Get ready to make some decisions. Medicare open enrollment began Oct. 15 and runs through early December. It’s the time when seniors and disabled people can switch plans to cover gaps in Medicare’s coverage.
Medicare continues to be one of the country’s most popular social programs, but there are coverage gaps. The program is complicated and often misunderstood, and those already on Medicare and those about to be should think hard about their options. It’s a time to beware of falling for sales pitches like the ones I received this year.
One mailing from a New York City hospital told me if I signed up for its “unique” Medicare Advantage plan, I could save money if I used the hospital system’s doctors, particularly its “preferred” physicians. It noted not all doctors who are part of its system were preferred providers and to check when making an appointment. It offered no clue about what “preferred” meant.
Another invitation from a seller of Medicare Advantage Plans invited me to a seminar at a local Boston Market, where I could pick up a free pie if I attended.
Often glossed over at these insurance-sponsored kaffeklatsches are the essential differences between the two options for covering Medicare’s gaps. Increasingly new seniors coming onto the program don’t know what those are.
These days insurers covering employees while they are working are allowed to automatically enroll them in an MA plan when they become eligible for Medicare. The insurer, using what’s called a “seamless conversion,” sends a letter to the workers explaining the new coverage, which takes effect unless they opt out within 60 days. It’s easy to overlook the notice.
Essentially, a consumer’s choice is between enrolling in traditional Medicare and buying a supplemental insurance plan called a Medigap or enrolling in a Medicare Advantage plan (MA) offered by private insurers. About one-third of Medicare beneficiaries now have MA plans largely because the government has paid insurers more — about two percent more — than it costs to provide the same benefits under the traditional program.
Those overpayments have allowed MA plans to offer extra benefits like eyeglasses and dental exams that are not part of traditional Medicare’s benefit package.
In some areas the higher government payments have made it possible to offer consumers MA plans with no monthly premiums, an attraction for cash-strapped seniors.
Premiums for Medigap policies are often higher, but people who have traditional Medicare and a Medigap policy face no restrictions on what doctors they can use. MA plans require seniors to use only providers in the insurers’ network. A recent Kaiser Family Foundation study of 20 counties found that on average MA plans included only about half of the area hospitals in their networks; 40 percent of the plans did not include a National Cancer Institute-designated cancer center.
MA plans come with high out-of-pocket maximums a senior must reach before the insurer will begin paying 100 percent of his or her medical expenses. In 2016 the maximum could be as high as $6,700. Also, seniors are sometimes surprised to learn that they are on the hook for 20 percent of the cost of expensive chemotherapy drugs until they reach the out-of-pocket limit. Too many sales people gloss over this crucial point.
While there is no limit on out-of-pocket spending for those in traditional Medicare, many seniors buy Medigap plans that limit their exposure to high out-of-pocket costs.
During open enrollment people already covered by a Medicare Advantage plan can choose a different MA plan. Seniors enrolled in traditional Medicare with a Medigap can also switch to an MA plan. But later on if they don’t like their MA plan, their options are limited.
Here’s the catch: They can always return to traditional Medicare during open enrollment, but they can’t always get a Medigap to cover the gaps. That depends on their state. Some allow people to buy Medigaps after returning to traditional Medicare. Others don’t.
Research shows that very little is really known about how MA plans care for people who become seriously ill or who need specialty care, says Tricia Newman, senior vice president of the Kaiser Family Foundation. Healthy 65-year-olds don’t always think about that possibility at an insurer’s sales event. She added seniors who opt for Medicare Advantage plans when they first go on Medicare may be making an irrevocable decision by giving up their right to purchase supplemental insurance later in life.
If you’re not sure of your options, it’s best to contact your state’s State Health Insurance Assistance Program (SHIP) for help understanding the costs and benefits of the different options. (In Indiana, the number is 1-800-452-4800.)
Trudy Lieberman, a journalist for more than 40 years, is a contributing editor to the Columbia Journalism Review, where she blogs about health care and retirement at cjr.org. She can be reached at firstname.lastname@example.org.