Health & Medical

Weighing Your Medicare Options

New managed-care insurance plans offer beneficiaries convenience and savings.

Everyone loves a deal, but good buys are not easy to find in health care. Now Medicare is offering a variety of new options that bundle medical-care and drug benefits into one neat package. These plans can reap great savings for patients who currently purchase three policies for comparable coverage – traditional Medicare, a drug benefit and a Medigap policy that pays out-of-pocket costs.

The all-in-one plans are being offered under Medicare’s managed-care program, called Medicare Advantage. Many Medicare Advantage plans, which are run by insurance companies, charge zero premiums for packages that cover medical-care and drug costs. With these zero-premium packages, beneficiaries only pay the Medicare Part B premium, which is $88.50 a month. Most plans offer prescription-drug benefits, so as you weigh Part D drug policies, it’s a particularly good time for you to consider managed care.

“Medicare Advantage is a terrific deal, both economically and in terms of convenience,” says Bruce Fried, a health-care lawyer in Washington, D.C., who ran the government’s managed-care program in the mid 1990s.

Today’s managed-care program is very different from the old Medicare+Choice, which primarily offered traditional HMOs. In the late 1990s, insurance companies fled the program after Congress cut their subsidies. Those that remained raised premiums and slashed benefits.

But in 2003, Congress approved new funds and opened the program to models other than HMOs. Insurers are swarming back into Medicare managed care, providing beneficiaries with widespread access to many well-priced choices. More than 140 new plans were introduced in 2005, bringing the total to more than 400. Some plans allow you to use just about any doctor who accepts Medicare.

The low premiums were enticing to Rick Brown, 65, a former manager for ConAgra Foods in Schaumburg, Ill., who retired five years ago to Cordova, Tenn. After the cost of his retiree health coverage rose for three years, Brown saw an advertisement for a Humana plan charging $89 a month (in addition to the Part B premium). The plan promised to cover medical care and prescription drugs for a premium lower than his current plan. But there was a catch: He’d lose his retiree coverage forever if he left.

Before deciding whether it was worth the risk, Brown needed to make some calculations-as all beneficiaries must do. A policy with a low premium may not be as attractive as it first seems. As you work out the Medicare math, check potential out-of-pocket costs and review limits on your choice of providers. And study the plan’s drug formulary.

If you’re considering Medicare Advantage, you may find up to three managed-care models, depending on what’s offered in your community:

HMO. An HMO limits the doctors and hospitals you can visit. You may have no coverage for nonemergency care outside of your network. HMOs are still the most common type of Medicare Advantage plans. But premiums have dropped, and many plans charge nothing above the Part B premium. HMOs do charge co-pays for hospital stays, doctor visits and some drugs, but they’re usually less than what a patient pays in a fee-for-service plan.

Regional PPO. New regional preferred-provider organizations are a lot like employer-sponsored PPOs. The government designated 26 regions, which include every community in the U.S. In some cases, a region is a full state; Florida is an example. In other cases, a region includes several states.

This means that a PPO patient could have access to a huge network of providers. If you see doctors and hospitals on the preferred list, you would pay rates often comparable to those of an HMO. Unlike an HMO, you can use out-of-network providers, but copayments are steep-perhaps 30% of provider bills.

Private fee-for-service. These plans are not to be confused with traditional fee-for-service plans that are run by Medicare. Insurance companies operate the private plans. Unlike Medicare HMOs or PPOs, you can use any doctor that accepts Medicare in any part of the U.S., although a small number of doctors have opted out of these plans. The downside is that premiums and co-pays are higher.

Picking a Plan Premiums for each of the three types of Medicare Advantage plans tend to be lower than if you sign up for traditional Medicare, a Part D drug plan and a Medigap policy that pays deductibles and co-pays.

For example, the average Plan F, the most popular Medigap policy, costs $146 per month, according to insurance research firm Weiss Ratings. This plan covers most out-of-pocket costs, except for prescription drugs. For drug coverage, you would need a Part D policy, with monthly prices averaging $25. When you compare $171 with premiums of some Medicare Advantage plans, the decision seems easy.

But although some Medicare Advantage plans have super-low premiums, they may have out-of-pocket costs that you wouldn’t pay with a Medicare fee-for-service plan together with a Medigap policy. And even among Medicare Advantage plans, there could be differences in out-of-pocket costs.

In Maryland, for example, one HMO charges no premium but requires a 15% co-pay for each in-network hospital stay. Another HMO charges $85 per month but $250 for each stay at an in-network hospital. One PPO charges $89, but $750 for an in-network hospital stay or 30% at an out-of-network hospital. At another PPO, you’ll pay $149 a month, but only $250 for an in-network hospital stay or 20% at out-of-network hospitals.

To decide on the most cost-effective plan, look at premiums for a number of plans as well as their deductibles and co-payments for doctor visits and drugs. Determine how many drugs you’re taking, along with an estimate of the number of doctor visits you make.

Also, consider the value of being able to use any doctor or hospital. Check with your physicians to see if they’ve signed with a plan. “If having the choice of doctors, medical centers, specialists and care away from home is important, then stick with original Medicare and a Medigap policy,” says Deane Beebe, of the Medicare Rights Center, a consumer group. Look carefully at the drug formularies, too, to determine whether your prescriptions are offered.

Compare and Contrast The Medicare Personal Plan Finder (www.medicare.gov/mppf) can help you compare the Medicare Advantage options in your community. If you don’t have Internet access, call 1-800-633-4227 or your state health-insurance assistance program.

For Medicare Advantage plans that offer drug coverage, you’ll need to dig a little deeper. Go to (www.medicare.gov, click “Compare Medicare Prescription Drug Plans” and then “Find a Prescription Drug Plan.” You’ll be asked several questions and sent to more pages. When you finally reach “Choose Drug Plan Type,” select “Choice C: Medicare Prescription Drug Plans,” which includes information on Medicare Advantage and Part D plans. This tool will calculate out-of-pocket costs for each drug and dosage.

Of course, the plan you choose could eventually raise its rates, your doctors could leave the plan, and the plan could drop your drugs from its formulary. You could switch to another Medicare Advantage plan, but you would have to wait until the open enrollment period, from November 15 to December 31. A plan can’t reject you because of health or age. Or you could always return to traditional Medicare fee-for-service, although your Medigap insurer may not take you back.

Beneficiaries with the most at stake are those who must make irrevocable decisions, such as Rick Brown and his retiree health coverage. Indeed, after doing the calculations, Brown decided to stick with his employer’s plan. “I am going to see how its premiums change and if it even continues to cover retiree benefits,” he says. But Brown says that if his company health coverage is no longer an option, he’ll sign up with Medicare Advantage.

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