Medicare Advantage is slowly but surely becoming the most popular way to receive one’s Medicare benefits. After all, what’s not to love? You get dental, vision, hearing, over-the-counter allowances ranging from $25 to $100 per month, food cards with certain plans, and emergency and urgent care while traveling. Competition has become so fierce that many plans give back money for the Part-B premium Medicare deducts from your Social Security check. But the question is, is the Part-B premium giveback worth the money? After all, there’s no such thing in life as a free lunch. So, here is how to know for sure.

Doing the Math! Numbers Never Lie

Whenever I speak with beneficiaries who want the reduction of their Part-B premium, I have them count the cost – do the math. You see, in order to give money back, something has to give, and that usually means higher copays. In other words, you are going to pay sooner or later. Now, with that said, it makes plenty of sense for many, but not for everyone.

For this example, I am going to use a popular plan in the Tampa Bay area in Florida. The plan has two different giveback amounts, depending on which county one lives in. You can get either $130 in Pinellas, Hillsborough or Pasco, and $144 in Polk.

The way this works is they credit your account with the amount (let’s say $130), so Medicare only deducts the difference, in this case $18.50, from your Social Security check. You get a pay raise of sorts. However, depending on one’s health, it may not be worth it.

Start Counting and Speculating

Whenever I get interest in these plans, I ask the beneficiary, “Based on your health and past experience, how often do you see your doctor a year?” Most people say twice. A few told me quarterly, due to their health. Whatever the number is, I double it! I say, “In order to have a safe prediction, let’s double that number.” I write down either 4 or 8.

Then I ask, “How many specialists, if any, do you see?” One person told they had six different specialists and saw them monthly. But, on average I may get two, with appointments once a quarter each. I then double that number, 16 visits.

I then add at least one hospital stay of a week, an emergency room visit, and two urgent care visits, since no one knows when an accident will happen, or they will need hospitalization.

Once I have my tally, I go down the Summary Benefits and I allot a copay to each service:

• Primary Care Visit – $0 copay
• Specialist visit – $20
• Emergency room – $120
• Hospital stay for 7 days – $125 per day, for the first 4 days = $500
• Urgent care visit – $90

Then we start doing the math:

• 4 PCP visits = $0
• 16 specialist visits = $320
• Emergency room = $120
• 2 Urgent care visits = $180
• Hospital stay = $500
• Tier 3 drugs, $35 copay X 1 prescription = $420

The grand total would equal $2,170. At $130 per month, the beneficiary would be given $1,560 for the year. Once using that money to pay his copays, he would have to pay out-of-pocket $620. This is assuming only one tier-3 prescription.

Often when a giveback is provided, there’s another choice from the same insurance carrier with no giveback, where the benefits are equal – a sister plan. The difference is much lower copays and no giveback.

When looking at the other option with the lower copays, which are:

• $0 for a specialist
• $5 for a PCP
• $120 for emergency
• $5 for urgent care
• $20 per day for the first 5 days hospitalized per benefit period
• Tier three drugs, $5 copay
• Higher over-the-counter allowances (which is like money in your pocket)

It may be a better to choose this option. With this plan, apples to apples, he would have spent $370 (a $250 savings).

When you take into consideration that the OTC allowance with the plan with the Part-B giveback is $40 per month, versus the plan without it being $50 per month, that’s an additional $120 in savings, making the out-of-pocket cost only $130, since he won’t need to spend his own cash for the OTC items people usually buy at CVS, Walgreens or Walmart each month (toothpaste, vitamins, Theraflu, soap, etc.).

While seeing a possible pay raise in your Social Security check is enticing, make sure you do the math. Because, when it’s all said and done, it’s how much you keep in the bank that counts.