What Options Are Available If You Have Medicare Under Obamacare?


bankIn 2013 much has been written about Obamacare by authors who would normally be talking about Medicare.  I know that I am guilty of forgetting about educating the options for Medicare beneficiaries this year.

As an insurance agent who works with Baby Boomers, I need to stay current with health insurance for both retirees and active employees.  With all the changes to the PPACA and adjustments to the new health insurance exchanges that have happened in 2013, it is understandable that the needs of Medicare beneficiaries can be put on the back burner.

Although the National Open Enrollment for active employees and people who are not enrolled in Medicare starts on October 1, the Annual Enrollment Period (AEP) for Medicare beneficiaries is no different from last year.

In this post I want to share what your options will be during the 6 week AEP for 2014.

MEDICARE ADVANTAGE

Medicare Advantage is also known as Medicare C.  It is the part of Medicare that allows you to choose a private insurance company to manage your health insurance rather than the federal government.

Most of the changes to the Medicare Advantage system that were made in the PPACA have been in force for several years.  The biggest change that was made to the program is the way that insurance companies get paid for managing the health insurance for beneficiaries.

The PPACA also authorized the Secretary of Health and Human Services to create a “Star Rating” to help Medicare beneficiaries choose which plan they want.

The Star Rating assigns 1-5 stars to each Medicare Advantage plan.  The more stars a plan gets from HHS, the more money they will receive from the government.  Also, plans with a 5 star rating, are able to sell  their plans throughout the year.

That does not mean that plans with less than 5 stars are bad.   It just means that they are only available at certain times.

Since the Secretary of Health and Human Service is in charge of awarding the star levels, 5 star Medicare Advantage plans are few.  If you live in an area where a 5 star Medicare Advantage plan is available, consider yourself fortunate.  Most Americans, who rely on Medicare Advantage, must rely on plans that have a 3 or 4 star rating.

Plans like that are provide good, quality coverage but earn the insurance company less money than a 5 star plan does.

There are a couple of positive things about Medicare Advantage plans.

  1. Medicare Advantage plans are generally less expensive than Original Medicare with a drug plan and Medigap.
  2. Unlike Original Medicare, Medicare Advantage plans all have a stated “Maximum Out-Of-Pocket” to allow you to better budget your health care expenditures for the year.

Unfortunately, even though they have some very good elements, there are also some drawbacks.  Medicare Advantage is not for everyone.

Perhaps the biggest drawback is the geographical limitations that come with Medicare Advantage.  Most plans have “networks” of doctors and hospitals.  If you go to a non-network doctor or hospital to get non-emergency treatment, your Medicare Advantage policy will pay only a reduced benefit or no benefit at all, depending on which plan you have.

In other words, I do not recommend Medicare Advantage plans to my clients who travel often.  Neither do I recommend them to “snowbirds” who enjoy their retirement in the north but move south when the cold winter comes.

Sometime in the next month, if you have not already, those of you who are already enrolled in a Medicare Advantage plan will get a plan description for 2014.  When you do, make certain that you do not ignore it or throw it away without reviewing it.

If you do not request a change during the AEP, your current Medicare Advantage election will apply for all of 2014.  This “convenience” can accidentally cause you problems.

Unlike Medigap plans, Medicare Advantage plans contract with the Centers for Medicare and Medicaid Services (CMS) annually.  That means that the insurance companies are allowed to adjust the premiums they charge, the benefits to which you are entitled or both.  The only way for you to know if something was changed on your plan before you are stuck with it for 2014 is for you to review your plan’s description in time to make changes if you need to.

MEDICARE D (PRESCRIPTION DRUG PLAN)

Original Medicare does not pay for prescription drugs.  If you want that type of coverage, you will need to buy a Medicare D plan.

When the PPACA first became law in 2010, it was almost impossible to go through a day without hearing some member of the press or politician sing the praises of the changes that were made to the system.

Unfortunately, as the second phase of Obamacare approaches, the politicians and press are more interested in discussing the trainwreck that is the implementation of Obamacare rather than the changes to the Prescription Drug Plan for those with Medicare.

Time and space limitations prevent me from rehashing all of the adjustments that were made to Medicare D.  However, there are a couple of significant facts that I want to point out.

  1. The “Donut Hole” gap for those with larger prescription bills is not totally closed.  Although it is being phased out a little more each year, it has not disappeared.
  2. Like Medicare Advantage, Medicare D (PDP) plans are based on an annual contract with CMS.  That means that the premium and roster of covered drugs (Formulary) can change each year.  If you have a Medicare D plan already, review the plan description and formulary you get in September to see if you need to make any adjustments in October.  A drug that used to be covered automatically may disappear from your formulary.

MEDICARE SUPPLEMENT

Some people elect to stay with Original Medicare but want private insurance to pay what Medicare does not.  The answer for them is a plan called a Medicare Supplement or Medigap.

Medigap plans are not as restrictive as Medicare Advantage but they are significantly more expensive.

The advise that I give to my clients when they ask me which form of Medicare is best for them is, “If you do not travel and have a doctor and hospital that you use that is in a Medicare Advantage network, Medicare Advantage may be the option for you.  However, if you do travel or want the freedom to use any doctor or hospital you choose, Medigap with a Medicare D plan may be a better option for you.”

Medigap has several things going for it.

  1. It supplements the charges from any doctor or hospital who accepts Medicare.
  2. It allows you to budget your health care expenditures for the year.
  3. Insurance companies who offer Medigap generally offer several plans from which you may choose.
  4. Since there is no annual contract with CMS, your benefits will not change from year to year.
  5. Medigap is available throughout the year.  If you decide to adjust your coverage outside of the AEP, you may, provided you are able to qualify.

FIN

When everything is considered, both Medicare Advantage and Medigap are wonderful options for people enrolled in Medicare.  Which one is best for you is determined by your unique lifestyle and desires.

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