Medicare is wildly popular with beneficiaries for good reason. Fixed incomes and increasing age, accompanied by ever-rising health care costs, means that without it most seniors would have no health care. But popularity is not the same as understanding. And a lack of knowledge about how Medicare actually works has made seniors a juicy target for unscrupulous sales people and scam-artist medical providers.
I’ve spent 23 years covering Medicare as a journalist and giving advice to others about it. But when 2011 rolled around, it was time to sign up myself.
It was a coming of age, so to speak. Reporting on Medicare over the years, I thought I had become an expert on the program — one of the most complex the federal government has to offer. [time-link title="(Read Swampland's post about how Rep. Paul Ryan is trying to overhaul Medicare)" url=http://swampland.time.com/2011/05/25/paul-ryans-sisyphean-task-selling-medicare-reform/]
Medicare was never simple, and in the past six years it has grown even more complicated. This stems in part from the fact that Medicare was never meant to cover all of an individual’s health expenses. In 2006, Medicare covered less than half of a recipient’s total spending for medical and long-term care expenses. Seniors paid on average 25 percent of their total health care expenses including premiums, deductibles and out-of-pocket spending. How to cover those gaps is the first and most important decision anyone makes after signing up. It was no different for me. Many seniors have more than 100 possible ways to cover these gaps. I had almost that many. Where to begin?
The first decision was whether to get all my basic Medicare benefits — hospital, doctor visits, lab services — from what’s called original or traditional Medicare or from a Medicare Advantage plan. Medicare Advantage (MA) plans work much like old-fashioned HMOs. For a fixed payment from the government, health plans and providers agree to accept Medicare Advantage rates. In the last few years, those payments have been so high that MA plans have been able to throw in some extra benefits like dental or vision care. The downside is you have to use doctors in the plan’s network. I would have to be comfortable with that.
If I chose original Medicare, that would mean selecting either a Medigap policy or keeping my retiree health plan from a former employer. Both of these options would cover the gaps in benefits under Medicare Part A, which pays for hospital stays, and Part B, which covers physician and outpatient care. They would cover most out-of-pocket expenses arising from those services.
Prescription drug coverage, known as Medicare Part D, added more complexity to my decision. If I kept my retiree plan, I would be able to continue the drug benefits I have now. If I chose a Medigap policy, I would have to buy separate drug coverage through what’s called a stand-alone “prescription drug plan.” If I elected to enroll in an MA plan, drug coverage would be included in the benefit package. [time-link title="(Read about how the economy has hurt the entitlement programs like Medicare)" url=http://www.time.com/time/nation/article/0,8599,2071356,00.html]
Each option came with advantages and disadvantages, which is the case for everyone signing up for Medicare. My goal was to find the option with the best coverage at the best price, and the one that offered the most long-term stability given the political upheaval surrounding Medicare itself. I began with some questions.
- Should I take original Medicare or a Medicare Advantage plan? I would have to think long and hard about going into a restricted-doctor network because of long-term relationships I have with my doctors.
- Assuming I picked original Medicare, would I be better off with a traditional Medigap policy and a stand-alone drug plan or keep my retiree health plan? I am one of the lucky few who still has excellent insurance from a retiree health plan that offers first-rate drug coverage. The coverage is expensive — more than $500 a month.
- How much less would my monthly outlay be if I were to choose a Medigap policy and a stand-alone drug plan? This is where other considerations came in.
- Would the retiree plan cover all of my Part B coinsurance, the biggest out-of-pocket expense in Medicare, if I went to out-of-network providers? My retiree plan, a PPO, offers both in- and out-of-network benefits. How it pays out-of network doctors is important.
- If I chose the retiree coverage and my ex-employer dropped coverage, would I be able to choose a Medigap policy or a Medicare Advantage plan without having to pass an insurer’s health requirements?
- Since I travel out of the country a lot, which option — a Medigap policy or the retiree plan — would give me coverage out of the United States?
I was ready to search for answers, but I was only just beginning. The first step would mean sitting down and poring through all the marketing brochures that vendors of Medigap and Medicare Advantage plans had sent my way.