: Your analysis is what we thought our options would be. We are both engineers and very detail-oriented. Our experiences about others dealing with Social Security offices have been a litany of disastrous advice by the agents. They appear to be giving bad advice to widows and widowers, who end up taking the benefit on their own record and not delaying that benefit when it happens to be more beneficial for the survivor. There have been rumors of a class action suit against the government over the multimillion-dollar losses in benefits that survivors have been cheated out of because of the general incompetence of the office staff at Social Security centers related to survivor benefits.

Phil Moeller: I think John is too harsh on Social Security, but his observations should be a reminder that you ultimately are responsible for the accuracy of your Social Security benefits. Doing a few hours of homework before you file for benefits would be time well spent.