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Have You Considered Medicare Advantage?

planning-for-a-medicare-advantage-planThe deadline for enrolling in a Medicare Advantage plan is fast approaching.  People currently enrolled in  Medicare Advantage need to check their plan and make sure it still fits their needs.  But for those in original Medicare, it’s an opportunity to take a look at an alternative to what they have now.  They may be surprised.

I never gave Medicare Advantage much thought until another couple at a dinner party we attended last summer raved about their Medical Advantage plan amidst others’ complaints about health care insurance and benefits.  On investigation, I learned Medicare Advantage is quite popular.  Since 2005, enrollment in Medicare Advantage plans has risen every year.  One in four people on Medicare are in Medicare Advantage; and in California, the ratio is one in three! Altogether, 11.7 million people in the U.S.  have enrolled in 3,900 Medicare Advantage plans.

Unlike original Medicare, Medicare Advantage health insurance plans are offered by private insurance companies.  They’ve been Medicare certified to offer all the benefits that Medicare Parts A and B offers.  Why is this form of Medicare (officially called Medicare Part C) so popular?  For one thing, unlike original Medicare, many Medicare Advantage plans offer vision, hearing and dental benefits.  Some even offer fitness club discounts and access to wellness centers.  Almost all of them include a drug benefit similar to Medicare Part D as well.  If you’re in Medicare Advantage, you won’t need to buy a Medicare supplement or Medicare ‘gap’ insurance.

Medicare Advantage plans also come in several forms:

Health Maintenance Organizations (HMOs)
Preferred Provider Organizations (PPOs)
Medical Savings Accounts (MSAs)
Private Fee for Service (PFFS)
Special Needs Plans (SNPs)

Most operate as a closed network requiring members to see network-specific doctors and hospitals.  There is, in fact, a cost penalty to see an outside doctor unless it’s an emergency.  The HMO plans are more restrictive in this regard than the PPO plans.  Another type of plan, the MSAs, deposits money into special savings accounts to be accessed for the beneficiary’s every-day medical needs.  These dollars will then roll over into the next year if they’re not used.  Expensive medical care in this type of insurance plan is paid by the plan after a deductible is met.  However, most Medical Advantage plans are in the form of HMOs.  They constitute 65% of the total with PPOs following at 19%.

Many might object to a system that limits their choice of doctors to those in a network.  This would be especially true if a favorite doctor wasn’t in a HMO or PPO network.  Another drawback some see is that Medical Advantage networks often require patients to see a referring physician before they can see a specialist.  But many seniors aren’t deterred by these limitations.  Instead, they see this as an advantage with  all the health providers involved sharing the patients’ medical information and coordinating medical decisions.  Studies of various health organizations shows that this approach does, in fact, result in fewer errors and better health outcomes as well as fewer unnecessary hospitalizations and re-admissions than the usual silo system.

Medicare Advantage members pay the Medicare Part B premiums; but they don’t buy a Medicare Supplement or Medicare ‘gap’ plan.   The additional cost of a Medicare Advantage plan differs from plan to plan.  Each may or may not charge a premium, have high or low deductibles, require co-payments or charge extra for special benefits.  Each plan has to be evaluated to determine which will provide the most value.

90% of people enrolled in original Medicare also purchase supplemental health insurance to cover what Medicare doesn’t.  This is an example of a “Pay Now” system in which you pay ahead for benefits you may or may not use.  With most Medicare Advantage plans, on the other hand, you pay out as you use the benefits through deductibles, co-payments, or extra charges for special benefits, making these plans “Pay Later” systems.  There’s another difference between the two Medicare coverage options:  Medicare Advantage, unlike original Medicare,  provides beneficiaries an annual ‘cap’ on their expenditures.  For 2012, this ranges from $3,400 to $6,700.  This means that, worst case, you’ll never pay more than that out-of-pocket.

To make selecting a plan easier, Medicare Advantage plans have each been rated 1 to 5 stars based on patient satisfaction, best practices, healthy outcomes, efficiency and management.  This year, plans achieving 3, 4, or 5 stars will receive bonuses from Medicare that must be used to enhance plan benefits, thereby making them more attractive to prospective members.  That said, the number of stars should not be your only criterion for considering a plan.  Instead, check the Summary of Benefits for the plan’s offered services and payments.  If you don’t want to leave your favorite doctor, make sure he’s in the plan’s Providers Directory.  Finally, check the plan’s Drug Formulary to make sure your drugs are available and affordable through the plan.

Obviously, given all the options available, it isn’t easy to decide which Medicare Advantage plan fits your needs or whether any Medicare Advantage plan is in your best interests.  Plan information, including the star ratings, is available at the Medicare.gov website.  However, your best bet would be to talk to a health insurance agent specializing in Medicare who can ask you the relevant questions that will guide your decision.

The good news is that, although Dec. 7 is the deadline for your decision, if you change your mind or are unhappy with your Medicare Advantage plan you can move back into original Medicare anytime between Jan. 1 and Feb. 14.  And you can change to any 5 star Medical Advantage plan in your area any time during the year!

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