Medicare Advantage will be a hot topic in 2010
The winds of change are blowing in the Medicare Advantage arena. For some members, the change will be minimal, but for others the change will mean starting from scratch. Medicare Advantage plans have become popular with many beneficiaries as a way to save money by having co-pays for many services and getting additional benefits beyond original Medicare, such as vision, dental and hearing coverage. The allure is that you will not have to pay an insurance company for a Medicare Supplement policy and you will lessen your responsibility for the expenses that Medicare doesn’t cover. This may sound good on the surface but there can be downsides as well.
Here’s the good news
There are many people on Medicare that are in between.They are in between being able to afford a Medicare Supplement policy and having additional assistance from the State. A good example would be someone in the sandwich generation. There are Medicare beneficiaries that have a decent retirement income, but may have the expense of putting a child through college while providing financial assistance or care for a parent. The Medicare Advantage option with a low premium or no premium may be the solution to saving some money on Medical services. There are also many under 65 Medicare beneficiaries that are unable to purchase a Medicare Supplement due to the way that individual States regulate insurance companies that offer them. Having a Medicare Advantage plan is a good thing if you have no other option. Another benefit of an Advantage plan, is that you generally have a maximum out of pocket expense that you are responsible for each year.
The Bad
The bad part of a Medicare Advantage plan can be what I call the smoke and mirrors aspect. I’m not implying that insurance companies or agents are intentionally misleading people, but plans can be confusing and misunderstood. One example is in the design of some plans. If you have original Medicare and you are hospitalized, you are responsible for a $1068 deductible for the first 60 days of inpatient care in 2009. Many Advantage plans will have a co-pay for the first 5 to 17 days (plans differ), and the co-pay may be in excess of $200 per day. That works if you are in the hospital for a couple days, but what if its a couple weeks? You are now paying more money for the hospital stay than you would under original Medicare. In addition, some plans have the same gaps in coverage for some services that Medicare has. For instance, many plans will still require you to be responsible for 20% of some out patient procedures. Potential plan members need to understand all aspects of the plan that they are considering.
The ugly truth
Plans limit your choice of providers. If you choose a HMO or PPO you generally know that when you enroll in such a plan. Many beneficiaries enroll in these plans because their medical providers are in network or because the plan design offers some benefits not otherwise available.
The Private Fee-For-service (PFFS) plans are another story. Your provider can choose to accept the plan on a visit by visit basis except in an emergency. Ouch! Also reimbursement rates for Medicare Advantage plans are being reduced for 2010 plans by 4.5%. This may force plans to increase prices or co-pays. Many PFFS plan are being eliminated in 2010. Some carriers have already indicated that they will not renew PFFS plans for 2010, leaving approximately 500,000 Advantage plan members to seek new coverage. These are the folks that are unfortunately starting from scratch. The silver lining is that they will have a guaranteed enrollment period for a Medicare Supplement policy should they opt for more stability.
Those that are losing their Medicare Advantage plan due to their carrier’s non-renewal for 2010, will have the option to enroll in a new plan for 2010 starting October 1st 2009. If a Medicare Supplement policy is out of reach and you can go with the flow (or swing with the punches!), you still have options in the Medicare Advantage market. You just need to know what you are getting into and expect that change will be constant.
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