Nov 15th the First Day of Medicare Open Enrollment

Are you turning 65?  Are you older and considering retirement? Welcome to the first day of Medicare open enrollment  - called the Annual Election Period.  You can expect the same basic benefits from every Medicare Advantage plan with modest differences in premiums, cost sharing and different ways to access doctors and hospitals. All insurers will follow the same rules on how they market their products and each insurer will use the same basic set of brochures to help you compare your options.  Finally, the government will provide you with a Web site where you can research each of your options side-by-side and even compare customer satisfaction rates (www.Medicare.gov).

Will You Add, Switch or Drop Your Medicare Coverage?

Sounds great on paper, but in reality it is still difficult to choose the right health plan.  Medicare will try and make it easier by sending you a copy of "Medicare and You" from the Center for Medicare and Medicaid Services (CMS).  This document will attempt to guide you through your choices - Original Medicare Alone, Medicare Advantage Plans, Medicare Supplement Plans, and Standalone Part D Prescription Drug Plans.  Medicare requires each health insurer to include a standardized brochure called a "Summary of Benefits" that includes the same benefit descriptions as well as the plan's premiums, benefits, and cost sharing (copays).  

If you are not already buried in mail from Medicare Insurers, you will be.  This is the only time of year where your can add, switch or drop your Medicare coverage.  You have until December 31st to make a decision and enroll.  Each one of these insurers is held to a minimum cost structure, must follow the same set of rules for marketing their products, and must disseminate the same brochures.  I've compiled the following tips for narrowing the list of possibilities:

• Monthly Premium (Who's Paying and How Much?):  You can expect your monthly plan premium will range from $0 to $180.  Each Medicare Advantage plan has a contract with Medicare to offer you a set of benefits and services. In addition to your premium, each health insurer will receive a fixed payment each month for each member enrolled in the plan from Medicare. Health insurers are able to provide these benefits and services because the government is providing these payments in addition to your monthly premium.  Check to see if the plan offers reimbursement for Hearing Aids, Dental, Eyeglasses, Fitness Benefits and more. 

Tip:  If the monthly premium is approaching the cost of a Medicare Supplement, choose the Medicare Supplement.  But remember, you still need to purchase a Part D Prescription Drug Plan, so the combination of both monthly payments must be weighed against the value of choosing a Medicare Advantage plan.

• For Profit or Non-Profit (Who Benefits from Your Premium?): Whether the plan is For Profit or Non-Profit the rules are the same.  The main difference is how much of the profit is returned to members (subscribers) vs. share holders through lower premiums, lower cost-sharing (out-of-pocket costs like copays and deductibles) and value added benefits (eye glasses, dental, hearing aids, and more). 

Tip: Choosing a local plan means your premium and extra payment from Medicare is spent locally. Spend your Medicare dollars locally and keep your neighbors employed.

• Medical Copays & Deductibles (What do You Pay When You Are Sick?):  A lower premium is usually followed by higher copays.  That $0 premium plan may look very attractive as long as you remain healthy and don't find yourself in the hospital.  When you get sick you can expect that your Medicare health insurer will charge you for each Doctor visit, Specialist visit, Inpatient Hospital Stay, Outpatient Surgery, Rehabilitation Services, and other services. 

Tip: Each plan is required to include a "Summary of Benefits" brochure in your sales kit.  This brochure is a comprehensive list of benefits and services offered by the health insurer.  This document will list which benefits and services require a copay, deductible and/or co-insurances.  All of these terms are forms of cost sharing - what you will pay when you are sick.  The more benefits that require cost sharing, the more expensive the plan is when you are sick. 

• Rx Copays and Deductibles (What do You Pay Drugs?):  The same principles apply to prescription drug coverage.  The lower the premium the higher the cost sharing for prescription drugs.  Please remember Medicare does not allow health insurers to discount the retail costs of drugs.  Any plan that states you are getting a discount off the retail cost of drugs is misleading you. 

Tip: Your monthly premium is buying you a fixed copay for your prescription drug. Why is this important? Because drug prices vary almost daily and on any given day one store in your neighborhood may have a lower price than another store.  Your premium will buy you a fixed monthly cost for each drug in your medicine cabinet. If the copay is more expensive than the drug, your monthly premium isn't returning any value to you.  Choose another plan.

• Local vs. National Health Insurer (Satisfaction Ratings):  Starting in 2010 all Medicare health insurers are required to include a copy of their Customer Satisfaction Rating in their sales kit.  If you don't see it, call the plan and ask for a copy or visit www.Medicare.gov. 

Tip: I recommend choosing a local health plan that has received a customer satisfaction rating of at least 4 out of 5 stars.

Remember, all plans are not equal.  You can always choose a higher premium with lower cost sharing during the next Annual Election Period (Nov 15 to Dec 31st).  Make sure that you know how much you will pay when you are sick - a low monthly premium may mean significantly more costs when you are sick.  Make sure your prescription drug plan is providing you with a copay that is significantly lower than the retail value of the drug. You've contributed 2.5% of your salary to Medicare each year over the course of your entire working life - - make the most of open enrollment and choose a health plan that provides the coverage your need at a price you can afford.

About the Author:

My name is Dana Cutter and I am Founder and Editor of Medicare Sherpa. Our staff spends their days searching the Internet for the best content and advice on retirement.  On our site you will find articles on Social Security, Medicare Benefits, Prescription Drug Benefits and more. Please feel fee to send me an email with ideas for content, site improvements or general help launching your online persona. I hope you will consider joining and I am looking forward to reading more about you online.

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