Medicare’s annual open enrollment runs from October 15th to December 7th. During this time, Medicare subscribers can join or change plans including:
- Medicare Advantage plans:
- Return to the original Medicare coverage
- Medicare Supplemental (Medigap) plans;
- Part D Prescription Drug plan
It is very important to make an informed choice of the best insurance plan for your medical needs, preferences, and budget. A bad choice can cost you thousands of dollars and prevent you from receiving services that you need from your preferred providers.
Medicare Insurance Options for Seniors
Original Medicare is the government-run health insurance for seniors and disabled people that use private doctors, hospitals and other healthcare providers.
By comparison, Medicare Advantage (MA) plans that often include a prescription drug plan, stand-alone Prescription Drug plans (PDP) that are used with original Medicare and Medigap (Supplemental) plans are all sold by private insurance companies that are subsidized and regulated by Medicare.
These plans are offered by a variety of large for-profits (eg. United Healthcare, Humana, Aetna), national non-profit organizations such as Blue Cross and many regional non-profit insurers.
In addition, some seniors are eligible to receive their health insurance through their current or former employer. And most Veterans are eligible to receive their health care and medications through the Veterans Administration.
Common Problems to Avoid
Your plan doesn’t include your preferred service providers.
If you don’t verify that your health care providers have a network contract with the insurer that you are considering, you could be facing huge bills. You could be responsible for paying the full cost of expensive services from health care providers or declined service.
Out-of-Network does not mean out of your area. Your preferred health care provider could be next door, but may not have a contract with your insurance company.
Be especially cautious of PPO plans, often sold by national insurers, that lead you to believe that you can go to any doctor anywhere. This is not accurate. Many times national insurers have not developed local provider networks or formal contracts. They often pay commissions to insurance agents to sell policies but do not have local staff to resolve provider and subscriber issues and concerns. These are often handled by central call centers.
The fine print in PPO plan documents includes this disclaimer: “Out-of-Network/non-contracted providers are under no obligation to treat plan members, except in emergencies”
This means that while you may have insurance, you may not be able to find a provider that accepts your plan, for a variety of reasons.
You Didn’t Anticipate High Deductibles and Out-of-Network Costs
Some plans, such as the Aetna Elite PPO are advertised as a $0 premium plan, however you need to pay the first $1,000 for many medical services plus an additional $350 deductible for Tier 3,4 & 5 drugs including vaccines that do not have a generic equivalent. In HMO plans, you could be responsible for the full cost of “out-of-network” services.
Consumers need to be aware that each insurer decides what drugs to include and exclude, and what they will charge subscribers. Generally, you will be responsible for the full cost of medications that are not included in the plan’s formulary. Drug prices can also vary by the pharmacy that you choose and if you choose a 90 day mail-order supply versus a more costly monthly supply.
In considering plans, you should not focus solely on the advertised premium cost, but rather your medical, drug, out-of-network needs and your projected out-of-pocket expenses including premiums, deductibles, co-pays, out-of-network charges and drug costs.
Medicare.gov provides a “plan finder” that helps you analyze medical & drug expenses among various plan options that are available where you live.
You Didn’t Consider Medigap Plans for High Medical Expenses and Maximum Choices
Many Medicare Advantage HMO plans have little or no out-of-network coverage and you may have to pay for the full costs of services that you receive. If you have serious medical conditions that require costly tests, hospitalization, nursing home rehabilitation, outpatient
surgery and intensive outpatient treatment such as cancer, heart disease, renal disease and/or you would like the freedom to select specialty providers outside of your plan’s network, you’ll need good coverage at an affordable price. “Original Medicare” has no limit on your annnual expenses. And, Medicare Advantage plans have a high annual maximum out-of-pocket limit of $6,700 but there is an alternative–Medigap plans.
As a general guide, if your projected annual out-of-pocket medical expenses (premiums, deductibles & co-pays – excluding your prescription drug expenses) exceeds $3,000/yr. and/or you want Medicare coverage across the country, you should explore a Medigap plan.
Medigap plans provide supplemental coverage to original Medicare and pays for deductibles and copays. All healthcare providers who participate in Medicare across the country are included and there are no out-of-network exclusions or surcharges.
Medigap plans are regulated by each state and you can receive information on the availability of plans and their premiums by contacting your state insurance department medicare.gov/contacts.
You Didn’t Think You Needed or Understood Differences in Prescription Drug Plans
Most Medicare Advantage plans include prescription drug (Part D) coverage. However, if you have “Original Medicare” with/or without a Medigap plan, you will also need to purchase a prescription drug plan (Part D) unless you have an approved employer drug plan or receive your medications from the VA.
If you don’t have a an approved drug plan and you want to purchase one at a later date, you are likely to be subject to a late enrollment penalty.
Part D plans are sold by private insurance companies and vary from state to state. For example, in New York State 27 plans are available from 10 different insurers. The premium and deductible cost of plans in New York varies widely from a Humana Walmart plan that costs $13 a month with a $435 deductible to a SilverScript plan that costs $91 a month with no deductible.
It is also important to check plans that you are considering to confirm that the medications that you need are included and what your co-pays and total annual expenses will be before enrolling in a plan.
Medicare.gov has a planfinder that compares the different cost of the various Part D plans based on the medications that you use and where you live.
You Didn’t Expect a Medicare Enrollment Penalties
Medicare rules require that if you want to receive Medicare benefits, you need to enroll and pay your Medicare Part B (outpatient) and Part D (prescriptions) premiums when you are first eligible. There are a few penalty exceptions, for example, if you receive creditable medical and drug insurance from you or your spouse’s employer, if you receive your medications from the VA.
Medicare penalties can be significant. The Part B (outpatient care) late enrollment penalty is 10% for each year, from the date of your initial Part B eligibility. The Part D (prescription drugs) penalty is 1% for each month from when you were initially eligible, or June 2006, the start of the program. There are a few circumstances when penalties can be reduced or eliminated.
The Importance of Having a Good Medicare Plan
Selecting the best plan for you or your family member is a very important responsibility since the consequences can be significant, both to your pocketbook and your ability to receive needed health care from your preferred providers.
Investing time in planning and seeking objective advice in selecting a plan, can save you a lot of time, money and headaches. The following is a list of free resources that are available to help you.
Social Security Administration, socialsecurity.gov, 800-772-1213
The Social Security Administration is the agency that you need to contact to apply for your Social Security benefits and enroll in Medicare Part B and D., In addition, you can be screened for eligibility (income and resources) and apply for “Extra Help” with your Part D premium and cost of your medications
Medicare: Medicare.gov – 800-633-4227
An excellent resource with Medicare information and specific help in comparing Medicare Advantage and Prescription Drug Plans in your area.
State Health Insurance Assistance Program SHIP 877-839-2675
Medicare contracts with states, counties and nonprofit organizations to provide individuals with personalized education, support, and assistance with Medicare.
These free services include comparative plan information, eligibility for financial assistance as well as help with selecting a Medicare plan, enrolling, and resolving problems.
Partnership for Prescription Assistance
This is an online information resource tool. You can learn about assistance programs that are available for specific medications, along with the eligibility criteria and program applications.
Medicare Rights Center, medicarerights.org , Helpline: 800-333-4114
The Medicare Rights Center is a national, nonprofit consumer service organization that works to ensure access to affordable health care for older adults and people with disabilities through counseling and advocacy, educational programs and public policy initiatives.
This article was updated in October 2019 from an earlier post.