Medicare is our only form of health insurance that approaches the simplicity of a European-style single payer system. But it's not as simple as it could be--especially at this time of year.

November 15th marks the start of the 6-week annual enrollment window for two important types of add-on Medicare insurance--Medicare Advantage and Medicare D prescription drug plans.

Basic Medicare gets very high satisfaction ratings from beneficiaries but it doesn't pay for everything. Medicare Parts A and B cover many outpatient services and hospitalization, with some costs born by beneficiaries through premiums and co-payments. But unlike most private health insurance plans, basic Medicare has no overall limit on out-of-pocket expenses--which means you face risk in cases of the most serious, care-intensive illness. The basic program also doesn't cover prescription drugs, dental expenses, and over-the-counter medicines.

Medicare Advantage and Medicare D are privately offered plans that address some of those gaps. Medigap policies offer a different way to go; these are used only to minimize co-pays and deductibles--but these policies aren't tied to the November-December enrollment window.

If you use only basic Medicare, you don't have to do anything during the enrollment period, unless you want to add an Advantage or Medicare D plan. If you're already using one of these supplemental plans you may be able to stick with it, although it can pay to shop for better pricing and services.

Some Advantage beneficiaries will have to make a new choice, because a large number of plans are being eliminated under a federal initiative aimed at streamlining the program. About 18 percent of plans are being terminated nationwide. If you're in one of these plans and don't pick a new one, you'll automatically revert to traditional Medicare--which could leave you uncovered on prescription drugs unless you decide to use a Medicare D plan.

In any case, if you do plan to buy a supplemental plan, it's smart to do so well ahead of the Dec. 31 deadline, since coverage begins January 1st and you could experience paperwork snafus if you wait until the last minute.

If you're getting ready to navigate the Medicare plan maze, here are some basics to keep in mind:

 

Medicare Advantage.

These are privatized Medicare plans offering all-in-one medical and drug coverage; they often come with add-ons such as dental coverage and even health club memberships. Plan options include preferred provider organizations, health maintenance organizations and private fee-for-service and specialty plans. When you join an Advantage plan, Medicare provides a fixed payment to the plan to cover your Part A (hospitalization) and Part B (medical insurance) coverage. There are usually additional co-payments and deductibles, depending on the type of plan you join. The plans are offered at the state level, so you need to shop by comparing what's available in your area.

The plans are offered at the state level, and pricing and services are affected by a complex set of federal formulas and local market competitive factors. While these plans cover a wider range of services than traditional Medicare, the managed care varieties are less flexible in that you can only use in-network providers.

 

Medicare D.

These prescription drug plans have been popular with consumers, although costs have been rising sharply; average premiums for the 10 most popular plans jumped 30 percent for the re-enrollment cycle for 2009. Also beware the notorious "doughnut hole," the current coverage gap that starts when beneficiaries exceed $2,510 in coverage for a given year. At that point, the beneficiary pays 100 percent of costs up to $4,500, when so-called "catastrophic coverage" kicks in. The hole likely will be phased out over a period of years under health care reform legislation.

Low-income individuals may qualify for assistance with their Part D premiums through a program called "Extra Help," which is administered through the Social Security Administration. More information can be found here: http://www.socialsecurity.gov/pubs/10509.htm

 

I've posted a page with more detailed information on Medicare supplemental plans, along with more links to online resources that can help you shop at http://retirementrevised.com/medicaresupplemental.

 

 

 

Navigating the Annual Medicare Sign-up Maze | Retire Smart

(c) 2009 Humberto Cruz