As someone wrote in another thread, it's that time of year (shopping for insurance).
Some risk factors that one looks at in funds are volatility, worst case (max drawdown), and tradeoffs in types of risk. Looking at insurance options now I have the feeling I'm facing the same considerations.
Volatility - some people prefer relative certainty and will pay up for that. In funds, that may mean sticking with MMFs or something close (paying with lost opportunity), or buying principal protected notes. Or it may mean sticking with bonds and/or large cap funds. Or they may be willing to live with just a limited amount of risk (say a 20/80 portfolio).
With insurance some people pay up for a plan F or G Medicare Supplemental Plan so they know virtually to the penny how much they will pay over a year. No risk, but at a cost. Similarly, people may buy platinum ACA plans that cost more up front in exchange for less variability in costs through the year (lower copays, lower max out of pocket).
Max drawdown - different insurance options may offer different limits on maximum costs. Original Medicare w/o Medigap doesn't cap expenses. Even with caps, there's another risk factor to consider - what happens if your provider goes out of network. If you've bought an HMO and you don't want to switch providers, your out of pocket expenses become uncapped. Buying a PPO for this contingency usually costs more and its caps are higher for out of network services. But at least downside is constrained.
Risk tradeoffs - In bond funds, for a given rate of return do you take more risk on the credit side or the interest rate side. Is the fund a type that has a different type of risk (e.g. securitized bonds often carry extension/prepayment risks that are not prominent in other types of bonds).
WIth insurance policies, each one seems to have at least one "gotcha". It may be an unusually high copay for inpatient hospitalization. Or an unusually high medical deductible. Or unusually high copays for therapists. Whatever. As with a mutual fund, it's up to you to guess which risk is less likely to occur and select accordingly.
I've almost surely had my head too deep into both investing and choosing insurance. It all seems to blend together. Still, I find the thought processes/analyses are not dissimilar. Risk vs reward (cost).
Comments
Medicare: I evaluated the risk and reward years ago, and in my county, a Medicare Advantage (MA) plan turned out to be a better option for us. By investing the money we save, the choice becomes even more beneficial.
Investing: We’re in a comfortable financial position, so our overall risk is very low. I can adjust anywhere from 0% to 100% in stocks or bonds, depending on market conditions. Since retiring in 2018, I’ve chosen to focus on unique bond funds to take advantage of current opportunities. This flexible approach has worked very well across different market environments.
Staying flexible, paying attention to current market conditions, and tuning out the noise are essential.
If you are flexible and willing to go to whatever providers are in an HMO network, you can save even more money to invest. Compare the PFFS plan to Humana's HMO plan H4141-017-003.
It cost $27/mo more ($324) in premiums. That's a sure cost vs. the additional $250 in glasses/contact coverage that one might or might not use. A slight to modest advantage for the HMO.
The HMO also gives $200/yr in OTC credits. And while the PFFS plan covers for dental work up to $4K instead of $2.5K, the tradeoff is an out-of-pocket cap that's $1.2K worse ($6.7K vs. $5.5K). (Since that dental insurance excludes implants, the $2.5K limit ought to be more than enough.)
So to maximize savings for additional investing, the HMO plan looks better. Not much better, but better. If you're willing to stay flexible and live with the providers the HMO offers. That's the main "cost" of the HMO.
There's a similar tradeoff between investing for total return and for income. The former maximizes return (wider pool of investments from which to choose¹). But it comes at a cost of a more variable and likely smaller cash flow (income stream). https://www.morningstar.com/retirement/best-ways-generate-income-retirement
Both HMO vs. PFFS and total return vs, income investing are balancing potentially higher rewards against greater certainty (in provider availability and cash flow, respectively).
In both choosing longer-term investments and health insurance, a person's ability to cover unexpected costs (or losses) is a major consideration. When choosing a healthcare plan, the maximum out-of-pocket is something that I look at. And our typical out-of-pocket annual expenses.
Example, I save around $2500 a year by opting for my employer's "standard" health care coverage over the "premium" policy. In a very bad year I might hit the worst case scenario of $6000 out-of-pocket. Meanwhile, the standard plan pays a little less over the year. If our health care expenses were very high, and we hit that maximum often, the premium policy would work out better. That is not the case for us, though. After 10 years of saving $2500/yr, we are well ahead.
Basically, a form of "self-insuring". The same principal applies to high-deductible plans. Which are better suited for younger and healthier people. And those with good financial resources.
msf said: "If you've bought an HMO and you don't want to switch providers, your out of pocket expenses become uncapped." That is a big dice roll, right there. Which is most likely to happen in the event of a catastrophic illness, really adding to stress at the worst possible time.
Humana's HMO plan H4141-017-003 isn't an option.
Every HMO has a rating of 3.5/5. Every PPO is 4.5/5. The PFFS is better than all, IMO.
All the HMOs don't have all our doctors. That's a no-go.
What happens if we vacation in CA and I get a heart attack? No HMO covers me in-network.
The last surgery I had, the doctor and the facility were not in-network. I pay the same as in-network.
Case closed. My MOOP is $6700. So far I have saved + investing about $20K.
Add my wife and in 10 years, it would be over $150K. I will take the chance.
BTW, the Original Medicare Medigap went from $145 to $206 in the last 3 years. That's over a 40% increase.
Income investing doesn't exist and never did. There are only 2 parameters. Total performance and risk/SD. When I was younger, I cared about performance. At retirement I cared a lot more about risk-adjusted performance. Although I invest mostly in bonds, I don't care about income.
I think I will keep what I have done since 2018, investing at least 95% in bond OEFs with extremly low losses . See
https://ibb.co/zT6QGzSs
Investing has so many more choices.
If your wife's employer(?) is giving you added benefits but offering fewer options, I can't speak to that. H4141 is generally available to subscribers in most of Georgia (Metro Georgia). See first page of Summary of Benefits.
https://www.humana-medicare.com/BenefitSummary/2026PDFs/H4141017003SB26.pdf
All the HMOs don't have all our doctors. That's a no-go.
"Staying flexible" only goes so far. I'd do the same thing rather than be flexible with doctors. Though insisting on particular providers comes at the cost of higher premiums and/or coinsurance and/or caps.
Every HMO has a rating of 3.5/5. Every PPO is 4.5/5. The PFFS is better than all, IMO.
H8145, Humana's PFFS in Georgia, has a 3.5* rating for 2026. (This is a drop from its 4.0 star rating for 2025.)
https://www.humana-medicare.com/BenefitSummary/2026PDFs/H8145GHA09ECHH26.pdf
There are 13 Humana PPOs for 2026 in Fulton County, GA (Atlanta) (your county may vary). Three of them have 4.5 stars; the remaining 10 have 3.5 stars. Not that I have any idea what the stars mean in pragmatic terms.
https://www.medicare.gov/plan-compare/#/search-results?plan_type=PLAN_TYPE_MAPD&fips=13121&zip=30305&year=2026&lang=en&page=1
What happens if we vacation in CA and I get a heart attack? No HMO covers me in-network.
From the HMO summary of benefits above: The last surgery I had, the doctor and the facility were not in-network. I pay the same as in-network.
Providers have the option, on a case by case basis, of providing you service on in-network rates. If they do so they agree to the terms of your policy as if they were in-network. That's a downside risk of PFFS plans - you are stuck with providers who are either in-network or are willing to pretend they are for you.
From Humana's PFFS Evidence of Coverage:
BTW, the Original Medicare Medigap went from $145 to $206 in the last 3 years. That's over a 40%.
I believe @FD1000 is referring to Part B increases. Here's the history of those increases;
2021 $148.50
2022 $170.10
2023 $164.90
2024 $174.80
2025 $185
2026 $206
part-b-premium-increase-history#Medicare-Part-B-premiums-in-detail
@Mona asked,
@FD1000 Which company had over a 40% incrrease?
Answer:
Company = US Giverment
https://mutualfundobserver.com/discuss/discussion/comment/200450/#Comment_200450
Some plans actually "give back" a portion of that Part B premium, so on paper people may pay less, or no, Part B premiums. But that "give back" is a bit of financial legerdemain. It's not dissimilar to annuity "bonus" plans where you get an immediate credit. Either way, the seller gets their money back and often more. Medicare "give back" plans may come with higher deductibles or higher caps or more onerous drug plan fee schedules or ...
Comparing apples to apples is not an easy task. Which gets us back to evaluating insurance plans or funds, trading off one type of risk against another. What might be more important to one person (e.g. max drawdown or max out of pocket) might not matter much to another. That other person might be a long term investor willing to wait for a fund to recover its value, or a healthy young person very unlikely to have large health expenses.
Supplement Insurance (Medigap) Plan G policies.
https://www.humana-medicare.com/BenefitSummary/2026PDFs/H7617094000SB26.pdf
Definitely one that's good for a laugh. It wouldn't even buy a single Big Mac meal these days.
Much appreciated.
BTW, that double dash? Pure ChatGPT. You really needed AI for one sentence?”
Some people in cities with spectacularly good hospitals and Medical Schools ( like Boston or Atlanta or LA) may feel comfortable knowing that if the MA plans drops one provider, there will be just as good alternatives. But this ignores the unusual but still possible "bone marrow transplant" problem. Sometimes you might need a very rare procedure that is done extremely well across the country but in your town, not so hot.
I think you have to do your homework very carefully and also realize what may look like a decent community hospital today may be awful in a few years, and as they loose business they may lower their prices and become more attractive to MA plans.
There are towns that come to mind where the entire health care system is under one umbrella like Rochester MN or apparently FT Wayne IN, but at least in the latter case their monopoly position allowed them to charge the highest prices in the county.
Even in what would be considered probably the best place in America for medical care, Boston, the infighting and money grubbing of the two major hospital systems has reached epidemic proportions with bad consequences for MA patients. Mass General just kicked all other MA plans out of their network.
Starting January 1, 2026, Mass General Brigham primary care providers will no longer be in-network with United Healthcare or Blue Cross Blue Shield of Massachusetts (BCBSMA)* Medicare Advantage plans
As usual, you need to know what you are doing.
Original is great in most places.
Advantage choices are great in big cities with many options.
I would never go for HMO.
If I lived in a smaller town and/or not many choices, Original would be my choice.
I'm reviewing Boston-area PPO plans. The Medicare.gov site clearly lists hospital options.
The Mass General Brigham Advantage website is not user friendly. I'm not spending much more time on it. I added two providers from Mass General Hospital, and several PPOs show up as accepting them, including Mass General Brigham Advantage (PPO).
Given that, I’m confident I can use providers and get procedures at Mass General under this plan.
Worst case: if coverage becomes an issue, you can relocate or establish residency in another county to qualify for Original Medicare.
People tend to conflate these terms. An HMO is a type of policy, whether it is an employer plan, an ACA plan, or a Medicare Advantage Plan. Likewise, PPO, EPO, PFFS, etc. are types of policies that may be packaged under ACA, Medicare Advantage, etc.
HMOs are the most restrictive because in most cases they won't cover out of network services. EPOs are almost as bad, because their only difference is that they don't require referrals to see specialists. That makes them easier to use but they likewise cover only in-network providers. With either you risk losing coverage for your doctors if they are kicked out of network midyear.
PFFSs require providers to accept the terms of their policy in order to be covered. Some out of network providers will accept those terms. From what sma writes, I imagine that Mass General would laugh if a PFFS policy holder asked it to accept the PFFS payment terms.
MA PPOs cover all providers that accept Medicare. You'll have higher coinsurance payments with out-of-network providers, but they'll still be covered. Including Mass General.
In the worst case, original Medicare + Medigap (Supplement Plan 1A in Mass.) + Part D might come out less expensive than a MA PPO. Or not.
The Mass. Medigap plans run around $3K/year plus a couple hundred bucks for Part D. A Humana PPO with a $60/mo give back (reduction in Part B premium) has an out-of-network cap of $7750 (net $7K after premium reduction). It also gives $4K in dental benefits along with a variety of small benefits (vision, transportation). Net, in worst case it's hard to predict which costs less.
If you don't use hospital services, the MA plan could come out much less expensive. Even when seeing out-of-network doctors.
There are towns that come to mind where the entire health care system is under one umbrella like Rochester MN or apparently FT Wayne IN,
I think San Francisco is another such town. It seems that Sutter Health has bought up all the hospitals.
https://www.sfchronicle.com/health/article/sutter-health-charged-30-hospitals-new-study-19731388.php
I think you have to do your homework very carefully
That's clearly the bottom line.
The City of San Francisco changed health carriers this year, from United to Blue Shield. United covered both Sutter and UCSF, but Blue Shield initially refused to agree on a contract with UCSF. That was not just with the City, but statewide. There was a terrific political blowback, and finally the UCSF group and Blue Shield were forced to an agreement.
Nice to talk with you- OJ
In your situation, the Humana Gold Choice H8145-069 (PFFS) plan is available in several counties across Georgia and South Carolina. If you "relocate or establish residency in another county" where this same plan is offered, you will not receive a guaranteed issue right for a Medigap policy. In that case, you should be prepared for possible medical underwriting.
You are of course right about the numbers (scope of control of various SF health care organizations). And I hadn't realized that UCSF was capturing remaining available hospitals.
The reason why I specifically mentioned Sutter was because I was thinking in slightly different terms. Kaiser is definitely an elephant in the room, though to mix metaphors, I prefer to think of it as a horse of a different color. For the most part it is a closed system - you're either in it and use just Kaiser providers, or you're out and don't use their doctors. That's different from working with other health care providers and affects how and even whether they negotiate with outside insurers.
UCSF was always a significant player but perhaps not in the same league as Kaiser and Sutter. Though its latest acquisitions could change that. From 2021: https://www.chcf.org/wp-content/uploads/2021/04/RegionalMarketAlmanac2020BayArea.pdf
I'm somewhat familiar with Sutter and UCSF, having received care from a UCSF specialist, care from a Brown & Toland (IPA) provider at CPMC (now part of Sutter), And as part of a Silicon Valley startup I spent an afternoon at Mt. Zion (now part of UCSF system) learning how we might improve radiology treatment equipment. Never interracted with Kaiser (closed system), but I have friends and family who are very happy with it.
The takeaway from that last paragraph is that this industry is massively consolidating, and as sma3 wrote, it's all about the money.
For example, in DeKalb County, Humana offers PPO plan H7617-092 that it doesn't offer in adjacent Fulton County. So if you moved from Fulton to DeKalb county, it seems that you'd be able to pick any other MA advantage plan. It would make more sense if only the added MA options were open to you. But that is not the way the text seems to read. (On the next line it does say that, in addition, if your old plan isn't offered at your new location, then you can switch to original Medicare.)