As individuals retire or age into Medicare, their insurance situation can change dramatically. There are a multitude of options open to those with Medicare. The terms are different, the prices are different, the products offered are dramatically different each year.
The purpose of this column is to give those who are eligible for Medicare, or soon to be eligible for Medicare, some understanding of their insurance options and how it could impact their health and finances.
These questions and answers are meant as a guide to help you understand the complex questions you are now thinking about. Each individual's specific situation may create a different solution. You shouldn't necessarily do what your friends, family and neighbors do.
Q: Your earlier column listed all the 24 Medicare Advantage Plans available, but I don't understand the difference between the plans. How do I know which one to choose?
A: Medicare Advantage Plans are plans that replace your Medicare. You do not lose Medicare; it just becomes inactive when you use these Medicare Advantage Plans. I will try to address some of the differences between the plans.
An HMO plan is a Health Maintenance Organization. This is usually a local insurance company offering a product in the area they do business. In our area, there are three local companies, BC/BS of Western New York (Senior Blue), Excellus Health Care (Senior Choice) and Independent Health (Encompass 65).
These three companies offer HMO plans that cover the eight counties in Western New York, and sometimes in Monroe County or Pennsylvania (like Erie, Warren, Bradford, and Corry). An HMO plan requires you to see your primary care physician for most things, and you may need referrals to see specialists or other providers. These referrals can be for limited amounts of time or lifetime referrals depending on the HMO companies and its policies. If you choose to go to a physician, specialist or hospital that is not in the network of the company you choose, you pay the bill in full. There can be special exceptions to this rule, like worldwide coverage for emergency care when you are away from home.
A Preferred Provider Organization (PPO) is similar to an HMO, but has some differences. It can be a local company or national company and has a similar network to the HMO, but this type of plan allows you to see non-participating physicians and specialists. This means you don't need a referral to see all physicians, and you can pick/choose who you see. The catch is you usually pay more when you see a non-participating provider. Sometimes "more" is $5, and sometimes it is significantly more. There is also different "Maximum Out of Pocket" for in and out of network fees.
A Private Fee For Service plan (PFFS) is another option. These plans have more similarities to PPO plans. Usually more physicians participate across the country, but may not be widely accepted locally. These are usually national companies and the plans have national coverage. Some areas of the country have more participating physicians than others, so be aware of your plan and if your physicians participate. This year, 2013, we only have one PFFS - Today's Options. This PFFS option comes with or without drug coverage. With a PFFS plan you can choose an alternative Stand Alone Drug Plan separate from your PFFS plan.
The Medicare Savings Account (MSA) will be available again this year through Blue Cross and Blue Shield (Blue Saver MSA). This plan operates almost as a debit account. Medicare pays you $3,000 annually and then you pay all your medical bills with this account. The Blue Saver MSA has a $4,750 deductible, and then all expenses are paid for by the plan. With this plan Medicare would pay the first $3,000 from your MSA, and then you cover the next $1,750, after that Blue Saver MSA pays 100 percent of your medical bills. In a year where you "spend" less than the $3,000 Medicare has given you, it rolls over to the following year. As long as this plan is offered you can accumulate dollars to pay your medical expenses. The MSA plan covers Medicare Part A (hospitalization) and Medicare Part B (medical/outpatient) benefits. This plan continues to be an interesting option. This plan does NOT include Prescription Drug coverage (Part D) so you must enroll in an additional Part D plan. That Part D plan operates separately from your MSA.
Call your physicians before you join any of these types of Medicare Advantage Plans. Be sure that your physicians participate, and if they don't participate be sure you understand how much it will cost to see them.
Another difference between HMOs, PPOs, PFFS and MSAs is the rules regarding drug coverage. If you choose a HMO or PPO plan and you need drug coverage, you must purchase that drug coverage from the plans they offer. You can't get that coverage from another Medicare Part D plan or company. If you enroll in a PFFS plan, they offer plans with and without drug coverage. You can join a plan without drug coverage and then enroll in a stand-alone Medicare Part D Prescription Drug plan. You can choose a PFFS plan with drug coverage included, and this plan will cover all your needs. This PFFS difference can give you more flexibility with your prescription drug plan choices. The MSA plan as I previously mentioned does not cover Prescription Medications, so you need to purchase an additional Medicare Part D approved plan.
I want to stress again, if you join a Medicare Advantage Plan you are actually stepping out of Traditional Medicare. You don't lose Medicare; you are simply choosing to use an alternate company to get your Medicare Coverage (opt out). You cannot join a Medicare Advantage plan unless you have both Medicare A and B.
To say this another way, if you choose a plan from the Medicare Advantage plan choices, you actually have Medicare Part A, B and sometimes D type coverage. You don't use your red, white and blue Medicare card (Part A and B). You only use your Medicare Advantage Plan's card.
The Medicare Advantage Plans and the companies that offer them are approved by Medicare to provide this coverage. The plans are required to give a minimum amount of coverage, equal to Medicare, but often provide additional services. These additional services (not covered by original Medicare), could be gym memberships, lower cost eye glasses, or health care products provided free of charge. These Medicare Advantage Plans have a wide variety of premiums (in addition to the Part B premium you are already paying). These Medicare Advantage Plans are also paid by Medicare to provide you with coverage.
In other words, these plans are paid a monthly premium by Medicare to cover you. Medicare Advantage Plans require you to pay co-pays for most of the services you get. These services include doctor visits, emergency room visits, hospitalizations, physical and occupational therapy, and many others. These plans have an out of pocket maximum, an amount you will never have to pay more than in any given year for your medical care.
The Annual Open Enrollment Period for Medicare Advantage Plans, (HMO, and PPO, and PFFS) is the Oct. 15 to Dec. 7 period. If you join this type of plan during that time, your coverage will begin Jan. 1. You can switch out of the Medicare Advantage Plans and go back to traditional Medicare with a Part D plan during the period of Jan. 1 to Feb. 15. (This is an enrollment period with very limited changes allowed.) The problem with this alternative is that the Medigap plans you may want to be secondary to Medicare, tend to be much higher priced premiums (because of no deductibles and limited co-pays).
Remember, if you use this Jan. 1 to Feb. 15 opportunity to switch, you must include prescription drug coverage. If you are eligible for VA services or other prescription drug benefits, then you may be able to use these alternatives as your creditable coverage for prescriptions.
Janell Sluga is a geriatric care manager certified and works for Senior Life Matters, a program of Lutheran Senior Housing, and has worked in Chautauqua County with seniors for more than 18 years. She is HIICAP (Health Insurance Information, Counseling & Assistance Program) counselor-trained by Office for the Aging. She does not sell insurance or represent any insurance company. She is an unbiased source of insurance and education to help seniors choose the best option for them.
You may submit questions to be answered in later columns to Janell Sluga at Senior Life Matters, 737 Falconer St., Jamestown, NY 14701, or call 716-720-9797, or by email at firstname.lastname@example.org.
Please remember that not all questions can be answered in this format, but as many as can be, will be.