Medicare offers many plan options that can make choosing a plan very complicated. In evaluating these choices, however, there are several very clear objectives to keep in mind that should simplify your decisions.
Providers: Doctors and Hospitals
Retaining access to primary physicians and specialists is far and away the most important priority in choosing a new Medicare insurance health plan. You also may want to make sure you will still have access to the hospitals and other healthcare facilities these doctors prefer to use. So, before picking a new plan, call your doctors’ offices and find out their hospitals of choice. Also ask them how easy or hard it is for their offices to work with specific private insurers.
Beyond providers, the next set of key choices involves your prescription medications. Begin by making a list of the prescription drugs you now take. Medicare’s Part D prescription drug plans do not have to offer all approved drugs on their list of available medicines, which is called a formulary. Furthermore, all Part D drug plans do not have to charge the same prices (copayments or coinsurance) for prescription drugs.
Armed with your healthcare provider and prescription drug lists, you are ready for the next decision.
Original Medicare and Medigap
Do you want Original, fee-for-service Medicare (Parts A and B), with a stand-alone Part D drug plan and also perhaps a Medigap policy? Part A, which covers hospital expenses, is premium-free to people who qualify for Social Security benefits and those whose spouses qualify. Part B, which covers doctors, equipment and other outpatient expenses, has a basic premium of $104.90 a month in 2015, but higher-income beneficiaries can pay up to $335.70 a month.
Original Medicare typically requires you to pay an annual deductible and 20% coinsurance for covered services, if the healthcare provider accepts assignment.* If the provider doesn’t accept assignment, you may pay more. There is no maximum out-of-pocket limit. Medicare supplement insurance policies, known as Medigap, can close these gaps in coverage. Private insurers sell these policies, which are regulated by state laws where you live. There are 10 standard Medigap “letter” plans offered. All insurers must provide identical coverage in the letter plans they offer. However, they are free to charge different premiums, so comparison shopping is a must.
Or, do you want a Medicare Advantage (MA) plan, which has to offer coverage at least as good as Original Medicare? Most MA plans offer more coverage than Original Medicare and have annual out-of-pocket limits on your expenses. You should check out the standard assumptions of plan use that determine these annual limits, and see how they compare with your own situation. MA plans can afford to do so in part because they restrict your choice of healthcare providers to a network of providers that you must use. You will face prices that could be much higher for out-of-network care. Original Medicare, by contrast, allows you to choose any healthcare provider that participates in Medicare.
MA plans often include Part D drug coverage; you’ll see them referred to as MA-PD plans. You can evaluate these plans by using Medicare’s Plan Finder. It lets you enter your personal drug list and see availability and pricing terms in plans sold where you live. You’ll also see Medicare’s Star Ratings (1 to 5) of the various plans.
Plan Finder does not include details on an MA Plan’s provider network. To make a truly informed choice, ask your doctors if they and the hospitals they prefer are included in the provider networks of the plan or plans you like best. If your doctor does not have this information, you can get it directly from the top few MA plans on your list.
*Assignment means that the healthcare provider has agreed to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill the beneficiary for any more than the Medicare deductible and coinsurance.